Vice President Corporate Development Employment Agreement

SIGNAL LETTERHEAD]


May 18, 1998


Dear Doug:


Signal Pharmaceuticals, Inc. ("Signal" or the "Company") is pleased to formally offer you the position of Vice President Corporate Development. The effective date of your employment will be Monday, June 8 (your "Start Date"), although it is understood that you shall have the option of working from your home in Pennsylvania until Monday, June 29.


The terms of this offer of employment are as follows:


Position: Vice President, Corporate Development


Reporting to: Mr. Carl F. Bobkoski, Executive Vice President


Base Salary: $7,292 semi-monthly (175,000 per year), less all
required withholding for taxes, social security
and other deductions, to be increased annually
in accordance with the standard practice of the
Company.


House Purchase Loan: The Company will provide you with a $60,000
interest free, subordinated, secured loan to be
used for the purchase of a new principal
residence, to be funded upon closing on a house
in San Diego County, secured by your Signal
common stock. 1/3 of the loan will be forgiven
upon the second anniversary of your Start Date
at the Company, 1/3 upon the third such
anniversary, and 1/3 upon the fourth such
anniversary. Should your employment be
terminated, for any reason, prior to the fourth
anniversary of your Start Date, you will have
one year from such date of termination to repay
the remaining balance to the Company, including
interest accrued on such at a rate of 8% per
year.


Performance Bonus: You will receive a performance bonus of
up to 20% of your annual salary based upon
performance against measurable, mutually agreed
upon goals set according to the Company's
standard practice. Individual goals will be
assigned specific percent weighting.


Relocation: Reimbursed moving expenses will include
reasonable and customary closing costs for the
sale of your house, including realtors' fees,
reasonable and customary costs for the purchase
of a new home, including origination fees or
points, reasonable legal fees, surveys and
...