<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- - --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ARIAD PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
April 24, 1997
Dear ARIAD Stockholder:
You are invited to attend the Annual Meeting of Stockholders of ARIAD
Pharmaceuticals, Inc. to be held on Friday, June 20, 1997 at 10:00 a.m. Eastern
Time, at the Company's offices at 26 Landsdowne Street, Cambridge,
Massachusetts.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the specific business to be acted upon. We urge you to read this
information carefully.
Your Board of Directors unanimously believes that the election of its nominees
as directors and approval of all of the items described in the Proxy Statement
are in the best interests of ARIAD and its stockholders and, accordingly,
recommends a vote FOR Items 1 through 4 on the enclosed proxy card.
In addition to the formal business to be transacted, I will make a presentation
on important developments over the past year and our plans for the future.
Members of ARIAD's Board of Directors and management will be available as well
to respond to questions of interest to stockholders.
I look forward to greeting those ARIAD stockholders who are able to attend the
meeting. If you plan on attending, please contact Ms. Lisa Dini in our Investor
Relations Office at 617-494-0400, extension 252, and we will send you directions
to the Company's headquarters.
It is important that your shares be represented and voted, whether or not you
plan to attend the meeting. Therefore, please sign, date and promptly return the
enclosed proxy in the envelope provided.
On behalf of ARIAD and all of its employees and directors, I would like to thank
you for your continuing support.
Sincerely yours,
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
<PAGE> 3
ARIAD PHARMACEUTICALS, INC.
26 LANDSDOWNE STREET
CAMBRIDGE, MASSACHUSETTS 02139
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 1997
Notice is hereby given that the Annual Meeting of Stockholders of ARIAD
Pharmaceuticals, Inc. (the "Company") will be held on Friday, June 20, 1997 at
10:00 a.m., Eastern Time, at the Company's offices at 26 Landsdowne Street,
Cambridge, Massachusetts 02139, for the following purposes:
1. To elect four Class 3 Directors to hold office until the 2000
Annual Meeting of Stockholders and until their successors are
duly elected and qualified,
2. To consider and act upon a proposal to 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,
3. To consider and act upon a proposal to 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,
4. To consider and act upon a proposal to adopt and approve the
ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan,
and
5. To transact such other business as may properly come before the
Meeting and any adjournments or postponements thereof.
Holders of record of the Company's Common Stock and series B preferred stock
at the close of business on April 22, 1997 are entitled to notice of and to vote
at the Meeting.
For the ten-day period immediately prior to the Meeting, the list of
stockholders entitled to vote at the Meeting will be available for inspection at
the offices of the Company, located at 26 Landsdowne Street, Cambridge,
Massachusetts 02139, for such purposes as are set forth in the General
Corporation Law of the State of Delaware.
By Order of the Board of Directors
David T. Washburn
Secretary
Dated: April 24, 1997
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS. ACCORDINGLY, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PAID ENVELOPE. IF YOU SO CHOOSE, YOU MAY VOTE YOUR SHARES IN
PERSON AT THE ANNUAL MEETING.
<PAGE> 4
ARIAD PHARMACEUTICALS, INC.
26 LANDSDOWNE STREET
CAMBRIDGE, MASSACHUSETTS 02139
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 1997
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of proxy are furnished in connection with the solicitation of proxies by the
Board of Directors (the "Board of Directors" or the "Board") of ARIAD
Pharmaceuticals, Inc. (the "Company" or "ARIAD") to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on Friday,
June 20, 1997 at 10:00 a.m., Eastern Time, at the Company's offices at 26
Landsdowne Street, Cambridge, Massachusetts 02139 and at any adjournments or
postponements thereof for the purposes set forth in the Notice of Annual
Meeting. These proxy materials are being mailed to stockholders on or about
April 24, 1997.
Holders of the Company's common stock, par value $0.001 per share (the
"Common Stock"), and series B preferred stock, par value $0.01 per share (the
"Preferred Stock" and, collectively with the Common Stock, the "Voting Stock"),
who are entitled to vote are urged to sign the enclosed form of proxy and return
it promptly in the envelope enclosed for that purpose. Proxies will be voted in
accordance with such holders' directions. If no directions are given, proxies
will be voted "FOR" the election as Class 3 Directors of the nominees named
herein; "FOR" the amendment to the ARIAD Pharmaceuticals, Inc. 1991 Stock Option
Plan for Employees and Consultants (the "1991 Employee Plan") as described
herein; "FOR" the amendment to the ARIAD Pharmaceuticals, Inc. 1994 Stock Option
Plan for Non-Employee Directors (the "1994 Director Plan") as described herein;
"FOR" the approval of the adoption of the ARIAD Pharmaceuticals, Inc. 1997
Employee Stock Purchase Plan; and, as to any other business that may come before
the Meeting, in accordance with the judgment of the person or persons named in
the proxy. The Board of Directors knows of no other business to be presented at
the Meeting.
The proxy may be revoked at any time prior to the voting thereof by written
notice of revocation to the Company at 26 Landsdowne Street, Cambridge,
Massachusetts 02139, Attention: Jay R. LaMarche, Executive Vice President and
Chief Financial Officer. The proxy may also be revoked by submission to the
Company of a more recently dated proxy or by attending the Meeting and voting in
person. Shares as to which a broker indicates it has no discretion to vote, and
which are not voted, will be considered not present at the Meeting for the
purpose of determining the presence of a quorum and as not voted for the
approval of the proposals described in the immediately preceding paragraph.
