<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER: 0-21696
ARIAD PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-3106987
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26 LANDSDOWNE STREET, CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices)(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 494-0400
Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report: Not Applicable
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares of the Registrant's common stock outstanding as of August
6, 1997 was 19,298,777.
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ARIAD PHARMACEUTICALS, INC.
TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION PAGE NO.
- -------------------------------- --------
ITEM 1. UNAUDITED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - June 30, 1997
and December 31, 1996 ............................................ 1
Condensed Consolidated Statements of Operations for the
Three Months and Six Months Ended June 30, 1997 and 1996 ......... 2
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 .......................... 3
Notes to Unaudited Condensed Consolidated Financial Statements ... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .............................. 7
PART II. OTHER INFORMATION
- ----------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .............. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................. 13
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,457,445 $ 2,906,851
Marketable securities 20,322,694 12,795,449
Accounts receivable and other 638,803 2,569,404
------------ ------------
Total current assets 40,418,942 18,271,704
------------ ------------
Property and equipment:
Leasehold improvements 7,003,769 7,000,873
Equipment and furniture 5,165,297 4,256,805
Construction in progress 2,663,431
------------ ------------
Total 14,832,497 11,257,678
Less accumulated depreciation and amortization 5,540,932 4,748,275
------------ ------------
Property and equipment, net 9,291,565 6,509,403
------------ ------------
Licensed technology and patent application costs, net 1,564,402 1,357,470
------------ ------------
Investment in Genomics Center 796,679
------------
Other assets, net 1,257,363 1,466,416
------------ ------------
Total $ 53,328,951 $ 27,604,993
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,695,814 $ 1,275,956
Accounts payable 2,468,127 788,282
Accrued liabilities 790,226 639,026
Advance from Genomics Center 1,205,272
Deferred revenue 3,666,665 3,666,665
------------ ------------
Total current liabilities 9,826,104 6,369,929
------------ ------------
Long-term debt 6,069,832 1,472,812
------------ ------------
Deferred revenue 1,411,115 3,077,781
------------ ------------
Stockholders' equity:
Series B convertible preferred stock, $.01 par
value; authorized, 5,000,000 shares; issued
and outstanding, 2,526,316 shares in 1997
(liquidation preference, $24,000,000) 25,263
Common stock, $.001 par value; authorized, 60,000,000
shares; issued and outstanding, 19,282,020 in
1997 and 19,036,723 shares in 1996 19,282 19,037
Additional paid-in capital 94,726,708 70,593,840
Net unrealized loss on marketable securities (78,495) (102,699)
Accumulated deficit (58,670,858) (53,825,707)
------------ ------------
Stockholders' equity 36,021,900 16,684,471
------------ ------------
Total $ 53,328,951 $ 27,604,993
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
1
<PAGE> 4
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Research revenue
(principally related parties) $ 2,489,209 $ 2,093,332 $ 4,462,542 $ 4,151,666
Interest income 525,213 288,598 817,930 636,323
----------- ----------- ----------- -----------
Total revenue 3,014,422 2,381,930 5,280,472 4,787,989
----------- ----------- ----------- -----------
Operating expenses:
Research and development 4,273,087 3,685,457 8,530,228 7,387,662
General and administrative 725,817 519,345 1,483,882 1,202,316
Interest expense 54,038 66,654 111,513 138,270
----------- ----------- ----------- -----------
Total operating expenses 5,052,942 4,271,456 10,125,623 8,728,248
----------- ----------- ----------- -----------
Net loss $(2,038,520) $(1,889,526) $(4,845,151) $(3,940,259)
=========== =========== =========== ===========
Net loss per share $ (.11) $ (.10) $ (.25) $ (.21)
=========== =========== =========== ===========
Weighted average number of
shares of common stock
outstanding 19,264,673 18,986,829 19,205,125 18,981,684
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
<PAGE> 5
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,845,151) $ (3,940,259)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 1,181,444 1,062,430
Deferred revenue (1,666,666) (1,666,666)
Stock-based compensation 35,151 9,930
Increase (decrease) from:
Accounts receivable and other 1,930,601 (106,162)
Other assets (84,630) (154,326)
Accounts payable 1,679,845 190,081
Accrued liabilities 151,200 (323,426)
Advance from Genomics Center 1,205,272
------------ ------------
Net cash used in operating activities (412,934) (4,928,398)
------------ ------------
Cash flows from investing activities:
Acquisitions of marketable securities (18,126,062) (11,121,994)
Proceeds from sales and maturities of marketable securities 10,589,470 19,873,770
Investment in Genomics Center (806,891)
Investment in property and equipment, net (3,574,819) (1,140,052)
Acquisitions of licensed technology and patents (258,272) (325,126)
------------ ------------
Net cash (used in) provided by investing activities (12,176,574) 7,286,598
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of series B preferred stock 24,000,000
Proceeds from borrowings 6,000,000
Repayment of borrowings (983,122) (736,530)
Proceeds from sale/leaseback of equipment 836,057
Proceeds from exercise of stock options 123,224 70,220
------------ ------------
Net cash provided by financing activities 29,140,102 169,747
------------ ------------
Net increase in cash and equivalents 16,550,594 2,527,947
Cash and equivalents, beginning of period 2,906,851 3,750,082
------------ ------------
Cash and equivalents, end of period $ 19,457,445 $ 6,278,029
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE> 6
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Management Statement
--------------------
In the opinion of the Company's management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position as
of June 30, 1997 and December 31, 1996 and the results of operations for the
three-month and six-month periods ended June 30, 1997 and 1996.
The results of operations for the three-month and six-month periods ended June
30, 1997 are not necessarily indicative of the results to be expected for the
full year.
2. Marketable Securities
---------------------
The Company has classified its marketable securities as available for sale and,
accordingly, carries such securities at aggregate fair value. At June 30, 1997
and December 31, 1996, the Company's marketable securities consisted of the
following:
<TABLE>
<CAPTION>
Aggregate Amortized Gross Unrealized
JUNE 30, 1997 Fair Value Cost Basis Gains Losses
- ------------- ---------- ---------- ------ --------
<S> <C> <C> <C> <C>
U.S. Government obligations $ 6,020,288 $ 6,086,006 $ 1,166 $ (66,884)
Corporate debt securities 14,302,406 14,315,183 15,146 (27,923)
----------- ----------- ------- ---------
Total $20,322,694 $20,401,189 $16,312 $ (94,807)
=========== =========== ======= =========
DECEMBER 31, 1996
- -----------------
U.S. Government obligations $ 4,444,217 $4,507,983 $ 580 $ (64,346)
Corporate debt securities 8,101,761 8,140,694 3,120 (42,053)
Certificate of deposit 249,471 249,471
----------- ----------- ------- ---------
Total $12,795,449 $12,898,148 $ 3,700 $(106,399)
=========== =========== ======= =========
</TABLE>
At June 30, 1997, approximately $18,700,000 of investments in marketable
securities had contractual maturities of one year or less. Realized gains and
losses on sales of marketable securities were not material during the quarter
ended June 30, 1997; the net unrealized loss of $78,495 is included in
stockholders' equity.
3. Hoechst-ARIAD Genomics Center, LLC
----------------------------------
In March 1997, the Company entered into an agreement which established a 50/50
joint venture with Hoechst Marion Roussel, Inc. ("HMR") to pursue functional
genomics (the "1997 HMR Genomics Agreement") with the goal of identifying novel
therapeutic proteins and small-molecule drug targets. The joint venture, named
the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"), is located at
the Company's research facilities in Cambridge, Massachusetts. Under the terms
of the 1997 HMR Genomics
4
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Agreement, the Company and HMR agreed to commit up to $85,000,000 to the
establishment of the Genomics Center and its first five years of operation. The
Company and HMR will jointly fund $78,500,000 of operating and related costs,
and ARIAD will fund up to $6,500,000 in leasehold improvements and equipment.
HMR committed to provide ARIAD with capital adequate to fund ARIAD's share of
such costs through the purchase of up to $49,000,000 of series B preferred stock
over the five-year period, including an initial investment of $24,000,000, which
was completed in March 1997.
The Company also entered into agreements with the Genomics Center to provide
research and administrative services (the "Services Agreements") to the Genomics
Center on a cost reimbursement basis. ARIAD's costs of providing the research
and administrative services to the Genomics Center will be charged to research
and development expense and general and administrative expense in the
consolidated financial statements. Under the Services Agreements, ARIAD will
bill the Genomics Center for 100% of its costs of providing the research and
administrative services; however, because ARIAD is providing 50% of the funding
of the Genomics Center, ARIAD will recognize as revenue only 50% of the costs.
ARIAD accounts for its investment in the Genomics Center using the equity
method. Revenue recognized pursuant to the Services Agreements amounted to
$378,000 for the six-month period ended June 30, 1997. Costs incurred in the
development of the joint venture are being amortized over a five-year period
beginning April 1, 1997.
4. Long-Term Debt
--------------
On June 27, 1997, the Company amended its existing debt agreement with its
principal bank and borrowed $6,000,000 that is repayable in 60 monthly
installments of $100,000, commencing August 1, 1997. Existing terms and
conditions, including pricing, collateral and covenants, were unchanged.
5. Commitments
-----------
In March 1997, in connection with the formation of the Genomics Center, the
Company entered into a collaborative agreement with Incyte Pharmaceuticals, Inc.
("Incyte") providing access to the LifeSeq(R) Database. As required by the
agreement, in order to secure the Company's obligation for installation and
payment of certain access fees, the Company obtained an irrevocable standby
letter of credit in the amount of $3,000,000 to the benefit of Incyte, which
expires on January 10, 1998.
6. Net Loss Per Share
------------------
The shares of series B convertible preferred stock issued in March 1997 are
common stock equivalents, but have been excluded from the computation of net
loss per share because their effect is not dilutive.
5
<PAGE> 8
7. New Accounting Pronouncement
----------------------------
The Company will adopt Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," in the fourth quarter of 1997, as required. The
standard specifies the computation, presentation and disclosure requirements for
earnings per share. The Company will continue to apply Accounting Principle
Board Opinion No. 15, "Earnings Per Share," until the adoption of SFAS No. 128.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
ARIAD Pharmaceuticals, Inc. (the "Company" or "ARIAD") is engaged in the
discovery and development of novel pharmaceuticals based on signal transduction
pathways and the genes that regulate them. The Company is currently focusing its
efforts in three areas: (i) the development of orally administered drugs to
block intracellular signal transduction pathways that are critical to major
diseases such as osteoporosis, allergy/asthma and immune-related disorders; (ii)
the development of a system to regulate gene therapy using orally administered
drugs; and (iii) the identification of new small-molecule drug targets and
therapeutic proteins through functional genomics. ARIAD has assembled a broad
portfolio of advanced technologies for the identification, validation and
optimization of novel drugs. These technologies have been integrated into a drug
discovery platform that, in conjunction with the Company's expertise in signal
transduction, forms the basis for multiple business opportunities, each with a
diversity of potential products. In each of its three areas of drug discovery,
the Company has entered into a strategic alliance with a collaborator to
complement its drug discovery technologies or to support its commercialization
efforts.
