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ArQule - Eric Gordon Resignation Agreement
AGREEMENT
This Agreement is made and entered into as of the 11th day of September, 1998, by and between Eric B. Gordon (hereinafter referred to as "Mr. Gordon") residing at 2 Charles Davis Drive, Wenham, Massachusetts, and ArQule, Inc. (hereinafter referred to as "ArQule" or the "Company"), a Delaware corporation having a principal place of business at 200 Boston Avenue, Medford, Massachusetts.
1. DEFINITIONS. As used in this Agreement, any reference to "ArQule" shall at all times unless otherwise specified include, and this Agreement shall cover, ArQule, Inc., its predecessors and successors, all of its past, present and future shareholders, directors, officers, employees, investors, representatives, attorneys, agents, and assigns, in their respective capacities as such and all of its affiliates, subsidiaries, parent or controlling corporations, and their affiliates and subsidiaries; and any reference to "Mr. Gordon" shall at all times unless otherwise specified include his attorneys, heirs, administrators, representatives, executors, legatees, successors, agents and assigns.
2. EMPLOYMENT. Mr. Gordon shall resign as President and Chief Executive Officer effective on such date as the Board of Directors of the Company may request. Subsequent to such resignation, Mr. Gordon shall remain an employee of ArQule at his current salary and benefit level until his resignation as an employee is requested by the Board which shall be no earlier than January 11, 1999; provided however, the Board of Directors may terminate Mr. Gordon at any time for Cause as such term is defined in Mr. Gordon's employment agreement with ArQule dated May 31, 1996 (the "Employment Agreement"); provided further that Mr. Gordon shall not be obligated to remain as an employee of ArQule after January 11, 1999. Such period of time prior to Mr. Gordon's resignation or termination is to be referred to as the "Transition Period". In accordance with ArQule's current practice, as part of Mr. Gordon's current salary, Mr. Gordon may receive certain bonuses which the Compensation Committee of the Company determines he has earned by the achievement of certain corporate and individual objectives in the 1998 Incentive Plan. During the Transition Period, Mr. Gordon shall report to the Board of Directors and shall undertake the duties and responsibilities requested of him by the Board of Directors. Upon termination of Mr. Gordon's employment hereunder, the Company shall (i) pay Mr. Gordon a lump sum amount equal to twelve months of Mr. Gordon's base salary (less usual taxes and withholding) less an amount equal to Mr. Gordon's daily base salary rate multiplied by the number of days between Mr. Gordon's resignation as President and Chief Executive Officer and the end of the Transition Period and (ii) provide Mr. Gordon with the benefits currently received by him in accordance with the terms of such benefit plans for a period of twelve months or until Mr. Gordon commences other employment. ArQule and Mr. Gordon hereby agree that if a new President and Chief Executive Officer has not been hired by ArQule by January 11, 1999, both parties have the option to negotiate the continuation of Mr. Gordon's services.
3. BOARD OF DIRECTORS. During the Transition Period, Mr. Gordon will remain a member of the Board of Directors. Upon termination of the Transition Period, Mr. Gordon will remain on the Board of Directors, although he agrees to resign immediately if requested to do so by a majority of the Board of Directors. If Mr. Gordon remains a director of the Company after
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the Company's 1999 Annual Meeting of Stockholders, then Mr. Gordon shall receive the standard compensation and benefits paid to other non-employee directors.
4. STOCK OPTIONS: Mr. Gordon has 235,103 options exercisable at $0.80 per share which have vested as of August 13, 1998. Mr. Gordon may exercise those options subject to the terms under which they were granted, including the requirement that the options be exercised within three months of the termination of Mr. Gordon's employment.
As of August 13, 1998 Mr. Gordon will have 193,717 unvested options exercisable at $0.80 per share. These options will vest according to the schedule set forth in Exhibit A, which shall not be later than the end of the Transition Period. New stock option certificates representing the incentive stock options and the nonstatutory stock options as set forth in Exhibit A attached hereto to purchase a total of 193,717 shares of the Company's Common Stock, with the vesting schedules in accordance with Exhibit A, will be promptly issued to Mr. Gordon following the execution of this Agreement. Mr. Gordon may exercise those options subject to the terms under which they were granted, including the requirement that the options be exercised within three months of the termination of Mr. Gordon's employment.
5. LOAN FORGIVENESS. Mr. Gordon owes the Company a loan principal amount of $166,667 plus interest. As additional consideration, the Company shall forgive $166,667 plus any accrued interest on January 11, 2000; provided, however, Mr. Gordon shall pay to the Company the loan principal amount of $166,667, plus interest, if (i) prior to January 11, 2000, Mr. Gordon breaches this Agreement or the Employment Agreement or (ii) no later than January 8, 2000, Mr. Gordon has not delivered to ArQule a check for the withholding taxes due on the forgiveness of $166,667 plus interest in an amount set forth in a notice sent by the Company to Mr. Gordon no later than January 1, 2000. In order to promptly notify Mr. Gordon pursuant to this section, Mr. Gordon further agrees to notify ArQule if prior to January 11, 2000 he changes his residence.
6. REFERENCE. The Company will provide Mr. Gordon with a positive verbal and/or written reference upon specific request.
7. MUTUAL GENERAL RELEASE. Effective as of the end of the Transition Period, Mr. Gordon and the Company fully, forever, irrevocably and unconditionally release, remise, and discharge each other from any and all manner of claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, dues, sums of money, costs, losses, accounts, reckonings, covenants, contracts, controversies, agreements, promises, leases, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys' fees and costs), of every kind and nature whatsoever, whether known or unknown, either at law, in equity, or mixed, which each ever had, nor has, or can, shall, or may have against the other, by reason of, on account of, or arising out of any matter or thing which has happened, developed, or occurred before the termination of the Transition Period (collectively referred to as "Claims") including, but not in limitation of the foregoing general terms, any Claims, asserted or unasserted, arising from his employment with or separation from ArQule, and specifically including any Claims under any federal or state labor, employment or discrimination laws, including but not limited to, Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Fair Labor Standards Act of 1938, as amended, the Americans with
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Disabilities Act of 1992, Chapter 151B of the Massachusetts General Laws, Sections 24A-24J of Chapter 149 of the Massachusetts General Laws, the Massachusetts Civil Rights Act, the Massachusetts Equal Rights Law, or at common law, except that this release shall not apply to any Claims with respect to the obligations or agreements of the parties under this Agreement and except that this release also shall not apply to any Claims by Mr. Gordon for indemnification pursuant to the Company's Amended and Restated Certificate of Incorporation or its By-Laws, a copy of which is attached to this Agreement. It is expressly agreed and understood that this release is a General Release, subject to the exceptions stated above. In addition, and not in limitation of the foregoing, effective as of the end of the Transition Period, Mr. Gordon forever releases and discharges ArQule from any liability or obligation to reinstate or reemploy him in any capacity.
8. ANNOUNCEMENT. The Company, after notice and an opportunity to review by Mr. Gordon, will announce that Mr. Gordon is stepping down from duties as President and Chief Executive Officer to pursue other opportunities. Mr. Gordon will also be given an opportunity to review the announcement to be made upon the appointment of his successor.
9. COMPANY PROPERTY. At the end of the Transition Period, Mr. Gordon will immediately return...
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