Proxies marked as abstaining on any matter to be acted on by the stockholders
will be treated as present at the Meeting for purposes of determining a quorum
but will not be counted as votes cast on such matters. The votes of stockholders
present in person or represented by proxy at the Meeting will be tabulated by an
inspector of elections appointed by the Company. The inspector's duties include
determining the number of shares represented at the Meeting, counting all votes
and ballots and certifying the determination of the number of shares represented
and the outcome of the balloting.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors. The entire cost of soliciting these proxies, including the
costs of preparing, printing and mailing to stockholders this Proxy Statement
and accompanying materials, will be borne by the Company. The Company has
retained D.F. King & Co., Inc. ("D.F. King") to assist in the solicitation of
proxies. The Company anticipates that it will pay D.F. King approximately $4,000
in fees, plus reasonable out-of-pocket expenses. In addition to use of the
mails, proxies may be solicited personally or by telephone or otherwise by
officers, directors and employees of the Company, who will receive no additional
compensation for such activities. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of shares held of record by such institutions
and persons. Such parties will be reimbursed for their reasonable expenses
incurred in such connection.
<PAGE> 5
OUTSTANDING VOTING SECURITIES
Only holders of record of the Voting Stock at the close of business on April
22, 1997 are entitled to notice of and to vote at the Meeting. On that date,
there were 19,261,972 shares of Common Stock and 2,526,316 shares of Preferred
Stock outstanding. Each share of Common Stock and each share of Preferred Stock
is entitled to one vote. Accordingly, a total of 21,788,288 votes are entitled
to be cast on each matter submitted to a vote at the Meeting. One third of such
shares, present in person or represented by proxy at the Meeting, will
constitute a quorum for the transaction of business at the Meeting. Under the
Delaware General Corporation Law, the affirmative vote of a plurality of the
shares of Voting Stock cast by the stockholders present or represented by proxy
at the Meeting is required to elect the nominees for election as Class 3
Directors of the Company; thus, abstentions will have no effect on the outcome
of the vote for the election of directors. The affirmative vote of a majority of
the shares of Voting Stock entitled to vote present in person or represented by
proxy at the Meeting is required to approve the amendments to the 1991 Employee
Plan and to the 1994 Director Plan and to approve the 1997 Employee Stock
Purchase Plan. Under applicable Delaware law, in determining whether the
amendments to the 1991 Employee Plan and to the 1994 Director Plan and the
approval of the 1997 Employee Stock Purchase Plan have received the requisite
number of affirmative votes, abstentions will be counted and will have the same
effect as a vote against these items. Broker non-votes will not be considered
present at the Meeting and will have no effect on the vote.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1997, certain information
with respect to (i) each person (including any "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) known to the Company to own beneficially more than 5% of the Voting
Stock, (ii) each director of the Company, (iii) each executive officer named in
the Summary Compensation Table under "Executive Compensation" and (iv) all
directors and executive officers as a group. In accordance with the rules
promulgated by the Securities and Exchange Commission (the "Commission"), such
ownership includes shares currently owned, as well as shares that the named
person has the right to acquire within 60 days, including, but not limited to,
shares that the named person has the right to acquire through the exercise of
any option, warrant or right or through the conversion of a security.
Except as otherwise indicated, the stockholders listed in the table have sole
voting and investment powers with respect to the Voting Stock shown as
beneficially owned.
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENTAGE
--------------------------- ------------------ ----------------
BB Biotech A.G. 3,000,000 (1) 13.8%
c/o Bellevue Asset
Management A.G.
Grunstrasse 12 CH-6343
Rothreuz, Switzerland
Hoechst Marion Roussel, 2,526,316 (2) 11.6
Inc.
Route 202-206
Bridgewater, NJ 08807-0800
Harvey J. Berger, M.D. 1,362,247 (3) 6.2
Joan S. Brugge, Ph.D. 282,838 (4) 1.3
Jay R. LaMarche 256,606 (5) 1.2
Edgar Haber, M.D. 241,207 1.1
Manfred Weigele, Ph.D. 205,910 *
Charles C. Cabot III 199,214 (6) *
Michael Gilman, Ph.D. 20,750
Vaughn D. Bryson 52,500 *
John M. Deutch, Ph.D. 39,553 *
Philip Felig, M.D. 86,250 *
Frank J. Hoenemeyer 146,178 (7) *
Peter T. Joseph 115,267 (8) *
Joel S. Marcus 52,500 *
Sandford D. Smith 71,741 *
Raymond S. Troubh 81,785 *
All directors and 3,214,546 14.0
executive officers as a
group (15) persons
---------------------------
*Indicates less than one percent
3
<PAGE> 7
1) Such shares are held of record by Biotech Target S.A., a wholly owned
subsidiary of BB Biotech A.G.
2) Includes 2,526,316 shares of series B preferred stock convertible into
2,526,316 shares of Common Stock sold to Hoechst Marion Roussel, Inc. on
March 18, 1997 in connection with the joint venture agreement for
establishing the Hoechst-ARIAD Genomics Center, LLC.
3) Includes 535,714 shares of Common Stock and options to purchase 235,714
shares of Common Stock held of record by The Berger Family Trust and 8,928
shares of Common Stock held of record by The Wolk Family Trust. Wendy S.
Berger and Harvey J. Berger, as co-trustees of such trusts, have the right to
vote and dispose of the shares held by such trusts; however, in certain
circumstances, Wendy S. Berger as co-trustee will have sole voting power with
respect to the shares held by each such trust. Includes 126,000 shares held
by Edith Berger, Dr. Berger's mother, 40,892 shares held by Wendy S. Berger,
Dr. Berger's spouse, and 7,928 shares held by Dr. Berger's children.
4) Includes 9,696 shares held jointly by Dr. Brugge and her spouse, William R.
Brugge, M.D., and 7,273 shares held by her son.