Since its inception in 1991, the Company has devoted substantially all of its
resources to its research and development programs. The Company receives no
revenue from the sale of pharmaceutical products, and substantially all revenue
to date has been received in connection with the Company's research
collaborations. The Company has not been profitable since inception and expects
to incur substantial losses for the foreseeable future, primarily due to the
expansion of its research and development programs, including the establishment
of the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center") . The Company
expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. As of June 30, 1997, the Company had an
accumulated deficit of $58,671,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED
JUNE 30, 1996
REVENUE
The Company recognized research revenue of $2,489,000 for the quarter ended
June 30, 1997 compared to $2,093,000 for the same period in 1996. Research
revenue is comprised principally of revenue from the Company's 1995
collaborative research and development agreement with Hoechst Marion Roussel
("HMR") (the "1995 HMR Osteoporosis Agreement") government-sponsored research
grants, and beginning in 1997, research revenue recognized for services
provided to the Genomics Center. The
7
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increase in research revenue of $396,000 is principally the result of services
provided to the Genomics Center. Although research revenue recognized under the
1995 HMR Osteoporosis Agreement is expected to remain substantially equivalent
in 1997, research revenue resulting from the services agreements with the
Genomics Center is expected to increase over the next three years.
Interest income increased to $525,000 for the quarter ended June 30, 1997, up
$236,000 from $289,000 for the same period in 1996 primarily as a result of
higher levels of funds invested.
OPERATING EXPENSES
Research and development expenses increased to $4,273,000 for the quarter ended
June 30, 1997 from $3,685,000 for the same period in 1996 due to increased
expenses incurred in the regulated gene therapy program, including manufacturing
development and other preclinical development costs, as well as increased
research activity under the 1995 HMR Osteoporosis Agreement. The Company expects
its research and development expenses to increase significantly as a result of
research services to be provided to the Genomics Center, as well as increased
manufacturing and preclinical development costs associated with advanced
preclinical studies of its gene therapy drug candidate.
General and administrative expenses increased to $726,000 for the quarter ended
June 30, 1997 from $519,000 for the corresponding period in 1996 primarily due
to increased expenses in connection with the formation of the Genomics Center
and other administrative expenses.
The Company incurred interest expense of $54,000 for the quarter ended June 30,
1997 compared to $67,000 for the corresponding period in 1996. The decrease
resulted from a lower level of long-term debt during the period. However, the
Company expects that interest expense will increase as a result of the increase
in long-term debt in June 1997.
OPERATING RESULTS
The Company incurred losses of $2,039,000 for the quarter ended June 30, 1997
and $1,890,000 for the corresponding period in 1996, or $.11 and $.10 per share,
respectively. The Company expects that substantial operating losses will
continue for several more years, will increase as its activities expand and
increased research services are provided to the Genomics Center and will
fluctuate as a result of differences in the timing and composition of revenue
earned and expenses incurred.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996
REVENUE
Revenues for the six months ended June 30, 1997 were $5,280,000 compared to
$4,788,000 for the corresponding period in 1996. Research revenue earned in 1997
increased by
8
<PAGE> 11
$311,000 over 1996 principally as a result of services provided to the
Genomics Center. Interest income for the six months ended June 30, 1997
increased by $182,000 over the corresponding period in 1996 primarily as a
result of a higher level of funds invested.
OPERATING EXPENSES
Research and development expenses increased to $8,530,000 for the six months
ended June 30, 1997, up 15% from $7,388,000 for the corresponding period in
1996, primarily due to increased expenses incurred in the regulated gene therapy
program, including manufacturing development and other preclinical development
costs, and increased research activity as a result of the 1995 HMR Osteoporosis
Agreement.
General and administrative expenses increased by 23% to $1,484,000 for the six
months ended June 30, 1997 compared to $1,202,000 for the corresponding period
in 1996, primarily due to increased expenses in connection with the formation of
the Genomics Center, the joint venture with Genovo Inc. and other administrative
expenses.
The Company incurred interest expense of $112,000 for the six months ended June
30, 1997 compared to $138,000 for the corresponding period in 1996 as a result
of a lower level of long-term debt.
OPERATING RESULTS
The Company incurred losses of $4,845,000 for the six months ended June 30, 1997
and $3,940,000 for the corresponding period in 1996, or $.25 and $.21 per share,
respectively. The Company expects that substantial operating losses will
continue for several more years, will increase as its activities expand and
increased research services are provided to the Genomics Center and will
fluctuate as a result of differences in the timing and composition of revenue
earned and expenses incurred.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and investments in property and
equipment primarily through the private placement and public offering of its
securities, including, most recently, the sale of series B preferred stock to
HMR in connection with the formation of the Genomics Center in March 1997, the
increase in June 1997 of its long-term debt and, commencing in April 1997, the
services agreements with the Genomics Center. Other sources of funds have
included sale/leaseback and capital lease transactions, interest income,
government-sponsored research grants and research revenue under the 1995 HMR
Osteoporosis Agreement.
As of June 30, 1997, the Company had cash, cash equivalents and marketable
securities totaling $39,780,000 and working capital of $30,593,000 compared to
cash, cash equivalents and marketable securities totaling $15,702,000 and
working capital amounting to $11,902,000 at December 31, 1996.
9
<PAGE> 12
The primary uses of cash during the six months ended June 30, 1997 were
$413,000 to finance the Company's operations and working capital requirements,
$3,575,000 to purchase laboratory equipment and to renovate space for the
Genomics Center, $983,000 to repay long-term debt, $807,000 for investment in
the Genomics Center and $258,000 to acquire licensed technology and patents.
The primary sources of cash during the six months ended June 30, 1997 were
$24,000,000 from the issuance of series B preferred stock to HMR, $4,000,000 of
research funding from the 1995 HMR Osteoporosis Agreement, $6,000,000 in
additional long-term debt and $1,205,000 in advances from the Genomics Center.
In February 1997, the Company began renovation of approximately 35,000 square
feet of previously leased space to provide laboratories and offices for the
Genomics Center and to expand existing chemistry and pharmacology laboratories.
The leasehold improvements are expected to be completed in the third quarter of
1997 at an aggregate cost of approximately $5,500,000.
In June 1997, the Company amended its existing debt agreement with its principal
bank and borrowed $6,000,000. The five-year bank term note bears interest at
prime plus 1% and is repayable in monthly installments of $100,000, commencing
August 1, 1997.
The Company has substantial fixed commitments under various research and
licensing agreements, consulting and employment agreements, lease agreements,
long-term debt instruments and funding obligations related to the operations of
the Genomics Center. The Company will require substantial additional funding for
its research and product development programs, for operating expenses, for the
pursuit of regulatory clearances and for building manufacturing, sales and
marketing capabilities. Adequate funds for these purposes, whether obtained
through financial markets or collaborative or other arrangements with corporate
partners, or from other sources, may not be available when needed or on terms
acceptable to the Company.
The Company believes that its available cash and existing sources of funding
will be adequate to satisfy its capital and operating requirements through 1998.
However, there can be no assurance that changes in the Company's research and
development plans or other events affecting the Company's operating expenses
will not result in the Company depleting its funds earlier.
SECURITIES LITIGATION REFORM ACT
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Except for the historical information contained in this Quarterly Report
on Form 10-Q, the matters discussed herein are forward-looking statements that
involve risks and uncertainties, including but not limited to risks and
uncertainties regarding the receipt of revenues under the Company's 1995 HMR
Osteoporosis Agreement and the services agreements, the actual research and
development expenses and other costs associated with the Genomics Center, the
adequacy of the Company's capital resources and the availability of additional
funding, as well as general economic, competitive, governmental and
10
<PAGE> 13
technological factors affecting the Company's operations, markets, products,
services and prices, and other factors discussed under the heading "Cautionary
Statement Regarding Forward-Looking Statements" in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission. As a result of
these factors, actual events or results could differ materially from those
described herein.
11
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on June 20, 1997. Of 21,788,288
shares issued and outstanding and eligible to vote as of the record date of
April 22, 1997, a quorum of 18,254,789 shares or 83.8% of the eligible shares
were present in person or represented by proxy.
The following actions were taken at such meeting:
(a) Reelection of the following Class 3 Directors:
<TABLE>
<CAPTION>
Number of Shares
---------------------------------------
For Withheld Authority
---------- ------------------
<S> <C> <C>
Harvey J. Berger, M.D. 18,168,531 86,258
Vaughn D. Bryson 18,170,273 84,516
Sandford D. Smith 18,170,273 84,516
Raymond S. Troubh 18,158,673 96,116
</TABLE>
Continuing Class 1 Directors (terms to expire 1998):
Joan S. Brugge, Ph.D.
Edgar Haber, M.D.
Frank J. Hoenemeyer
John M. Deutch, Ph.D.
Continuing Class 2 Directors (terms to expire 1999):
Philip Felig, M.D.
Peter T. Joseph
Jay R. LaMarche
Joel S. Marcus
(b) Increase by 2,200,000 shares the aggregate number of shares for which
stock options may be granted under the ARIAD Pharmaceuticals, Inc. 1991
Stock Option Plan for Employees and Consultants (11,184,495 shares for
approval, 2,591,875 shares against approval, 60,197 shares abstaining and
4,418,222 broker non-votes).
12
<PAGE> 15
(c) Increase by 300,000 shares the aggregate number of shares for which stock
options may be granted under the ARIAD Pharmaceuticals, Inc. 1994 Stock
Option Plan for Non-Employee Directors (12,643,242 shares for approval,
1,554,777 shares against approval, 50,164 shares abstaining and 4,006,606
broker non-votes).
(d) Adoption and approval of the ARIAD Pharmaceuticals, Inc. 1997 Employee
Stock Purchase Plan (13,887,035 shares for approval, 313,113 shares
against approval, 48,035 shares abstaining and 4,006,606 broker
non-votes).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith:
Exhibit 10.29 Amendment, dated January 1, 1997, to Executive
Employment Agreement between ARIAD Pharmaceuticals, Inc. and
Harvey J. Berger, M.D.
Exhibit 10.30 Amendment, dated January 1, 1997, to Executive
Employment Agreement between ARIAD Pharmaceuticals, Inc. and
Jay R. LaMarche.
Exhibit 10.31 Amendment, dated January 1, 1997, to Executive
Employment Agreement between ARIAD Pharmaceuticals, Inc. and
Charles C. Cabot III.
Exhibit 10.32 Amendment, dated January 1, 1997, to Executive
Employment Agreement between ARIAD Pharmaceuticals, Inc. and
Manfred Weigele, Ph.D.
Exhibit 10.33 Amendment, dated January 1, 1997, to Executive
Employment Agreement between ARIAD Pharmaceuticals, Inc. and
Michael Gilman, Ph.D.
Exhibit 10.34 Consulting Agreement, dated July 1, 1997, between
ARIAD Pharmaceuticals, Inc. and Joan S. Brugge, Ph.D.
Exhibit 10.35 ARIAD Pharmaceuticals, Inc. 1997 Employee Stock
Purchase Plan
Exhibit 10.36 Amendment to the 1991 Stock Option Plan for
Employees and Consultants
Exhibit 10.37 Amendment to the 1994 Stock Option Plan for
Non-Employee Directors
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<PAGE> 16
Exhibit 10.38 Fourth Amendment to Loan And Security Agreement dated
June 27, 1997 with BankBoston, N.A. as successor in interest to
BayBank, N.A.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1997.
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARIAD Pharmaceuticals, Inc.