5) Includes 6,696 shares and 44,000 shares issuable upon exercise of warrants
held by Carol B. LaMarche, Mr. LaMarche's spouse.
6) Includes 10,000 shares held by Mr. Cabot's children.
7) Includes options to purchase 68,393 shares held of record by the Frank J.
Hoenemeyer 1991 Family Trust.
8) Includes 6,696 shares held in the name of Rosecliff Profit Sharing Trust.
INFORMATION REGARDING DIRECTORS
The following table sets forth certain information for each of the four
nominees for election as directors at this Meeting, as well as for each of the
continuing directors whose terms expire either at the Annual Meeting of the
Stockholders in 1998 or 1999, or at such time as such director's successor is
duly elected and qualified.
NOMINEES AS CLASS 3 DIRECTORS
(TERM TO EXPIRE 2000)
Harvey J. Berger, M.D., 46, is the principal founder of ARIAD and has served
as the Company's Chairman of the Board, President and Chief Executive Officer
since April 1991. From 1986 to 1991, Dr. Berger held a series of senior
management positions at Centocor, Inc., a biotechnology company, most recently
as Executive Vice President and President of the Research and Development
Division. Dr. Berger currently is a Lecturer in the Division of Health Sciences
and Technology at the Massachusetts Institute of Technology and the Harvard
Medical School. He also has held senior academic and administrative appointments
at Emory University, Yale University and the University of Pennsylvania and was
an Established Investigator of the American Heart Association.
Vaughn D. Bryson, 58, a Director of ARIAD since February 1995, is
President of Life Science Advisors, Inc. Mr. Bryson is a thirty-two year
veteran of Eli Lilly & Co. ("Lilly") and was President and Chief Executive
Officer of Lilly from 1991 to 1993. He served as Executive Vice President
from 1986 until 1990. He also was a member of Lilly's Board of Directors
from 1984 until his retirement in 1993. Mr. Bryson was Vice Chairman of
Vector Securities International Inc. from April 1994 to December 1996. He
also is a Director of EndoVascular Therapeutics, Inc., Fusion Medical
Technologies Inc., Quintiles Transnational Corp., NaPro BioTherapeutics,
Inc., and Perclose, Inc.
Sandford D. Smith, 50, a Director of ARIAD since October 1991, is
President, Specialty Therapeutics and International Group, Genzyme
Corporation. From April 1996 to December 1996, he was Vice President,
International Group at Genzyme Corporation. Mr. Smith was President and
Chief Executive Officer and a Director of the Repligen Corporation from 1986
to March 1996. Mr. Smith is also a Director of CSPI.
Raymond S. Troubh, 70, a Director of ARIAD since October 1991, has been a
financial consultant for more than the past five years. Mr. Troubh is a Director
of ADT Limited, America West Airlines, Inc., Becton, Dickinson and Company,
Diamond Offshore Drilling, Inc., Foundation Health Corporation, General American
Investors Company, Inc., Olsten Corporation, Petrie Stores Corporation, Time
Warner, Inc., Triarc Companies, Inc. and WHX Corporation.
4
<PAGE> 8
CONTINUING CLASS 1 DIRECTORS
(TERM TO EXPIRE 1998)
Edgar Haber, M.D., 65, Vice Chairman of the Board of Directors of the Company
since October 1991, is Director of the Division of Biological Sciences and the
Elkan R. Blout Professor of Biological Sciences at the Harvard School of Public
Health and Professor of Medicine at Harvard Medical School. Prior to these
appointments, from 1990 to 1991, Dr. Haber was President of the Bristol-Myers
Squibb Pharmaceutical Research Institute and a Director of the Bristol-Myers
Squibb Company.
Joan S. Brugge, Ph.D., 47, has served as Senior Vice President, Exploratory
Research since October 1996. She served as Senior Vice President, Research -
Biology from May 1992 to September 1996 and as Scientific Director of ARIAD from
May 1992 to February 1997. Dr. Brugge was elected a Director of ARIAD in
February 1995. Since March 1997, she has co-chaired the ARIAD Board of
Scientific and Medical Advisors. Effective July 1, 1997, Dr. Brugge will resign
as Senior Vice President, Exploratory Research and become Professor of Cell
Biology at Harvard Medical School. Dr. Brugge will continue to serve as a
Director of ARIAD and as Co-chair of the ARIAD Board of Scientific and Medical
Advisors and has agreed to serve as a consultant to ARIAD on an exclusive basis.
John M. Deutch, Ph.D., 58, a Director of ARIAD since March 1997, is an
Institute Professor at the Massachusetts Institute of Technology. He previously
served as Director of the United States Central Intelligence Agency, Deputy
Secretary of Defense, Undersecretary of Defense (Acquisition and Technology),
Provost, Dean of the School of Science, Chairman of the Department of Chemistry
and the Karl Taylor Compton Professor of Chemistry of the Massachusetts
Institute of Technology. Dr. Deutch has received numerous awards and honors in
physical chemistry and computational sciences, as well as in government service.
Dr. Deutch is a Director of Citicorp, CMS Energy and Palomar Medical
Technologies.
Frank J. Hoenemeyer, 77, a Director of ARIAD since October 1991, is an
independent financial consultant. Mr. Hoenemeyer was the President of Gregory
and Hoenemeyer Inc., a financial consulting firm, from 1987 to 1990. He was Vice
Chairman of The Prudential Insurance Company of America from 1981 until his
retirement in 1984, Chief Investment Officer from 1965 to 1984 and a Director
from 1974 to 1984. Mr. Hoenemeyer serves on several private and public boards,
including American International Group Inc., Mitsui Trust Bank, USA, Carey
Fiduciaries Advisors, a subsidiary of W.P. Carey & Co., Inc., Cincinnati
Incorporated and Wellsford Residential Property. He also is Chairman of the
Turrell Fund.
CONTINUING CLASS 2 DIRECTORS
(TERM TO EXPIRE 1999)
Philip Felig, M.D., 60, a Director of ARIAD since October 1991, is currently
in medical practice specializing in endocrinology and diabetes as an Attending
Physician on the Senior Medical Staff at Lenox Hill Hospital and as Clinical
Professor of Medicine at New York Medical College. From 1986 to 1987, he was
Chief Executive Officer of Sandoz Pharmaceuticals Corporation and from 1984 to
1987, President of the Sandoz Research Institute.
Peter T. Joseph, 46, a Director of ARIAD since October 1991, is Chairman and
Chief Executive Officer of Rosecliff, Inc., an investment management firm that
he has headed since 1987. From 1987 to 1992, Mr. Joseph served as Managing
General Partner of Acadia Partners, L.P.
Jay R. LaMarche, 50, has served as Chief Financial Officer, Treasurer and a
Director of ARIAD since January 1992. Mr. LaMarche has served as Executive Vice
President since March 1997 and served as Senior Vice President, Finance from
January 1992 to February 1997. Prior to joining ARIAD, he was Chief Financial
Officer and a Director of ChemDesign Corporation, a fine chemicals manufacturer,
where he served in several capacities, most recently as Executive Vice
President.
Joel S. Marcus, 49, a Director of ARIAD since February 1995, is a founder and
principal of Health Science Capital Partners, which invests in
healthcare-related companies. Mr. Marcus is also Chief Executive Officer of
Alexandria Real Estate Equities, Inc., a real estate investment trust
principally focused on the life sciences industry. Mr. Marcus was a partner with
Brobeck, Phleger & Harrison, a law firm, from 1991 to 1994.
5
<PAGE> 9
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1996, the Board of Directors held
four meetings. Mr. Joseph attended fewer than 75% of the aggregate number of
meetings held during such fiscal year by the Board of Directors and the
committees of the Board on which he served.
The Board of Directors has three committees, the Executive Committee, the
Compensation and Stock Option Committee and the Audit Committee. The Board
does not have a nominating committee.
The members of the Executive Committee are Drs. Berger and Haber and Messrs.
Bryson and LaMarche. The Executive Committee has and may exercise certain powers
and authority of the Board of Directors in connection with the management and
affairs of the Company. The Executive Committee did not meet during the fiscal
year ended December 31, 1996.
The members of the Compensation and Stock Option Committee are Dr. Felig and
Messrs. Smith and Troubh. The Compensation and Stock Option Committee
establishes compensation levels for executive officers, evaluates the
performance of executive officers, considers management succession and related
matters and administers the Company's stock option plans. Such committee reviews
with the Board of Directors all aspects of compensation for the executive
officers, except that decisions with respect to awards under the 1991 Employee
Plan, are made solely by the committee. The Compensation and Stock Option
Committee held four meetings (including actions taken by written consent) during
the fiscal year ended December 31, 1996.
The members of the Audit Committee are Messrs. Hoenemeyer, Joseph and Marcus.
The responsibilities of the Audit Committee include, with the assistance of
management, the selection and engagement of the Company's independent auditors,
the review of the scope of the audit proposed by the auditors, a post-audit
review of the Company's financial statements and general oversight of the
Company's financial reporting and the adequacy of internal controls. The Audit
Committee held two meetings during the fiscal year ended December 31, 1996.
Directors do not receive any cash compensation for service on the Board of
Directors or its committees. Directors are reimbursed for their expenses for
each meeting attended. On December 1, 1996, each of Drs. Haber and Felig and
Messrs. Bryson, Hoenemeyer, Joseph, Marcus, Smith and Troubh was awarded options
to purchase 10,000 shares of Common Stock at $4.88 per share, pursuant to the
1994 Director Plan. Such options were exercisable on the grant date. Dr. Felig
received advisor fees aggregating $20,000 in connection with his membership on
the Board of Scientific and Medical Advisors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1994, the Company engaged Vector Securities International, Inc.
("Vector Securities") to provide consulting and investment banking services with
respect to its activities in seeking strategic alliances with established
pharmaceutical and biotechnology companies and incurred fees payable to Vector
Securities aggregating $1,200,000 in 1995 and $75,000 in 1996. Vaughn D. Bryson,
a Director of the Company since February 1, 1995, served as Vice Chairman of
Vector Securities through December 1996.
6
<PAGE> 10
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
NAME AGE OFFICE OR POSITIONS HELD
- - -------------------- ------ ------------------------------------------
Harvey J. Berger, M.D. 46 Chairman of the Board, President and
Chief Executive Officer
Charles C. Cabot III 40 Executive Vice President and Chief
Operating Officer
Michael Gilman, Ph.D. 42 Executive Vice President and Chief
Scientific Officer
Jay R. LaMarche 50 Executive Vice President and Chief
Financial Officer
Joan S. Brugge, Ph.D. 47 Senior Vice President, Exploratory
Research
Manfred Weigele, Ph.D. 64 Senior Vice President, Physical and
Chemical Sciences
For biographical information on Drs. Berger and Brugge and Mr. LaMarche, see
"Information Regarding Directors."
Charles C. Cabot III has served as Executive Vice President and Chief
Operating Officer of ARIAD since March 1997. He served as Senior Vice President
and Chief Operating Officer from January 1994 to February 1997 and as Senior
Vice President, Business Operations from January 1992 to December 1993. Prior to
joining ARIAD, from 1985 to 1991, Mr. Cabot held several positions at Centocor
Inc., most recently as a Vice President in the corporate group.