(Registrant)
By: /s/ Jay R. LaMarche
---------------------------------------
Jay R. LaMarche
Executive Vice President, and
Chief Financial Officer
(Duly authorized Officer and Principal
Financial Officer)
Date: August 12, 1997
15
<PAGE> 1
EXHIBIT 10.29
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
This THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (the "Third Amendment")
made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and Harvey J. Berger (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of January 1, 1992, as amended as of April 19, 1994 and June 30, 1994
(the "Agreement"), and the parties hereto desire to further amend certain
provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. TERMINATION OF EMPLOYMENT. The first clause of Section 2 of the
Agreement is hereby amended to read as follows:
"The term of the Employee's employment under this Agreement (the
"term") commenced as of January 1, 1992 (the "Effective Date") and shall
end on December 31, 2001 unless sooner terminated pursuant to Section 4
or 5 of this Agreement;"
II. COMPENSATION. The first sentence of Section 3.1 is hereby
amended to read as follows:
"3.1 As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $300,000 per annum during
the first year of the Term and increased each year thereafter as set
forth below, payable in equal semi-monthly installments, less such
deductions or amounts to be withheld as shall be required by applicable
law and regulations."
1
<PAGE> 2
III. DEFINITIONS. The definition of the "Company's Field of Interest"
in Section 16 (c) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery,
development and commercialization of pharmaceutical products based on
(a) intervention in signal transduction pathways; (b) gene and cell
therapy; and (c) functional genomics."
IV. This Third Amendment shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts
applicable to agreements made and to be performed entirely in Massachusetts.
V. Except as modified by this Third Amendment, the Agreement
remains in full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ David T. Washburn
-----------------------------------
David T. Washburn
Secretary
EMPLOYEE
/s/ Harvey J. Berger, M.D.
-------------------------------------
Harvey J. Berger, M.D.
2
<PAGE> 1
EXHIBIT 10.30
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as
of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Jay R. LaMarche (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of January 1, 1992 and amended as of March 2, 1994 (the "Agreement"),
and the parties hereto desire to further amend certain provisions of the
Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of
Section 1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Executive Vice President and Chief
Financial Officer."
II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is hereby extended to
December 31, 2000 (the "Term"), unless sooner terminated pursuant to Section 4
or 5 of this Agreement; PROVIDED, however, that this Agreement shall
automatically be renewed for successive one-year terms (the Term and, if the
period of employment is so renewed, such additional period(s) of employment are
1
<PAGE> 2
collectively referred to herein as the "Term") unless terminated by written
notice given by either party to the other at least 90 days prior to the end of
the applicable Term."
III. COMPENSATION. Section 3.1 is hereby replaced and amended in its entirety
as follows:
"3.1. As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $215,000 per annum during
the first year of the Term and increased each year thereafter, by
amounts, if any, to be determined by the Board of Directors of the
Company (the "Board") in its sole discretion, payable in equal
semi-monthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations."
IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or
more of the following shall occur:
(a) a material breach of the terms of this Agreement
by the Company and such breach continues for 30 days after the Employee
gives the Company written notice of such breach;
(b) the Company shall make a general assignment for
benefit of creditors; or any proceeding shall be instituted by the
Company seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking entry of an order for relief of the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property or the Company shall take any corporate action to authorize
any of the actions set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an
action or proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or
for any other relief under the Federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and remain undismissed or unstayed for a
period of 30 days;
(d) a receiver, assignee, liquidator, trustee or
similar officer for the Company or for all or any part of its property
shall be appointed involuntarily, or
(e) a Change in Control as defined in Section 14."
2
<PAGE> 3
V. SEVERANCE. Section 6 is hereby replaced and amended in its
entirety as follows:
"6. If (i) the Company terminates this Agreement without Cause
or (ii) the Employee terminates this Agreement pursuant to Section
5.1(a), then: (1) except in the case of death or disability, the Company
shall continue to pay Employee his current salary for the remaining
period of the applicable Term; (2) all options granted pursuant to this
Agreement that would have vested during the Term shall vest immediately
prior to such termination; (3) the Company shall continue to provide all
benefits subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards
and similar equity rights granted to the Employee shall immediately vest
and remain fully exercisable through their original term with all
rights; and (ii) the Company shall continue to pay Employee his current
salary for the shorter of (a) six months, or (b) the remaining period of
the applicable Term."
VI. DEFINITIONS. The definition of the Company's "Field of Interest"
in Section 14(b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery,
development and commercialization of pharmaceutical products based on
(a) intervention in signal transduction pathways; (b) gene and cell
therapy; and (c) functional genomics. The Company's Field of Interest
may be changed at the sole discretion of the Company from time to time."
The definition of "Change in Control" shall be added as Section
14(e) of the Agreement as follows:
" 'Change in Control' means the occurrence of any of the
following events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender or
exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires more than 50% of
the issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all
of the Company's assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or
Section 13 (d) of the Securities Exchange Act of 1934 acquires more than
50% of the combined voting power of Company's issued and outstanding
voting securities entitled to vote in the election of the Board."
3
<PAGE> 4
VII. This Amendment shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VIII. Except as modified by this Second Amendment, the Agreement
remains in full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment as of the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
---------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Jay R. LaMarche
------------------------------------------
Jay R. LaMarche
4
<PAGE> 1
EXHIBIT 10.31
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as
of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Charles C. Cabot III (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of January 1, 1992 and amended as of March 2, 1994 (the "Agreement"),
and the parties hereto desire to further amend certain provisions of the
Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of
Section 1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Executive Vice President and Chief
Operating Officer."
II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is hereby extended to
December 31, 2000 (the "Term"), unless sooner terminated pursuant to Section 4
or 5 of this Agreement; PROVIDED, however, that this Agreement shall
automatically be renewed for successive one-year terms (the Term and, if the
period of employment is so renewed, such additional period(s) of employment are
1
<PAGE> 2
collectively referred to herein as the "Term") unless terminated by written
notice given by either party to the other at least 90 days prior to the end of
the applicable Term."
III. COMPENSATION. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $215,000 per annum during
the first year of the Term and increased each year thereafter, by
amounts, if any, to be determined by the Board of Directors of the
Company (the "Board") in its sole discretion, payable in equal
semi-monthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations."
IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or
more of the following shall occur:
(a) a material breach of the terms of this Agreement by the
Company and such breach continues for 30 days after the Employee gives
the Company written notice of such breach;
(b) the Company shall make a general assignment for benefit
of creditors; or any proceeding shall be instituted by the Company
seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking entry of an order for relief of the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property or the Company shall take any corporate action to authorize
any of the actions set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or
for any other relief under the Federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and remain undismissed or unstayed for a
period of 30 days;
(d) a receiver, assignee, liquidator, trustee or similar
officer for the Company or for all or any part of its property shall be
appointed involuntarily, or
(e) a Change in Control as defined in Section 14."
2
<PAGE> 3
V. SEVERANCE. Section 6 is hereby replaced and amended in its
entirety as follows:
"6. If (i) the Company terminates this Agreement without Cause
or (ii) the Employee terminates this Agreement pursuant to Section
5.1(a), then: (1) except in the case of death or disability, the Company
shall continue to pay Employee his current salary for the remaining
period of the applicable Term; (2) all options granted pursuant to this
Agreement that would have vested during the Term shall vest immediately
prior to such termination; (3) the Company shall continue to provide all
benefits subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards
and similar equity rights granted to the Employee shall immediately vest
and remain fully exercisable through their original term with all
rights; and (ii) the Company shall continue to pay Employee his current
salary for the shorter of (a) six months, or (b) the remaining period of
the applicable Term."
VI. DEFINITIONS. The definition of the Company's "Field of Interest"
in Section 14(b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery,
development and commercialization of pharmaceutical products based on
(a) intervention in signal transduction pathways; (b) gene and cell
therapy; and (c) functional genomics. The Company's Field of Interest
may be changed at the sole discretion of the Company from time to time."
The definition of "Change in Control" shall be added as Section
14(e) of the Agreement as follows:
" 'Change in Control' means the occurrence of any of the
following events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender or
exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires more than 50% of
the issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all
of the Company's assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or
Section 13 (d) of the Securities Exchange Act of 1934 acquires more than
50% of the combined voting power of Company's issued and outstanding
voting securities entitled to vote in the election of the Board."
3
<PAGE> 4
VII. This Amendment shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VIII. Except as modified by this Second Amendment, the Agreement
remains in full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment as of the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
----------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Charles C. Cabot III
-------------------------------------------
Charles C. Cabot III
4
<PAGE> 1
EXHIBIT 10.32
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as
of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Manfred Weigele, Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of October 14, 1991 and amended as of March 2, 1994 (the "Agreement"),
and the parties hereto desire to further amend certain provisions of the
Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of
Section 1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Senior Vice President, Physical and
Chemical Sciences."
II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is
hereby extended to December 31, 1998 (the "Term"), unless sooner
terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED,
however, that this Agreement shall automatically be renewed for
successive one-year terms (the Term and, if the period of employment is
so renewed, such additional period(s) of employment are collectively
referred to herein as the "Term")
1
<PAGE> 2
unless terminated by written notice given by either party to the other
at least 90 days prior to the end of the applicable Term."
III. COMPENSATION. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $215,000 per annum during
the first year of the Term and increased each year thereafter, by
amounts, if any, to be determined by the Board of Directors of the
Company (the "Board") in its sole discretion, payable in equal
semi-monthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations."
IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or
more of the following shall occur:
(a) a material breach of the terms of this Agreement by the
Company and such breach continues for 30 days after the Employee gives
the Company written notice of such breach;
(b) the Company shall make a general assignment for benefit
of creditors; or any proceeding shall be instituted by the Company
seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking entry of an order for relief of the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property or the Company shall take any corporate action to authorize
any of the actions set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or
for any other relief under the Federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and remain undismissed or unstayed for a
period of 30 days;
(d) a receiver, assignee, liquidator, trustee or similar
officer for the Company or for all or any part of its property shall be
appointed involuntarily, or
(e) a Change in Control as defined in Section 14."
V. SEVERANCE. Section 6 is hereby replaced and amended in its
entirety as follows:
2
<PAGE> 3
"6. If (i) the Company terminates this Agreement without
Cause or (ii) the Employee terminates this Agreement pursuant to Section
5.1(a), then: (1) except in the case of death or disability, the Company
shall continue to pay Employee his current salary for the remaining
period of the applicable Term; (2) all options granted pursuant to this
Agreement that would have vested during the Term shall vest immediately
prior to such termination; (3) the Company shall continue to provide all
benefits subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards
and similar equity rights granted to the Employee shall immediately vest
and remain fully exercisable through their original term with all
rights; and (ii) the Company shall continue to pay Employee his current
salary for the shorter of (a) six months, or (b) the remaining period of
the applicable Term."
VI. DEFINITIONS. The definition of the Company's "Field of Interest"
in Section 14(b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery,
development and commercialization of pharmaceutical products based on
(a) intervention in signal transduction pathways; (b) gene and cell
therapy; and (c) functional genomics. The Company's Field of Interest
may be changed at the sole discretion of the Company from time to time."
The definition of "Change in Control" shall be added as Section
14(e) of the Agreement as follows:
" 'Change in Control' means the occurrence of any of the
following events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender
or exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires more than 50% of
the issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all
of the Company's assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or
Section 13 (d) of the Securities Exchange Act of 1934 acquires more than
50% of the combined voting power of Company's issued and outstanding
voting securities entitled to vote in the election of the Board."
3
<PAGE> 4
VII. This Amendment shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VIII. Except as modified by this Second Amendment, the Agreement
remains in full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment as of the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
----------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Manfred Weigele, Ph.D.
-------------------------------------------
Manfred Weigele, Ph.D.
4
<PAGE> 1
EXHIBIT 10.33
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of
January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Michael Gilman, Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of March 25, 1994 (the "Agreement"), and the parties hereto desire to
further amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of
Section 1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Senior Vice President, Drug Discovery and
Scientific Director, ARIAD Gene Therapeutics, Inc.; as of March 11,
1997, the title shall be Executive Vice President and Chief Scientific
Officer, ARIAD Pharmaceuticals, Inc. and Scientific Director, ARIAD Gene
Therapeutics, Inc."
II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is
hereby extended to December 31, 2000 (the "Term"), unless sooner
terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED,
however, that this Agreement shall automatically be renewed for
successive one-year terms (the Term and, if the period of employment is
so renewed, such additional period(s) of employment are collectively
referred to herein as the "Term")
<PAGE> 2
unless terminated by written notice given by either party to the other
at least 90 days prior to the end of the applicable Term."
III. COMPENSATION. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $215,000 per annum during
the first year of the Term and increased each year thereafter, by
amounts, if any, to be determined by the Board of Directors of the
Company (the "Board") in its sole discretion, payable in equal
semi-monthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations."
IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or
more of the following shall occur:
(a) a material breach of the terms of this Agreement
by the Company and such breach continues for 30 days after the Employee
gives the Company written notice of such breach;
(b) the Company shall make a general assignment for
benefit of creditors; or any proceeding shall be instituted by the
Company seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking entry of an order for relief of the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of
its property or the Company shall take any corporate action to authorize
any of the actions set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an
action or proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or
for any other relief under the Federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and remain undismissed or unstayed for a
period of 30 days;
(d) a receiver, assignee, liquidator, trustee or
similar officer for the Company or for all or any part of its property
shall be appointed involuntarily, or
(e) a Change in Control as defined in Section 14."
V. SEVERANCE. Section 6 is hereby replaced and amended in its
entirety as follows:
2
<PAGE> 3
"6. If (i) the Company terminates this Agreement without
Cause or (ii) the Employee terminates this Agreement pursuant to Section
5.1(a), then: (1) except in the case of death or disability, the Company
shall continue to pay Employee his current salary for the remaining
period of the applicable Term; (2) all options granted pursuant to this
Agreement that would have vested during the Term shall vest immediately
prior to such termination; (3) the Company shall continue to provide all
benefits subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards
and similar equity rights granted to the Employee shall immediately vest
and remain fully exercisable through their original term with all
rights; and (ii) the Company shall continue to pay Employee his current
salary for the shorter of (a) six months, or (b) the remaining period of
the applicable Term."
VI. DEFINITIONS. The definition of the Company's "Field of Interest"
in Section 14(b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery,
development and commercialization of pharmaceutical products based on
(a) intervention in signal transduction pathways; (b) gene and cell
therapy; and (c) functional genomics. The Company's Field of Interest
may be changed at the sole discretion of the Company from time to time."
The definition of "Change in Control" shall be added as Section
14(e) of the Agreement as follows:
" 'Change in Control' means the occurrence of any of the
following events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender or
exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires more than 50% of
the issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all
of the Company's assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or
Section 13 (d) of the Securities Exchange Act of 1934 acquires more than
50% of the combined voting power of Company's issued and outstanding
voting securities entitled to vote in the election of the Board."
3
<PAGE> 4
VII. This Amendment shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VIII. Except as modified by this Amendment, the Agreement remains in
full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
----------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Michael Gilman, Ph.D.
-------------------------------------------
Michael Gilman, Ph.D.
4
<PAGE> 1
EXHIBIT 10.34
CONSULTING AGREEMENT FOR MEMBERS
OF THE ARIAD BOARD OF SCIENTIFIC AND MEDICAL ADVISORS
This Agreement is made between ARIAD Pharmaceuticals, Inc. (the "Company") and
Joan S. Brugge, Ph.D. (the "Consultant") and shall be effective as of July 1,
1997 (the "Effective Date").
The Consultant has been involved in scientific research in fields of
particular interest to the Company. The Company wishes to retain the Consultant
in a consulting capacity and as a Co-chair of the Board of Scientific and
Medical Advisors of the Company, and the Consultant desires to perform such
consulting services. The duties of the Consultant will be within the guidelines
of the Harvard University Faculty of Medicine Policy on Conflicts of Interest
and Commitment, as well as other regulations and policies of Harvard University.
Accordingly, the parties agree as follows:
1. SERVICES.
1.1 The Consultant will advise the Company's management,
employees and agents, at reasonable times, in the Company's field of interest.
The Company's field of interest is: the discovery, development and
commercialization of pharmaceutical products based on (a) intervention in signal
transduction pathways; (b) gene and cell therapy; and (c) functional genomics
(the Company's "Field of Interest"). The Company's Field of Interest may be
changed at the sole discretion of the Company from time to time.
1
<PAGE> 2
1.2 Consultation may be sought by the Company over the
telephone, in person at the Consultant's office, or through written
correspondence, and will involve reviewing activities and developments in the
Company's Field of Interest. In addition, the Consultant will make herself
available in person at the Company's offices or other reasonable locations. The
Consultant's time commitment shall be sufficient for the Consultant to meet
objectives established by the Company and agreed upon by the parties. The
Consultant also will co-chair the Board of Scientific and Medical Advisors of
the Company, will be a member of the Board of Directors of the Company (subject
to nomination by the Board of Directors and election by the shareholders of the
Company), and agrees to use her best efforts to attend all such meetings. Time
spent at such meetings will accrue against the Consultant's time commitment
hereunder.
1.3 The position of Co-chair of the Board of Scientific and
Medical Advisors of the Company is not an executive officer position of the
Company and does not include direct responsibilities for the operation of a
material segment of the Company's business.
1.4 The Consultant acknowledges that in her capacity as a
member of the Board of Directors of the Company, she will have fiduciary
responsibilities to the Company and its shareholders which extend beyond, and
are independent of, her obligations as set forth in this Agreement.
2. CASH COMPENSATION. As consideration for the consulting services
provided by the Consultant, the Company shall pay to the Consultant the amount
of $95,000 per year. The annual fee shall be paid in installments of $7,917 per
month. Reasonable expenses of the Consultant
3
<PAGE> 3
incurred at the request of the Company will be reimbursed promptly by the
Company, subject to customary verification.
3. STOCK OPTIONS. All options for shares of Common Stock of the
Company and its subsidiary, ARIAD Gene Therapeutics, Inc., previously granted to
the Consultant, shall continue to vest and be exerciseable through their
original terms, subject to the terms and conditions of the stock option plans
for employees and consultants of the Company and its subsidiary.
4. TERM. The term of this Agreement will begin on the Effective
Date of this Agreement and will end at the end of the calendar quarter in which
the fifth anniversary of this Agreement occurs or upon earlier termination as
provided below (the "Term"). This Agreement may be terminated at any earlier
time prior to the fifth anniversary hereof by either party with at least 30 days
written notice. The Term will be automatically renewed for successive one-year
periods, unless either party provides written notice at least 30 days prior to
the end of the Term that such party does not wish to renew this Agreement.
5. CERTAIN OTHER CONTRACTS.
5.1 As of the Effective Date, the Consultant will be
employed by an academic or research institution (the "Institution"). The Company
recognizes that the Consultant's primary responsibility will be to the
Institution. In connection with such employment, the Consultant may enter into
certain agreements with the Institution relating to ownership of intellectual
property rights, conflicts of interest and other matters, and will be
3
<PAGE> 4
subject to certain policy statements of the Institution (collectively, the
"Institutional Agreement"). If any provision of this Agreement is in conflict
with the Institutional Agreement, then the Institutional Agreement will govern
to the extent of such conflict, and the conflicting provisions of this Agreement
will not apply.
5.2 The Consultant will not disclose to the Company any
information that the Consultant is obligated to keep secret pursuant to a
confidentiality agreement with a third party, and nothing in this Agreement will
impose any obligation on the Consultant to the contrary. If any provision of
this Agreement is in conflict with any such confidentiality agreement, then such
confidentiality agreement will govern to the extent of such conflict, and the
conflicting provisions of this Agreement will not apply.
5.3 The consulting work performed hereunder will not be
conducted on time that is required to be devoted to the Institution or any other
third party. The Consultant shall not use the funding, resources and facilities
of the Institution or any third party to perform consulting work hereunder and
shall not perform the consulting work hereunder in any manner that would give
the Institution or any third party rights to the product of such work.
5.4 The Consultant has disclosed and, during the Term, will
disclose to the Chief Executive Officer of the Company any potential conflicts
between this Agreement and other contracts binding the Consultant.
6. EXCLUSIVE SERVICES DURING THE TERM. Subject to written waivers
that may be provided by the Company upon request, the Consultant agrees that (i)
during the Term of this Agreement and (ii) if the Consultant terminates this
Agreement pursuant to the provisions contained in Section 4,
4
<PAGE> 5
for three (3) months after such termination, she will not (a) provide any
services as an employee, director, advisor, or consultant to any other business
or commercial entity in the biotechnology and/or pharmaceutical fields or (b)
participate in the formation of any business or commercial entity in the
biotechnology and/or pharmaceutical fields. The foregoing restriction shall not
prohibit the Institution or the Consultant's laboratory from performing research
for a biotechnology and/or pharmaceutical company pursuant to a sponsored
research agreement, so long as Consultant does not perform services for the
sponsor other than as required by the sponsored research agreement.
7. DIRECTION OF PROJECTS AND INVENTIONS TO THE COMPANY. Subject to
the Consultant's obligations under the Institutional Agreement and
confidentiality agreements with third parties, during the Term of this
Agreement, the Consultant will use reasonable efforts to disclose to the Chief
Executive Officer of the Company, on a confidential basis, technology and
product opportunities which come to the attention of the Consultant in the
Company's Field of Interest, and any invention, improvement, discovery, process,
formula or method or other intellectual property relating to or useful in, the
Company's Field of Interest, whether or not patentable, whether or not
copyrightable.
8. INVENTIONS DISCOVERED BY THE CONSULTANT WHILE PERFORMING
SERVICES HEREUNDER. The Consultant will promptly disclose to the Chief Executive
Officer of the Company any invention, improvement, discovery, process, formula,
or method or other intellectual property, whether or not patentable, whether or
not copyrightable (collectively,
5
<PAGE> 6
"Invention") made, conceived or first reduced to practice by the Consultant,
either alone or jointly with others, while performing services hereunder. The
Consultant hereby assigns to the Company all of her right, title and interest in
and to any such Inventions. The Consultant will execute any documents necessary
to perfect the assignment of such Inventions to the Company and to enable the
Company to apply for, obtain, and enforce patents or copyrights in any and all
countries on such Inventions. The Consultant hereby irrevocably designates the
Chief Patent Counsel of the Company as her agent and attorney-in-fact to execute
and file any such document and to do all lawful acts necessary to apply for and
obtain patents and copyrights, and to enforce the Company's rights under this
paragraph. This Section 8 will survive the termination of this Agreement.
9. CONFIDENTIALITY.
9.1 The Consultant acknowledges that, during the course of
performing her services hereunder, the Company will be disclosing information to
the Consultant related to the Company's Field of Interest, Inventions, projects
and business plans, as well as other information ("Confidential Information").
The Consultant acknowledges that the Company's business is extremely
competitive, dependent in part upon the maintenance of secrecy, and that any
disclosure of the Confidential Information would result in serious harm to the
Company.