Michael Gilman, Ph.D. has served as Executive Vice President and Chief
Scientific Officer of ARIAD since March 1997. He served as Senior Vice
President, Drug Discovery from October 1996 to February 1997 and as Vice
President, Research - Gene Therapy from August 1994 to September 1996. Dr.
Gilman has served as Scientific Director of ARIAD Gene Therapeutics, Inc.
("AGTI") since August 1994. Prior to joining ARIAD, Dr. Gilman was on the
staff at the Cold Spring Harbor Laboratory since 1986, most recently as a
Senior Scientist.
Manfred Weigele, Ph.D. has served as Senior Vice President, Physical and
Chemical Sciences of ARIAD since October 1996 and served as Senior Vice
President, Research - Chemistry from October 1991 to September 1996. Prior to
joining ARIAD, from 1985 to 1991, Dr. Weigele was a Vice President and Group
Director of Chemistry Research at Hoffmann-LaRoche Inc.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth aggregate amounts of compensation paid or
accrued by the Company for the years ended December 31, 1996, 1995 and 1994, for
services rendered in all capacities, by each of the Company's Chief Executive
Officer and the four most highly compensated executive officers other than the
Chief Executive Officer. No options were granted to the named executive officers
in 1995, however certain options previously granted were repriced and are
therefore reported as new grants herein.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL -----------------
COMPENSATION NUMBER OF
(1)(2) SECURITIES
NAME AND PRINCIPAL ------ UNDERLYING
POSITION YEAR SALARY OPTIONS
--------------------- ------ ------------------ -----------------
Harvey J. Berger, M.D. 1996 $220,000 44,000
Chairman, President 1995 220,000 414,285 (3)
and Chief Executive 1994 220,000 50,000
Officer
Charles C. Cabot III 1996 170,000 34,000
Executive Vice 1995 170,000 119,642 (3)
President and 1994 160,000 35,000
Chief Operating
Officer
Jay R. LaMarche 1996 170,000 34,000
Executive Vice 1995 170,000 119,642 (3)
President and Chief 1994 160,000 35,000
Financial Officer
Joan S. Brugge, Ph.D. 1996 170,000 44,000
Senior Vice 1995 170,000 162,499 (3)
President, 1994 160,000 35,000
Exploratory
Research
Manfred Weigele, Ph.D. 1996 170,000 34,000
Senior Vice 1995 170,000 119,642 (3)
President, 1994 160,000 35,000
Physical and
Chemical Sciences
---------------------
(1)Discretionary cash bonuses provided for in employment agreements of the
executive officers were not awarded for 1996, 1995 or 1994.
(2)Other annual compensation is not presented, as the cost did not exceed the
lesser of $50,000 or 10% of the total salary reported for any of the named
executive officers.
(3)No options were granted to the named executive officers in 1995. Represents
Company and AGTI options granted in prior years for which the exercise prices
were amended to the then current fair market values under repricings offered
to all plan participants.
8
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is comprised of Dr. Felig
and Messrs. Smith and Troubh. On December 1, 1996, pursuant to the 1994
Director Plan, the Company granted to each member of the committee options to
purchase 10,000 shares of Common Stock at $4.88 per share.
EMPLOYMENT AGREEMENTS
Dr. Berger, Chief Executive Officer, President and Chairman of the Board
of Directors of the Company, has an employment agreement with the Company which
commenced in January 1992 and terminates in December 2001. The agreement
provides that he shall be employed as the Chief Executive Officer and President
of the Company, shall be nominated for election to the Board of Directors, serve
as Chairman of the Board and receive an annual base salary of $300,000 for 1997,
increasing each year by at least 10% of the preceding year's base salary. This
increase has been waived by Dr. Berger in all prior years. Dr. Berger is
eligible each year to receive a discretionary bonus, determined by the Board of
Directors, of up to 50% of his annual base salary. Dr. Berger's employment
agreement is automatically renewable for successive three-year terms unless
terminated by either party. If the Company fails to renew the employment
agreement, it is obligated to pay Dr. Berger twice his annual salary for the
final year of his term.
Dr. Berger's employment agreement provides that, upon the occurrence of
certain events including, (i) a sale of the Company or an acquisition of a
substantial equity interest in the Company by a person or group of persons, (ii)
if Dr. Berger or his designee ceases to be the highest ranking executive officer
of the Company or ceases to control personnel decisions with respect to the
Company's senior management, (iii) if the Company is in material breach of the
terms of the employment agreement, (iv) if the Company is bankrupt or insolvent
or (v) if the Company terminates Dr. Berger's employment agreement without
cause, (1) the Company will pay Dr. Berger the greater of (x) any remaining
salary payable during the term plus the maximum possible bonus for each year
remaining in the term and (y) an amount equal to twice his current annual salary
and maximum bonus for the current year of employment (the "Severance Payment")
and (2) all of his stock options, stock awards and similar equity rights will
immediately vest and become exercisable. The Company is not obligated to make
the Severance Payment if it discharges Dr. Berger for cause or if Dr. Berger
terminates the agreement. In addition, the occurrence of any event described
above would permit Dr. Berger to terminate his employment. If the vesting of
certain benefits and the payment of certain amounts by the Company to Dr. Berger
are treated as payments in the nature of compensation that are contingent on a
"change in control" (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")), the deductibility of such payments
could, depending upon the aggregate amount of such payments, be disallowed
pursuant to Section 280G of the Code and an excise tax could be imposed on Dr.