9.2 The Consultant agrees that the Confidential Information
only will be used by the Consultant in connection with consulting activities
hereunder, and will not be used in any way that is detrimental to the Company.
6
<PAGE> 7
9.3 The Consultant agrees not to disclose, directly or
indirectly, the Confidential Information to any third person or entity, other
than representatives or agents of the Company. The Consultant will treat all
such information as confidential and proprietary property of the Company.
9.4 The term "Confidential Information" does not include
information that (a) is or becomes generally available to the public other than
by disclosure in violation of this Agreement, (b) was within the relevant
party's possession prior to being furnished to such party, (c) becomes available
to the relevant party on a nonconfidential basis or (d) was independently
developed by the relevant party without reference to the information provided by
the Company.
9.5 The Consultant may disclose any Confidential Information
that is required to be disclosed by law, government regulation or court order.
If disclosure is required, the Consultant will give the Company advance notice
so that the Company may seek a protective order or take other action reasonable
in light of the circumstances.
9.6 Upon termination of this Agreement, the Consultant will
promptly return to the Company all materials containing Confidential
Information, as well as data, records, reports and other property, furnished by
the Company to the Consultant or produced by the Consultant in connection with
services rendered hereunder. Notwithstanding such return, the Consultant shall
continue to be bound by the terms of the confidentiality provisions contained in
this Section 9 for a period of three years after the termination of this
Agreement.
10. FREEDOM TO PUBLISH.
7
<PAGE> 8
10.1 The Company acknowledges the Consultant's obligation to
disseminate new knowledge and research findings. Notwithstanding the
confidentiality provisions, or any other provision, of this Agreement, the
Consultant may publish the results of the Consultant's work performed in the
Company's Field of Interest pursuant to this Agreement.
10.2 The Consultant acknowledges that publication or oral
disclosure of any Invention or other work prior to filing for patent or
copyright protection could result in the complete loss of any commercial value
of the Consultant's research to the Institution, the Company, and/or the
Consultant, as the case may be. The Consultant agrees to provide the Company
with prompt notice of the intention to publish, or disclose, any work directly
involving the Company or services provided under this Agreement. A draft of the
relevant paper, chapter, report, presentation or other document (except
scientific abstracts), which will be held in confidence by the Company, will be
provided to the Company at least 60 days prior to publication or disclosure, but
no later than the date of initial submission, in order to allow the Company to
have relevant patent or copyright applications prepared, if appropriate. All
relevant scientific abstracts (e.g., research summaries of less than 250 words)
will be provided to the Company at least seven days prior to submission for
publication or presentation.
11. USE OF NAME. It is understood that the name of the Consultant
and the Institution will appear in disclosure documents required by securities
laws, and in other regulatory and administrative filings in the ordinary course
of the Company's business. It is also understood that the name of the Consultant
and the Institution will appear in connection with
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<PAGE> 9
the Company's Board of Scientific and Medical Advisors. The above-described uses
will be deemed to be non-commercial uses. The name of the Consultant and the
Institution will not be used for any commercial purpose without the Consultant's
consent.
12. NO CONFLICT; VALID AND BINDING. The Consultant represents that
neither the execution of this Agreement nor the performance of the Consultant's
obligations under this Agreement (as modified to the extent required by Section
5) will result in a violation or breach of any other agreement by which the
Consultant is bound. The Company represents that this Agreement has been duly
authorized and executed and is a valid and legally binding obligation of the
Company, subject to no conflicting agreements.
13. NOTICES. Any notice provided under this Agreement shall be in
writing and shall be deemed to have been effectively given when delivered
personally, sent by private express mail service (such as Federal Express), or
sent by regular mail (and a return receipt is received) to the following
address: In the case of the Company:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, Massachusetts 02139
Attn.: Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
In the case of the Consultant:
Joan S. Brugge, Ph.D.
50 Sarah Way
Concord, Massachusetts 01742
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<PAGE> 10
or to such other address as may have been designated by the Company or the
Consultant by notice to the other given as provided herein.
14. INDEPENDENT CONTRACTOR; WITHHOLDING. The Consultant will at all
times be an independent contractor, and as such will not have authority to bind
the Company. The Consultant recognizes that no amount will be withheld from her
compensation for payment of any Federal, state or local taxes and that the
Consultant has sole responsibility to pay such taxes, if any, and file such
returns as shall be required by applicable laws and regulations.
15. ASSIGNMENT. Due to the personal nature of the services to be
rendered by the Consultant, the Consultant may not assign this Agreement. The
Company may assign all rights and liabilities under this Agreement (as a group
with other similar agreements with members of the Board of Scientific and
Medical Advisors) to a subsidiary or an affiliate or to a successor to all or a
substantial part of its business and assets without the consent of the
Consultant. Subject to the foregoing, this Agreement will inure to the benefit
of and be binding upon each of the heirs, assigns and successors of the
respective parties.
16. SEVERABILITY. If any provision of this Agreement shall be
declared invalid, illegal or unenforceable, such provision shall be severed and
the remaining provisions shall continue in full force and effect.
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<PAGE> 11
17. REMEDIES. The Consultant acknowledges that the Company would
have no adequate remedy at law to enforce Sections 6, 8 and 9 hereof. In the
event of a violation by the Consultant of such Sections, the Company shall have
the right to seek injunctive relief, as well as any other relevant damages.
18. GOVERNING LAW; ENTIRE AGREEMENT; AMENDMENT. This agreement shall
be governed by the laws of the State of New York applicable to agreements made
and to be performed within such State, represents the entire understanding of
the parties with regard to the matters covered by this Agreement, supersedes all
prior agreements between the parties, EXCEPT Sections 8 (Confidentiality), 9
(Inventions Discovered by the Employee While Performing Services Hereunder), 10
(Non-Competition and Non-Solicitation), and 11 (Indemnification) of the
Employment Agreement between the Consultant and the Company dated as of January
3, 1992 and amended as of March 2, 1994, and may only be amended in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written below.
ARIAD PHARMACEUTICALS, INC.
/s/ Harvey J. Berger
- -----------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
CONSULTANT
/s/ Joan S. Brugge, Ph.D.
- -----------------------------------------
Joan S. Brugge, Ph.D.
July 1, 1997
Date
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<PAGE> 1
EXHIBIT 10.35
ARIAD PHARMACEUTICALS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1997 Employee Stock
Purchase Plan (the "Plan") of ARIAD Pharmaceuticals, Inc. (the "Company").
1. PURPOSE. The purpose of the Plan is to provide Employees of the
Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company, or a
committee of the Board of Directors named by the Board to administer
the Plan.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock, $0.001 par value, of the
Company.
(d) "COMPANY" shall mean ARIAD Pharmaceuticals, Inc., a Delaware
corporation.
(e) "COMPENSATION" shall mean all compensation that is taxable income
for federal income tax purposes, including, payments for overtime,
shift premium, incentive compensation, incentive payments, bonuses,
commissions and other compensation.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Company,
provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by
contract or statute.
<PAGE> 2
(g) "CONTRIBUTIONS" shall mean all amounts credited to the account of a
participant pursuant to the Plan.
(h) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.
(i) "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least 20 hours per week and more than
five months in a calendar year by the Company or one of its
Designated Subsidiaries.
(j) "EXERCISE DATE" shall mean the last day of each Offering Period of
the Plan.
(k) "OFFERING DATE" shall mean the first business day of each Offering
Period of the Plan, except that in the case of an individual who
becomes an eligible Employee after the first business day of an
Offering Period but on or prior to the first business day of the
last calendar quarter of such Offering Period, the term "Offering
Date" shall mean the first business day of the calendar quarter
coinciding with or next succeeding the day on which that individual
becomes an eligible Employee.
Options granted after the first business day of an Offering Period
will be subject to the same terms as the options granted on the
first business day of such Offering Period except that they will
have a different grant date (thus, potentially, a different exercise
price) and, because they expire at the same time as the options
granted on the first business day of such Offering Period, a shorter
term.
(l) "OFFERING PERIOD" shall mean a period of three months.
(m) "PLAN" shall mean this ARIAD Pharmaceuticals, Inc. 1997 Employee
Stock Purchase Plan.
(n) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
<PAGE> 3
(a) Any person who has been continuously employed as an Employee for
three (3) months as of the Offering Date of a given Offering
Period shall be eligible to participate in such Offering Period
under the Plan, provided that such person was not eligible to
participate in such
<PAGE> 4
Offering Period as of any prior Offering Date, and further, subject
to the requirements of paragraph 5(a) and the limitations imposed by
Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section
424(d) of the Code) would own stock and/or hold outstanding options
to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the
Company or of any Subsidiary of the Company, or (ii) which permits
his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company
and its Subsidiaries to accrue at a rate which exceeds $25,000 of
fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is
outstanding at any time. Any option granted under the Plan shall be
deemed to be modified to the extent necessary to satisfy this
paragraph (b).
4. OFFERING PERIODS. The Plan shall be implemented by a series of
Offering Periods, with a new Offering Period commencing on July 1,
October 1, January 1 and April 1 of each year (or at such other time
or times as may be determined by the Board of Directors). The
initial Offering Period shall commence at a time to be determined by
the Board. The Plan shall continue until terminated in accordance
with paragraph 19 hereof. The Board of Directors of the Company
shall have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings without
stockholder approval if such change is announced at least 15 days
prior to the scheduled beginning of the first Offering Period to be
affected. In addition, Employees shall not be entitled to enroll in
the Plan or exercise any options granted under the Plan during any
period in which the Company has restricted the purchase or sale of
its securities by its Employees.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing an Enrollment Form provided by the Company and filing it
with the Company prior to the applicable Offering Date, unless a
later time for filing the Enrollment Form is set by the Board for
all eligible Employees with respect to a given Offering Period. The
Enrollment Form shall set forth the percentage of the participant's
Compensation (which shall be not less than 1% and not more than 10%)
to be paid as Contributions pursuant to the Plan.
<PAGE> 5
(b) Payroll deductions shall commence on the first payroll following the
Offering Date and shall end on the last payroll paid on or prior to
the Exercise Date of the Offering Periods to which the Enrollment
Form is applicable, unless sooner terminated by the participant as
provided in paragraph 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) The participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than 1% and
not more than 10% of such participant's Compensation on each such
payday; provided that the aggregate of such payroll deductions
during the Offering Period shall not exceed 10% of the participant's
aggregate Compensation during said Offering Period. All payroll
deductions made by a participant shall be credited to his or her
account under the Plan. A participant may not make any additional
payments into such account.
(b) A participant may discontinue his or her participation in the Plan
as provided in paragraph 10, or, on one occasion only during the
Offering Period, may decrease, but may not increase, the rate of his
or her Contributions during the Offering Period by completing and
filing with the Company a new Enrollment Form within the ten-day
period immediately preceding the second calendar quarter during the
Offering Period. The change in rate shall be effective as of the
beginning of the calendar quarter following the date of the filing
of the new subscription agreement.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and paragraph 3(b) herein, a
participant's payroll deductions may be decreased to 0% at such time
during any Offering Period which is scheduled to end during the
current calendar year that the aggregate of all payroll deductions
accumulated with respect to such Offering Period and any other
Offering Period ending within the same calendar year equals $21,250.
Payroll deductions shall recommence at the rate provided in such
participant's Enrollment Form at the beginning of the first Offering
Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in paragraph 10.