Berger pursuant to Section 4999 of the Code for which he would, pursuant to the
employment agreement, be compensated by the Company. The employment agreement
contains a noncompetition provision that is effective during the term of the
agreement and, if Dr. Berger is terminated for cause, for a period of one year
following the date of termination.
The Company has also entered into employment agreements with Dr. Brugge,
Senior Vice President, Exploratory Research, Mr. Cabot, Executive Vice President
and Chief Operating Officer, Mr. LaMarche, Executive Vice President and Chief
Financial Officer, and Dr. Weigele, Senior Vice President, Physical and Chemical
Sciences. The agreements provide for employment at each such executive's present
position through December 2000 for Messrs. Cabot and LaMarche and through June
1997 and December 1998, respectively, for Drs. Brugge and Weigele at an annual
base salary of $215,000 for 1997, increasing each year by an amount to be
determined by the Board of Directors. In addition, each executive is eligible
each year to receive a discretionary bonus, to be determined by the Board of
Directors, of up to 30% of his or her annual base salary. The agreements are
renewable for successive one-year terms with the mutual consent of the parties.
The agreements with Messrs. Cabot and LaMarche and Dr. Weigele provide
that: (i) upon a change of control of the Company, such officers will be
entitled to receive, upon termination, any remaining salary payable during the
term or six months salary whichever is shorter, and all stock options held by
such officers will immediately vest and become exercisable; and (ii) upon
termination by the Company, without cause, such officer will be entitled to
receive his current salary for the remaining period of the applicable term and
all outstanding options that would have vested during such term shall vest
immediately.
9
<PAGE> 13
STOCK OPTION PLANS
The 1991 Employee Plan and the ARIAD Pharmaceuticals, Inc. 1991 Stock
Option Plan for Directors (the "1991 Director Plan") were adopted in January
1992 and amended by the Company's Board of Directors and stockholders in
September 1994. In September 1994, the 1994 Director Plan was adopted by the
Company's Board of Directors and approved by the Company's stockholders and
further grants under the 1991 Director Plan were terminated. The 1991 Employee
Plan, the 1991 Director Plan and the 1994 Director Plan are referred to
collectively herein as the "Plans." The 1991 Employee Plan and the 1994 Director
Plan are referred to collectively herein as the "Current Plans." An aggregate of
3,785,714 shares of Common Stock was reserved for issuance to officers,
directors, key employees and consultants of the Company under the Plans. The
Current Plans provide for the grant of nonqualified and incentive stock options.
The Plans are administered by the Compensation and Stock Option Committee
(the "Committee"). Subject to the limitations set forth in the 1991 Employee
Plan, the Committee has the authority to determine when and to whom options will
be granted under such plan, when such options may be exercised and may vest and
the terms and conditions of each option granted; provided, however, that no
incentive stock option may be granted to any individual who is not an employee
of the Company or any of its subsidiaries; and, provided further, that the
maximum number of shares subject to options granted to any employee pursuant to
the 1991 Employee Plan may not exceed 250,000 in any calendar year. The
administration of the Current Plans is intended to comply with the requirements
of Rule 16b-3 under the Exchange Act.
The 1994 Director Plan provides for the grant of nonqualified options to
directors who are not employees of the Company or any of its affiliates (nine
persons at March 31, 1997) pursuant to a specified formula as follows: (i)
options to purchase 15,000 shares of Common Stock will be granted to each
nonemployee director upon his or her first being elected to the Board of
Directors and (ii) options to purchase 10,000 shares of Common Stock will be
granted annually to each nonemployee director on December 1. The exercise price
of options equals the "fair market value" (as defined in the 1994 Director Plan)
of the underlying shares of Common Stock on the date of grant. The maximum
number of shares of Common Stock that may be issued upon the exercise of options
granted under the 1994 Director Plan is 300,000, subject to adjustment (as
provided in the 1994 Director Plan). The 1994 Director Plan will be
self-administered to the extent required by Rule 16b-3 under the Exchange Act.
The shares of Common Stock purchased upon the exercise of an option
granted under the Plans are to be paid for (i) in cash, check or money order
payable to the order of the Company, (ii) with the approval of the Compensation
and Stock Option Committee, through the delivery of other shares of Common Stock
having an aggregate fair market value equal to the total exercise price of the
option being exercised or (iii) any combination thereof.
No option granted under any of the Plans is transferable, except, in the
Committee's discretion, options granted pursuant to the plans are transferable
to a trust for the primary benefit of the optionee's family members or in the
event of a recipient's death. In the event of a recipient's death, the
recipient's vested options may be exercised by the person entitled to do so
under the recipient's will or, if applicable, by the person so entitled pursuant
to the laws of descent and distribution, at any time prior to expiration of the
options, but in any event not later than one year after the date of his or her
death. In the Committee's discretion, an option may be transferred pursuant to a
"qualified domestic relations order," as defined in section 414(f) of the Code.
At December 31, 1996, options with respect to 3,079,361 shares of Common
Stock under the Plans were outstanding with a weighted average exercise price of
$2.57 per share. In 1996, options to purchase 70,995 shares were exercised at an
average exercise price of $1.91 per share. At December 31, 1996, options were
exercisable to purchase 1,878,668 shares at exercise prices ranging from $1.60
to $4.62 per share. In November 1994, the Company repriced options to purchase
291,757 shares (with original exercise prices ranging from $5.60 to $7.00 per
share) to $2.00 per share (the then fair market value) for prior grants made to
nonmanagement employees. In March 1995, the Company repriced options to purchase
1,391,732 shares (with original exercise prices ranging from $5.00 to $8.25 per
share) to $2.00 per share (the then fair market value) for prior grants to
officers, directors and consultants.
10
<PAGE> 14
In December 1993, AGTI adopted the ARIAD Gene Therapeutics, Inc. 1993
Stock Option Plan for Employees and Consultants and the ARIAD Gene Therapeutics,
Inc. 1993 Stock Option Plan for Directors (collectively, "the AGTI Plans") that
are substantially similar to the 1991 Employee Plan and the 1991 Director Plan,
respectively, and reserved 1,785,714 shares of AGTI's common stock for issuance
pursuant to such plans. In January and June 1994, options under the AGTI Plans
with respect to 793,923 shares of AGTI's common stock were granted to certain
ARIAD officers, key employees and consultants at an exercise price of $3.50 per
share, and options with respect to 482,142 shares of AGTI's common stock were
granted to certain other ARIAD officers and consultants at an exercise price of
$.42 per share. In March 1995, AGTI repriced options to purchase 746,423 shares
from $3.50 per share to $.42 per share (the then fair market value) for prior
grants to executive officers, employees and certain consultants. The options
granted in January 1994 were granted in consideration of services rendered in
1993. None of the options granted in June 1994 were granted to any of the
Company's executive officers named in the Summary Compensation Table. The AGTI
Plans were approved by the stockholders of the Company at the 1994 Annual
Meeting. See "Executive Compensation". No such options have been exercised.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE ---------------------
NAME GRANTED(1) FISCAL YEAR PRICE EXPIRATION DATE 5%($) 10%($)
- - ---------------------- ------------------ ------------- -------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Harvey J. Berger, M.D. 44,000 6.3% $4.19 03/12/06 $115,943 $293,822
Charles C. Cabot III 34,000 4.9 4.19 03/12/06 89,592 227,044
Jay R. LaMarche 34,000 4.9 4.19 03/12/06 89,592 227,044
Joan S. Brugge, Ph.D. 44,000 4.9 4.19 03/12/06 115,943 293,822
Manfred Weigele, Ph.D. 34,000 4.9 4.19 03/12/06 89,592 227,044
</TABLE>
- - ----------------
(1) Exercisable on the earlier of January 1, 2002 or upon approval by the United
States Food and Drug Administration of an Investigational New Drug
application to initiate clinical trials for any ARIAD human therapeutic
product.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
No. of Securities Underlying Value of Unexercised
Unexercised Options at Fiscal In-the-Money Options at
Year End(#) Fiscal Year End($)(4)
----------------------------- -----------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- - ---------------------- ------------ ------------ ----------------------------- -----------------------
<S> <C> <C> <C> <C>
Harvey J. Berger, M.D. _ _ 260,714/69,000(1)(2) $807,785/124,780
89,286/89,285(3)
Charles C. Cabot III _ _ 47,857/51,500(1) 153,442/90,130
44,643/44,642(3)
Jay R. LaMarche _ _ 47,857/51,500(1) 153,442/90,130
44,643/44,642(3)
Joan S. Brugge, Ph.D. _ _ 90,714/61,500(1) 284,585/98,830
44,643/44,642(3)
Manfred Weigele, Ph.D. _ _ 47,857/51,500(1) 153,442/90,130
44,643/44,642(3)
</TABLE>
- - ----------------
(1) Options to purchase shares of Common Stock of the Company.
(2) Includes options to purchase 235,714 shares held by The Berger Family Trust.
(3) Options to purchase shares of common stock of AGTI.
(4) Based upon a fair market value of $5.06 per share of Common Stock, which was
the closing price of a share of Common Stock on the Nasdaq National Market
on December 31, 1996.
11
<PAGE> 15
401(K) PLAN
Effective January 1, 1993, the Board of Directors adopted the ARIAD
Retirement Savings Plan (the "401(k) Plan") which is intended to qualify under
Section 401(k) of the Code covering all of the Company's eligible employees.
Pursuant to the 401(k) Plan, employees may elect to defer, in the form of
contributions to the 401(k) Plan, from 1% to 15% of their current compensation
up to the statutorily prescribed annual limit ($9,500 in 1996) and have the
amount of the reduction contributed to the 401(k) Plan. The Company plans to
provide matching contributions to such Plan commencing in 1997.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
GENERAL
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") establishes compensation levels for executive officers, evaluates
the performance of executive officers, considers management succession and
related matters, administers the Company's stock option plans and recommends the
grant of stock options under the stock option plans of AGTI. The Committee
reviews with the Board of Directors all aspects of compensation for the
executive officers, except that decisions with respect to awards under the 1991
Employee Plan are made solely by the Committee. The Committee is composed of
three members who are nonemployee directors.
COMPENSATION POLICY
The Committee's fundamental executive compensation philosophy is to enable
the Company to attract and retain key executive personnel and to motivate those
executives to achieve the Company's objectives. Competition for experienced
senior executive officers in the biotechnology industry is intense. In
furtherance of these objectives, the Company offers executives base salaries and
incentive compensation (primarily in the form of stock options) in amounts it
believes are comparable to those offered by other companies with which the
Company competes.
BASE SALARY AND BONUS AWARDS
The Committee's subjective evaluation, the Company's overall progress and the
individual executive's performance are considered in the Committee's
recommendations concerning base salary and bonus awards. Stock options are
granted to executive officers to create a link between executive compensation
and stockholder return and to enable executive officers to develop and maintain
a significant, long-term stock ownership position in the Company. In making
decisions as to the compensation of the Company's executive officers, the
Committee also relies upon compensation statistics from various sources,
including specific industry-wide surveys. Discretionary cash bonuses provided
for in the employment agreements of the executive officers have not been awarded
since formation of the Company.
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR FISCAL YEAR 1996
Dr. Berger waived the 10% annual increase in base salary provided for in his
employment agreement in each year of its term, prior to January 1, 1997.