<PAGE> 6
7. GRANT OF OPTION.
(a) On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date of such Offering Period a number of
shares of the Common Stock determined by dividing such Employee's
Contributions accumulated prior to such Exercise Date and retained
in the participant's account as of the Exercise Date by the lower of
(i) 85% of the fair market value of a share of Common Stock on the
Offering Date, or (ii) 85% of the fair market value of a share of
the Common Stock on the Exercise Date; provided however, that such
purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. The fair market value of a share of the Common
Stock shall be determined as provided in Section 7(b) herein.
(b) The option price per share of the shares offered in a given Offering
Period shall be the lower of (i) 85% of the fair market value of a
share of the Common Stock on the Offering Date, or (ii) 85% of the
fair market value of a share of the Common Stock on the Exercise
Date. The fair market value of the Common Stock on a given date
shall be determined by the Board based on the closing sale price of
the Common Stock for such date (or, in the event that the Common
Stock is not traded on such date, on the immediately preceding
trading date), as reported by the National Association of Securities
Dealers Automated Quotation (NASDAQ) National Market System or, if
such price is not reported, the mean of the bid and asked prices per
share of the Common Stock as reported by NASDAQ or, in the event the
Common Stock is listed on a stock exchange, the fair market value
per share shall be the closing sale price on such exchange on such
date (or, in the event that the Common Stock is not traded on such
date, on the immediately preceding trading date), as reported in The
Wall Street Journal.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of
shares will be exercised automatically on the Exercise Date of the
Offering Period, and the maximum number of full shares subject to
option will be purchased for him or her at the applicable option
price with the accumulated Contributions in his or her account. If a
fractional number of shares results, then such number shall be
rounded down to the next whole number and any unapplied cash shall
be carried forward to the next Exercise Date, unless the participant
requests a cash payment. The shares purchased upon exercise of an
option hereunder
<PAGE> 7
shall be deemed to be transferred to the participant on the Exercise
Date. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. DELIVERY. Upon the written request of a participant, certificates
representing the shares purchased upon exercise of an option will be
issued as promptly as practicable after the Exercise Date of each
Offering Period to participants who wish to hold their shares in
certificate form. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him or her
of shares at the termination of each Offering Period shall be
carried forward to the next Exercise Date unless the participant
requests a cash payment.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any
time prior to the Exercise Date of the Offering Period by giving
written notice to the Company. All of the participant's
Contributions credited to his or her account will be paid to him or
her promptly after receipt of his or her notice of withdrawal and
his or her option for the current period will be automatically
terminated, and no further Contributions for the purchase of shares
will be made during the Offering Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of the Offering Period for any
reason, including retirement or death, the Contributions credited to
his or her account will be returned to him or her or, in the case of
his or her death, to the person or persons entitled thereto under
paragraph 14, and his or her option will be automatically
terminated.
(c) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least 20 hours per week during the
Offering Period in which the Employee is a participant, he or she
will be deemed to have elected to withdraw from the Plan and the
Contributions credited to his or her account will be returned to him
or her and his or her option terminated.
(d) A participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in a succeeding
offering or in any similar plan which may hereafter be adopted by
the Company.
<PAGE> 8
11. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 500,000 shares, subject
to adjustment upon changes in capitalization of the Company as
provided in paragraph 18. If the total number of shares which would
otherwise be subject to options granted pursuant to Section 7(a)
hereof on the Offering Date of an Offering Period exceeds the number
of shares then available under the Plan (after deduction of all
shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the
shares remaining available for option grant in as uniform a manner
as shall be practicable and as it shall determine to be equitable.
Any amounts remaining in an Employee's account not applied to the
purchase of stock pursuant to this Section 12 shall be refunded on
or promptly after the Exercise Date. In such event, the Company
shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall
similarly reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
13. ADMINISTRATION. The Board shall supervise and administer the Plan
and shall have full power to adopt, amend and rescind any rules
deemed desirable and appropriate for the administration of the Plan
and not inconsistent with the Plan, to construe and interpret the
Plan, and to make all other determinations necessary or advisable
for the administration of the Plan.
<PAGE> 9
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's
account under the Plan in the event of such participant's death
subsequent to the end of the Offering Period but prior to delivery
to him or her of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event
of such participant's death prior to the Exercise Date of the
Offering Period. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In
the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to
any one or more dependents or relatives of the participant, or if no
spouse, dependent or relative is known to the Company, then to such
other person as the Company may designate.
15. TRANSFERABILITY. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the
laws of descent and distribution or as provided in paragraph 14
hereof) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.
16. USE OF FUNDS. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such
Contributions.
17. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating
<PAGE> 10
Employees promptly following the Exercise Date, which statements
will set forth the amounts of Contributions, the per share purchase
price, the number of shares purchased and the remaining cash
balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the number of shares of
Common Stock covered by each option under the Plan which has not yet
been exercised and the number of shares of Common Stock which have
been authorized for issuance under the Plan but have not yet been
placed under option (collectively, the "Reserves"), as well as the
price per share of Common Stock covered by each option under the
Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares
of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of shares of Common
Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by
the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with
or into another corporation, each option under the Plan shall be
assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its
sole discretion and in lieu of such assumption or substitution, to
shorten the Offering Period then in progress by setting a new
Exercise Date (the "New Exercise Date"). If the Board shortens the
Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board
shall notify each participant in writing, at least ten days prior to
the New Exercise Date, that the Exercise Date for his or her option
has been changed to the New Exercise Date and that his or her option
<PAGE> 11
will be exercised automatically on the New Exercise Date, unless
prior to such date he or she has withdrawn from the Offering Period
as provided in paragraph 10. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the option confers the right
to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each
share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not
solely common stock of the successor corporation or its parent (as
defined in Section 424(e) of the Code), the Board may, with the
consent of the successor corporation, provide for the consideration
to be received upon exercise of the option to be solely common stock
of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common
Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well
as the price per share of Common Stock covered by each outstanding
option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other
increases or reductions of shares of its outstanding Common Stock,
and in the event of the Company being consolidated with or merged
into any other corporation.
19. AMENDMENT OR TERMINATION. The Board of Directors of the Company may
at any time terminate or amend the Plan. Except as provided in
paragraph 18, no such termination may affect options previously
granted, nor may an amendment make any change in any option
theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any
applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as so required.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the
<PAGE> 12
Company at the location, or by the person, designated by the Company
for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply
with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules
and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall
be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only
for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the
Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any
Employee or other optionee the right to continue in the employment
of the Company or any Subsidiary, or affect any right which the
Company or any Subsidiary may have to terminate the employment of
such Employee or other optionee.
23. RIGHTS AS A STOCKHOLDER. Neither the granting of an option nor a
deduction from payroll shall constitute an Employee the owner of
Shares covered by an option. No optionee shall have any right as a
stockholder unless and until an option has been exercised, and the
Shares underlying the option have been registered in the Company's
share register.
24. TERM OF PLAN. The Plan became effective upon its adoption by the
Board of Directors on March 11, 1997 and shall continue in effect
for a term of 20 years unless sooner terminated under paragraph 19.
25. APPLICABLE LAW. This Plan shall be governed in accordance with the
laws of Delaware.
<PAGE> 1
EXHIBIT 10.36
AMENDMENT TO THE ARIAD PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN FOR EMPLOYEES AND CONSULTANTS (the "Plan")
Section 3 of the Plan is hereby amended to read as follows:
3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the adjustment
provisions of Paragraph 13 below, a maximum of 5,685,714 shares of Common Stock
(reduced by the number of shares of Common Stock then subject to, or issued with
respect to, options granted under the ARIAD Pharmaceuticals, Inc. 1991 Stock
Option Plan For Directors) may be made subject to options granted under the
Plan. If, and to the extent that, options granted under the Plan shall
terminate, expire or be canceled for any reason without having been exercised,
new options may be granted in respect of the shares covered by such terminated,
expired or canceled options. The granting and terms of such new options shall
comply in all respects with the provisions of the Plan.
Shares sold upon the exercise of any option granted under the Plan may be
shares of authorized and unissued Common Stock, shares of issued Common Stock
held in the Company's treasury, or both.
There shall be reserved at all times for sale under the Plan a number of
shares, of either authorized and unissued shares of Common Stock, shares of
Common Stock held in the Company's treasury, or both, equal to the maximum
number of shares which may be purchased pursuant to options granted or that may
be granted under the Plan.
<PAGE> 1
EXHIBIT 10.37
AMENDMENT TO THE ARIAD PHARMACEUTICALS, INC.
1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (the "Plan")
Section 3 of the Plan is hereby amended to read as follows
3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the adjustment
provisions of Paragraph 13 below, a maximum of 600,000 shares of Common Stock
may be made subject to options granted under the Plan. If, and to the extent
that, options granted under the Plan shall terminate, expire or be canceled for
any reason without having been exercised, new options may be granted in respect
of the shares covered by such terminated, expired or canceled options. The
granting and terms of such new options shall comply in all respects with the
provisions of the Plan.
Shares sold upon the exercise of any option granted under the Plan may be
shares of authorized and unissued Common Stock, shares of issued Common Stock
held in the Company's treasury or both.
There shall be reserved at all times for sale under the Plan a number of
shares, of either authorized and unissued shares of Common Stock, shares of
Common Stock held in the Company's treasury, or both, equal to the maximum
number of shares which may be purchased pursuant to options granted or that may
be granted under the Plan.
<PAGE> 1
EXHIBIT 10.38
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
-----------------------------------------------
THIS AMENDMENT is made as of June 27, 1997 by and between ARIAD
PHARMACEUTICALS, INC., a Delaware corporation (the "Borrower"); ARIAD
CORPORATION, a Delaware corporation and the wholly owned subsidiary of the
Borrower (the "Lessee Subsidiary"); ARIAD GENE THERAPEUTICS, INC., a Delaware
corporation which is controlled by the Borrower ("AGT" and, together with the
Lessee Subsidiary, the "Subsidiaries", the Borrower and the Subsidiaries being
referred to collectively herein as the "Companies"),; and BANKBOSTON, N.A., as
successor in interest to BAYBANK, N.A. (the "Bank").
RECITALS
--------
A. The Borrower, the Lessee Subsidiary and the Bank are parties to a
Loan and Security Agreement dated as of September 23, 1992, as amended by the
First Amendment to Loan and Security Agreement dated as of October 19, 1992, the
Second Amendment to Loan and Security Agreement dated as of June 10, 1994 and
the Third Amendment to Loan and Security Agreement dated as of March 7, 1996 (as
so amended and as hereafter amended, replaced, restated, supplemented, renewed
or otherwise modified from time to time, the "Loan Agreement"). Capitalized
terms used herein without definition have the meanings assigned to them in the
Loan Agreement.
B. The Advances made under SECTION 3.1 of the Loan Agreement in the
aggregate principal amount of $6,000,000, converted to a term loan as of
November 30, 1992. The last installment of principal due thereon, in the amount
of $100,000, is due and payable on July 1, 1997.
C. The Borrower and the Subsidiaries have requested that the Bank
provide additional term financing in the principal amount of $6,000,000,
maturing on July 1, 2002 but otherwise advanced on substantially the same terms
and conditions as the original Term Loan.
C. Subject to certain terms and conditions, including without
limitation the addition of AGT as a co-maker on the Note and as a party to the
Loan Agreement, the Bank is willing to provide such financing, as hereinafter
set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. AMENDMENTS TO LOAN AGREEMENT.
----------------------------
The Loan Agreement is hereby amended as follows:
<PAGE> 2
A. AGT ADDED AS A PARTY TO THE LOAN AGREEMENT. AGT, by its execution of
this Amendment on the date hereof, shall become, and hereby is, a party to the
Loan Agreement, in its capacity as a co-maker of the Note and a Subsidiary of
the Borrower. Ninety-Seven percent (97%) of the issued and outstanding capital
stock of AGT is owned by the Borrower, which controls AGT. The remaining shares
are owned by Leland Stanford, Jr. University and Harvard College. For all
purposes of the Loan Agreement and the other Loan Documents, AGT shall be bound
by all of the obligations heretofore applicable to ARIAD Corporation
(hereinafter referred to by amendment as the Lessee Subsidiary), except as to
those which relate specifically to the Lessee Subsidiary's activities as lessee
of the Leased Premises. Accordingly, all references to ARIAD Corporation in the
Loan Documents shall, except where the context requires otherwise, be deemed to
mean both the Lessee Subsidiary and AGT.
B. DEFINITIONS. The definitions of "Advance and Advances", "Note" and
"Termination Date" in Sections 1.23, 1.24 and 1.33, respectively, of the Loan
Agreement are amended to read, and new definitions of "AGT", "Bank",
"Companies", "Investment Properties", "Lessee Subsidiary", "Subsidiary" and
"Subsidiaries" and "New Term Loan" are added which read, as follows:
1.3. "Advance" and "Advances" shall each mean, from and after June 30,
1997, the New Term Loan.
1.3A. "AGT" shall mean ARIAD Gene Therapeutics, Inc. ,a Delaware
corporation of which the Borrower owns ninety-seven percent (97%) of the issued
and outstanding shares of capital stock and which is controlled by the Borrower.
1.4A. "Bank" shall, collectively, mean BankBoston, N.A., together with its
successors and assigns under SECTION 10.4.
1.5A "Company" and "Companies" shall mean the Borrower and the
Subsidiaries or, as the case may be, any one of them.
1.17A "Investment Property" shall mean securities and other property
included within the definition of "investment property" in the UCC.
1.21. "License Subsidiary" shall mean ARIAD Corporation, a Delaware
corporation of which the Borrower owns all of the issued and outstanding shares
of capital stock.
1.23A. "New Term Loan" shall mean the single term loan made by the Bank on
or about June 30, 1997 pursuant to Section 3.1A of this Agreement.
1.24. "Note" shall mean, collectively, the promissory note in the
principal amount of Six Million Dollars ($6,000,000) dated as of June 30, 1997,
jointly and severally executed by the Borrower and the Subsidiaries and
delivered to the Bank
2
<PAGE> 3
pursuant to Section 3.1A of this Agreement, as hereafter amended, restated,
supplemented, renewed or otherwise modified from time to time, together with any
and all replacements and substitutions therefor (whether in connection with
assignments by the Bank or otherwise).
1.32A. "Subsidiary" and "Subsidiaries" shall mean the wholly owned or
majority controlled subsidiaries of the Borrower from to time or, as the case
may be, any one of them.
1.33. "Termination Date" shall mean July 1, 2002.
C. NEW SECURITY FROM AGT.
1. ARTICLE 2 of the Loan Agreement is hereby amended by adding after the
word "Instruments" where it appears therein a comma and the words "Investment
Property", which defined term has been added to ARTICLE 1 by this Amendment.
2. Under ARTICLE 2 of the Loan Agreement the Borrower and the Lessee
Subsidiary have previously granted to the Bank a continuing security interest in
the Collateral described and defined therein. By operation of this Amendment the
references to ARIAD Corporation set forth therein now refer as well to AGT. In
order to give full effect to such amendment, each of the Borrower, the Lessee
Subsidiary and AGT hereby grants (or re-grants, as the case may be) to the Bank
a continuing security interest in all of such Company's now owned or hereafter
acquired properties, assets and rights of every name and nature, including
without limitation all now owned or hereafter acquired Collateral described in
paragraphs (a) through (o) of ARTICLE 2, as amended by this Amendment and after
giving effect to any amendments to the Patent Mortgage made as required
hereunder.
D. NEW TERM LOAN; CONDITIONS.
1. A new SECTION 3.1A is added after SECTION 3.1 of the Loan Agreement,
reading as follows:
3.1A. New Term Loan.
-------------
Subject to the terms and conditions set forth herein and in reliance on
the representations, warranties and covenants contained herein, the Bank agrees
to make an additional term loan (the "New Term Loan") to the Borrower on June
30, 1997. The New Term Loan shall be in the principal amount of $6,000,000, (a)
shall be used to make leasehold improvements at the Leased Premises and for
working capital and other general corporate purposes (including without
limitation the payment of the last $100,000 installment owed under the Advances
made under Section 3.1, which is due and payable on July 1, 1997), (b) shall be
payable jointly and severally by the Borrower and the Subsidiaries as provided
in Section 3.4, (c) shall be
<PAGE> 4
evidenced by the Note referred to in Section 3.5, (d) shall bear interest at the
rate provided in Section 3.8 and (e) shall otherwise be governed by all of the
terms and conditions and covenants of this Agreement applicable to Advances.
2. A new SECTION 3.2A is added after SECTION 3.2 of the Loan Agreement,
reading as follows:
3.2A. Conditions to the New Term Loan.
-------------------------------
Prior to the New Term Loan, and as a condition of the Borrower's right to
receive any proceeds thereof, there shall have been furnished to the Bank:
(a) A title certification satisfactory to the Bank with respect to the
Leased Premises, updating the certification provided by Perkins, Smith & Cohen
as of October 19, 1992 and showing that the Leasehold Mortgage, as amended by
the First Amendment to Mortgage recorded in connection with the New Term Loan,
is prior to all mortgages and other encumbrances other than those previously
approved by the Bank in connection with the original recording of the Leasehold
Mortgage, together with any and all related documents and other materials
requested by the Bank.
(b) New insurance certificates showing the coverage referred to in
SECTION 7.8(b), including evidence of a "lenders' loss payable" endorsement
obtained by the Borrower with respect to all policies.
E. AMORTIZATION OF TERM LOAN; INTEREST.
1. SECTION 3.4 of the Loan Agreement is amended to read in its entirety as
follows:
3.4. TERM LOAN REPAYMENT. The Advance shall be repaid, without set-off,
deduction or counterclaim, in sixty (60) monthly installments of $100,000,
beginning August 1, 1997 and ending July 1, 2002, on which date the outstanding
principal balance under the Note, together with all accrued and unpaid interest
and other charges under the Note and this Agreement, shall be due and payable in
full.
2. SECTION 3.7 of the Loan Agreement is amended to read as follows;
3.7. [Intentionally Deleted.]
2. SECTION 3.8 is amended by adding at the end thereof the following;
Interest on the Note shall be calculated, for each alternative rate, based
upon a 360-day year and actual day months.
4
<PAGE> 5
F. OTHER AMENDMENTS.
1. SECTION 7.13 of the Loan Agreement is amended by adding a new paragraph
(iv) at the end of subsection (c) thereof reading in its entirety as follows:
(iv) the Borrower's investments in Hoechst-ARIAD Genomics Center, LLC, a
Delaware limited liability company, made in accordance with the provisions of
Article III of the Operating Agreement of such limited liability company, as
originally executed as of March 18, 1997, provided, however, that, as of the
date of any such investment, and immediately after giving effect thereto, there
shall exist no Event of Default (as defined in Article 8) or any event or
condition that, but for the requirement that time elapse or notice be given, or
both, would constitute an Event of Default;
2. SECTION 7.21(e) of the Loan Agreement is amended by deleting from
subparagraph (ii) thereof the word "operating" where it appears after the word
"projected". The parties hereby confirm that the references in both
subparagraphs (i) and (ii) of such SECTION 7.21(e) to "projected cash
requirements" of the Borrower include any and all cash amounts needed from time
to time to fund investments in Hoechst-ARIAD Genomics Center, LLC.
3. ARTICLE 8 of the Loan Agreement is amended by adding after paragraph
(o) thereof, before the period, a semicolon, followed by the word "and" and the
following new paragraph (p):
(p) Hoechst-ARIAD Genomics Center, LLC (the "LLC") shall breach its
payment obligations under Section 3 of each of the Administrative Services
Agreement and the Scientific Research Services Agreement, each dated as of March
18, 1997 and among the LLC, the Borrower and Hoechst Marion Russel, Inc., in an
amount which, together with any other prior breaches under such Section, shall
exceed $1,000,000 in the aggregate.
3. SECTION 10. 4 of the Loan Agreement is amended to read in its entirety
as follows:
10.4. Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Subsidiaries and the Bank and their respective successors and
assigns, and all subsequent holders of the Note, the Advances or any portion
thereof.
(b) The Bank may assign its rights and interests under this Agreement,
the Note and the other Loan Documents and/or delegate its obligations hereunder
and thereunder, in whole or in part, and sell participations in the Note and the
Security Documents as security therefor, provided that:
5
<PAGE> 6
(i) Any such assignment and/or delegation made hereunder shall be
pursuant to an instrument of assignment and acceptance in form and
substance satisfactory to BankBoston, N.A. (which shall include, among
other matters, the payment of customary processing fees and restrictions
on reassignments and participations satisfactory to BankBoston, N.A.)
executed and delivered by the parties thereto. Upon such execution and
delivery, from and after the effective date specified in such assignment
and acceptance, (A) the assignee thereunder shall become a party hereto
and, to the extent provided in such assignment and acceptance, have the
rights and obligations of the Bank hereunder and (B) the assignor
thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement as to that portion of its
obligation being so assigned and delegated. Each such assignment and
acceptance shall be deemed to amend this Agreement to the extent, and only
to the extent, necessary to reflect the addition of the assignee as a
Bank.
(ii) Within ten (10) Business days after receipt of notice of any
such assignment, the Borrower and the Subsidiaries shall execute and
deliver to each of the assignor and assignee, in exchange for each such
surrendered promissory note a new promissory note and included within the
meaning of the term "Note", payable to the order of such assignor and such
assignee , respectively, in the amount necessary to reflect such party's
portion of the Advances, after giving effect to such assignment. Such new
Notes shall be dated the effective date of such assignment and acceptance
and shall otherwise be in substantially the form provided in this
Agreement. Canceled notes shall be returned to the Borrower upon the
execution and delivery of such new notes.
(iii) Neither the Borrower nor any Subsidiary may assign any of its
rights or delegate any of its duties or obligations hereunder or under the
Note or any other Loan Document.
4. EXHIBIT A to the Loan Agreement is deleted and the attached EXHIBIT
A substituted therefor.
G. SCHEDULES. In order to update the representations and warranties of
the Companies as set forth in ARTICLE 6 of the Loan Agreement, SCHEDULES 6.1,
6.2, 6.3(c), 6.4, 7.19 and 9.10 of the Loan Agreement are deleted and the
attached new SCHEDULES 6.1, 6.2, 6.3(c), 6.4, 7.19 and 9.10 are substituted
therefor.
III. WAIVER. The Lenders hereby waive the Event of Default arising under
paragraph (c) of ARTICLE 8 of the Loan Agreement from the fact that the Borrower
made its initial investments in Hoechst-ARIAD Genomics Center, LLC without the
Bank's written consent, in technical violation of the provisions of
6
<PAGE> 7
SECTION 7.13 of the Loan Agreement, The foregoing waiver is limited to its
express terms and shall not be deemed to extend to any other matters or
obligations under the Loan Documents. This Agreement shall constitute the entire
agreement between the Lenders, the Agent and the Borrower regarding such
waivers, and shall supersede any prior agreement or understanding, written or
oral, between the Borrower, the Agent and the Lenders related thereto.
IV. CONFIRMATION OF SECURITY. Each of the Borrower and the Lessee
Subsidiary hereby confirms that (1) the terms "Liability" and "Liabilities", as
defined in the Loan Agreement and the Pledge Agreement and the term
"Obligations", as defined in the Patent Mortgage, include the obligations of the
Companies under (a) the New Note referred to in SECTION V below and referred to
as the "Note" in the Loan Agreement, as amended hereby, and (b) the Master
Equipment Leasing Agreement dated as of December 21, 1995 and any other
equipment leasing or other agreements entered into from time to time between the
Companies or any of them and the Bank and (2) the term "Note", as used in each
of the Loan Documents, including the Leasehold Mortgage and the Patent Mortgage,
includes such New Note.
III. NO FURTHER AMENDMENTS. Except as specifically amended hereby, the
Loan Agreement, the Pledge Agreement, the Patent Mortgage and the Leasehold
Mortgage shall remain unmodified and in full force and effect and are hereby
ratified and affirmed in all respects, and the indebtedness of the Companies to
the Bank evidenced thereby and by the New Note is hereby reaffirmed in all
respects.
IV. CERTAIN REPRESENTATIONS. As a material inducement to the Bank to
enter into this Amendment, each of the Borrower, the Lessee Subsidiary and AGT
hereby represents and warrants to the Bank (which representations and warranties
shall survive the delivery of this Amendment), after giving effect to this
Amendment, as follows:
A. The execution and delivery of this Amendment, the Mortgage Amendment
(as defined below) and the New Note (as defined below) have been duly authorized
by all requisite corporate action on the part of each of the Companies.
B. The representations and warranties contained in Article 6 of the
Loan Agreement and in the other Loan Documents are true and correct in all
material respects on and as of the date of this Amendment as though made at and
as of such date. No material adverse change has occurred in the assets,
liabilities, financial condition, business or prospects of any Company from that
disclosed in the financial statements most recently furnished to the Bank. No
Event of Default has occurred and is continuing.
7
<PAGE> 8
C. None of the Companies is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
governmental instrumentality or other agency or any other person or entity other
than the Confirmation Agreement executed as of the date hereof by Forest City
Cambridge, Inc. in connection with or as a condition to the execution, delivery
or performance of this Amendment, the Mortgage Amendment or the New Note or
regarding the New Term Loan contemplated thereby.
D. Each of this Amendment, the Mortgage Amendment and the New Note
constitutes the legal, valid and binding obligation of the Companies,
enforceable against each of them in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors generally or the application of
principles of equity, whether in any action at law or proceeding in equity, and
subject to the availability of the remedy of specific performance or of any
other equitable remedy or relief to enforce any right thereunder.
V. CONDITIONS. The willingness of the Bank to agree to the foregoing is
subject to the satisfaction of the following conditions precedent and
subsequent:
A. On or before the date of this Amendment, the Companies shall have
executed and delivered to the Bank (or shall have caused to be executed and
delivered to the Bank by the appropriate persons) the following:
1. This Amendment;
2. The joint and several $6,000,000 Term Note of the Companies in
the form attached as EXHIBIT A hereto (as hereafter amended,
restated, supplemented, renewed or otherwise modified from time to
time, together with any and all replacements and substitutions
therefor (whether in connection with assignments by the Bank or
otherwise, the "New Note").
3. The First Amendment to Leasehold Mortgage of even date
herewith, together with the title certification and opinion required
by SECTION 3.2A.
4. The letter executed as of the date hereof by Forest City
Cambridge, Inc. with respect to the lessor's consent signed in
connection with the Mortgage.
5. True and complete copies of any required stockholders' and
directors' consents and/or resolutions, authorizing the execution
and delivery of such documents, certified by the Secretary of the
appropriate company;
8
<PAGE> 9
6. Certified copies of articles of incorporation and bylaws,
certificates of legal existence and good standing and such other
supporting documents and certificates as the Bank or its counsel may
reasonably request.
B. On or before the date of this Amendment, the Borrower shall have
delivered to the Bank the opinion of its counsel, Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo with respect to this Agreement and the other documents executed
in connection herewith, satisfactory in form and substance to the Bank.
C. On or before the date of this Amendment, the Borrower shall have
paid the Bank a non-refundable amendment fee in the amount of $60,000.
D. On or before July 14, 1997, the Companies shall have executed and
delivered to the Bank (or shall have caused to be executed and delivered to the
Bank by the appropriate persons) the following:
1. A Collateral Assignment of Leases and Rents with respect to
the Leased Premises.
2. A First Amendment to Lessor's Consent and Waiver, executed by
Forest City Cambridge, Inc.
3. UCC financing statements in proper form for filing with
respect to AGT.
4. Such other supporting documents and certificates with respect
to AGT or otherwise as the Bank or its counsel may reasonably
request.
VI. MISCELLANEOUS.
A. As provided in SECTION 10.8 of the Loan Agreement, the Borrower and
the Subsidiaries agree to reimburse the Bank upon demand for all reasonable fees
and disbursements of counsel to the Bank incurred in connection with the
preparation of this Amendment and the Note Amendment.
B. This Amendment shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
C. This Amendment may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts
hereof, all of which counterparts shall together constitute one and the same
agreement.
9
<PAGE> 10
D. The obligations of the Borrower and the Subsidiaries under this
Amendment and the Note (as such term is used in the Loan Agreement, as amended
hereby), shall be joint and several in nature.
10
<PAGE> 11
IN WITNESS WHEREOF, the Bank, the Borrower and the Subsidiaries have
caused this Amendment to be duly executed as a sealed instrument by their duly
authorized representatives, all as of the day and year first above written.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Executive Vice President
ARIAD CORPORATION
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Senior Vice President - Finance
ARIAD GENE THERAPEUTICS, INC.
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Vice President
BANKBOSTON, N.A.
By: /s/ Karen M. Kinsella,
-----------------------------------------
Karen M. Kinsella, Vice President
11
<PAGE> 12
EXHIBIT A TO EXHIBIT 10.38
SECURED TERM NOTE
-----------------
Boston, Massachusetts
$6,000,000 June 27, 1997
FOR VALUE RECEIVED, the undersigned, ARIAD PHARMACEUTICALS, INC., a
Delaware corporation (the "Pharmaceuticals"), ARIAD CORPORATION, a Delaware
corporation (the "Lessee Subsidiary") and ARIAD GENE THERAPEUTICS, INC., a
Delaware corporation ("AGT" and, collectively with Pharmaceuticals and the
Lessee Subsidiary, the "Makers"), hereby jointly and severally promise to pay to
the order of BANKBOSTON, N.A., having an address at 100 Federal Street, Boston,
Massachusetts 02110 (the "Bank"), the principal sum of Six Million Dollars
($6,000,000) or, if less, the aggregate unpaid principal amount of Advances made
hereunder by the Bank to Pharmaceuticals or any other Maker pursuant to that
certain Loan and Security Agreement dated as of September 23, 1992, as amended
by the First Amendment to Loan and Security Agreement dated as of October 19,
1992, the Second Amendment to Loan and Security Agreement dated as of June 10,
1994, the Third Amendment to Loan and Security Agreement dated as of March 7,
1996 and the Fourth Amendment to Loan and Security Agreement of even date
herewith (as so amended and as hereafter amended, replaced, restated,
supplemented, renewed or otherwise modified from time to time, the "Loan
Agreement") between the Makers and the Bank, together with interest on any and
all principal remaining unpaid hereunder from the date hereof until payment in
full, payable on the dates and at the interest rate or rates specified in the
Loan Agreement. Capitalized terms used in this Note without definition have the
meanings assigned to them in the Loan Agreement.
The aggregate principal amount outstanding hereunder shall be payable as
provided in the Loan Agreement. This Note may be prepaid in accordance with the
terms and provisions of the Loan Agreement without penalty or premium (other
than certain makewhole payments under SECTION 3.6 of the Loan Agreement).
All principal and interest hereunder are payable in lawful money of the
United States of America to the Bank at its address specified above in
immediately available funds as provided in the Loan Agreement on the date on
which such payment shall become due. Payments of principal and interest
hereunder which are not made by such date may be made by debiting any deposit
account(s), if any, in the name of the Makers, or any of them, with the Bank.
The Makers hereby irrevocably authorize the Bank to so debit such deposit
account(s).
The Makers, for themselves and their legal representatives, successors and
assigns, to the extent they may lawfully do so, hereby expressly waive
presentment,
<PAGE> 13
demand, protest, notice of protest, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption or
insolvency laws, and consent that the Bank may release or surrender, exchange or
substitute any personal property or other collateral security now held or which
may hereafter be held as security for the payment of this Note, and may extend
the time for payment or otherwise modify the terms of payment of any part or the
whole of the debt evidenced hereby to the extent provided in the Loan Agreement
without in any way affecting the liability of the Makers; provided that such
modifications do not increase the obligations hereunder.
This Note is the "Note" referred to in and is entitled to the benefits of
the Loan Agreement (including Schedules thereto) and all other instruments and
agreements evidencing and/or securing the indebtedness hereunder, which Loan
Agreement and other instruments and agreements are hereby made part of this Note
and are deemed incorporated herein in full. The occurrence or existence of an
Event of Default shall constitute a default under this Note and shall, subject
to the provisions of the Loan Agreement, entitle the Bank to accelerate the
entire indebtedness hereunder and to take such other action as may be provided
for in the Loan Agreement or any other instrument or agreement evidencing and/or
securing this Note, all in accordance with the terms of the Loan Agreement.
All agreements between or among the Makers and the Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness or otherwise, shall the
amount paid or agreed to be paid for the use or forbearance of the indebtedness
evidenced hereby exceed the maximum amount which the Bank is permitted to
receive under applicable law. If, from any circumstances whatsoever, fulfillment
of any provision hereof or of the Loan Agreement, at the time performance of
such provision shall be due, shall involve exceeding such amount, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
validity and if, from any circumstances, the Bank should ever receive as
interest an amount which would exceed such maximum amount, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof,
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Note shall be governed by
such new law as of its effective date. This provision shall control every other
provision of all agreements between or among the Makers, or any of them, and the
Bank.
This Note and all transactions hereunder and/or evidenced herein shall be
governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
2
<PAGE> 14
If this Note shall not be paid when due and shall be placed by the holder
hereof in the hands of any attorney for collection, through legal proceedings or
otherwise, the Makers will pay reasonable attorneys' fees to the holder hereof
together with reasonable costs and expenses of collection, including, without
limitation, any such attorneys' fees, costs and expenses relating to any
proceedings with respect to the bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation of any of the Makers or any
party (other than the Bank) to any instrument or agreement securing this Note.
This Note shall be binding, jointly and severally, upon the Makers and
upon their heirs, successors, assigns and legal representatives and shall inure
to the benefit of the Bank and its successors, endorsees and assigns.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed under
seal by their duly authorized representative as of the date first above written.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Executive Vice President
ARIAD CORPORATION
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Senior Vice President - Finance
ARIAD GENE THERAPEUTICS, INC.
By: /s/ Jay R. LaMarche
-----------------------------------------
Jay R. LaMarche
Vice President
3
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