Effective January 1, 1997, the Board of Directors established Dr. Berger's
annual base salary at $300,000. As with other executive officers, Dr. Berger was
not paid any cash bonus for 1996. In March 1996, Dr. Berger was awarded options
to acquire 44,000 shares of Common Stock of the Company in consideration of his
performance in 1996. The grant of options was based upon the Committee's
subjective evaluation of the progress made by the Company in identifying and
licensing new technology and product candidates, entering significant strategic
alliances and joint ventures, developing new lead compounds, building the
Company's technology platform and advancing lead compounds from discovery
research into development. The option award was also made in recognition of Dr.
Berger's role in the motivation of the Company's management team and in the
recruitment of new staff. The Committee believes that Dr. Berger's annual
compensation is competitive with the compensation of the chief executive
officers of comparable biotechnology companies.
THE COMPENSATION AND STOCK OPTION COMMITTEE
Philip Felig, M.D., Chairman
Sandford D. Smith
Raymond S. Troubh
12
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock since March 24, 1992, the
date of completion of the 1992 Private Placement, with the total cumulative
return of the Nasdaq U.S. Stock Market Index and the Nasdaq Pharmaceutical Stock
Index, the latter of which includes biotechnology companies. The price of a
share of Common Stock for the period from March 24, 1992 to April 19, 1993 is
based upon a fair market value of $5.60 per share, which is the price per share
paid by investors in the 1992 Private Placement. The price of a share of Common
Stock from April 20, 1993 to May 19, 1994 is based upon a fair market value of
$7.00 per share, which is the price per share paid by investors in the 1993
Private Placement. The price of a share of Common Stock for the period from May
20, 1994 to September 19, 1994 is based upon the closing price per share as
quoted on the Nasdaq National Market of the Company's Units (comprised of a
share of Common Stock and a warrant to purchase a share of Common Stock and
assuming a $1.00 value for such warrant) which traded on the Nasdaq National
Market from May 20, 1994 until separation on September 19, 1994. The price of a
share of Common Stock for the period from September 20, 1994 to December 31,
1996 is based upon the closing price per share as quoted on the Nasdaq National
Market.
The comparison assumes $100 was invested on March 24, 1992 in the Company's
Common Stock and in each of the foregoing indices and further assumes
reinvestment of dividends. The Company did not declare or pay any dividends
during the comparison period.
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN AMONG THE COMPANY,
NASDAQ U.S. STOCK MARKET INDEX AND NASDAQ PHARMACEUTICAL STOCK INDEX
<TABLE>
<CAPTION>
24-Mar-92 31-Dec-92 20-Apr-93 31-Dec-93 20-May-94 19-Sep-94 31-Dec-94 31-Dec-95 31-Dec-96
33687 33969 34079 34334 34474 34596 34669 35064 35430
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Initial 2nd Initial Unit
Private Private Public Separation
Placement Placement Offering Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INDEXED DATA
ARIAD 100.000 100.000 125.000 125.000 125.000 51.339 31.250 84.821 90.402
Pharmaceuticals 100.000 93.777 67.230 83.585 66.530 71.432 71.131 100.593 123.738
US Market 100.000 111.933 107.231 128.491 115.359 122.866 111.081 203.223 203.442
</TABLE>
SECTION 16 FILINGS
Section 16(a) of the Exchange Act requires the Company's directors, executive
officers and beneficial owners of more than 10% of the Company's Common Stock to
file reports of ownership and changes of ownership with the Commission on Forms
3, 4 and 5. The Company believes that during the fiscal year ended December 31,
1996 its directors, executive officers and beneficial owners of more than 10% of
the Company's Common Stock complied with all applicable filing requirements.
13
<PAGE> 17
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has audited the books of the Company since
1991. Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting and will be given the opportunity to make a statement, if they so
desire. The representatives also will be available to respond to appropriate
questions raised by those in attendance at the Meeting.
The Company's management has selected Deloitte & Touche LLP as independent
public accountants to audit the books, records and accounts of the Company for
the fiscal year ending December 31, 1997. The Audit Committee of the Board of
Directors is expected to approve the selection.
ANNUAL REPORT ON FORM 10-K; INCORPORATION BY REFERENCE
Upon the written request of any record holder or beneficial owner of Common
Stock entitled to vote at the Meeting, the Company, without charge, will provide
a copy of its Annual Report on Form 10-K for the year ended December 31, 1996,
as filed with the Securities and Exchange Commission. Requests should be
directed to Corporate Communications, ARIAD Pharmaceuticals, Inc., 26 Landsdowne
Street, Cambridge, Massachusetts 02139-4234, telephone: 617-494-0400, Email:
[email protected].
TO THE EXTENT THIS PROXY STATEMENT HAS BEEN OR WILL BE SPECIFICALLY INCORPORATED
BY REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THE SECTIONS OF THE
PROXY STATEMENT ENTITLED "REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE"
AND "PERFORMANCE GRAPH" SHALL NOT BE DEEMED TO BE SO INCORPORATED UNLESS
SPECIFICALLY OTHERWISE PROVIDED IN ANY SUCH FILING.
PROPOSALS
PROPOSAL 1
ELECTION OF CLASS 3 DIRECTORS
The Company's By-laws, as amended (the "By-laws"), provide that the number of
directors shall be fixed by the Board. The Board of Directors has fixed the
number at twelve and, at a meeting held on March 11, 1997, nominated the persons
named below to stand for election. All such nominees are currently directors.
The Company's Certificate of Incorporation, as amended, and By-laws provide
that the Board of Directors shall be divided into three classes, as nearly equal
in number as possible, with the directors in each class serving a term of three
years and until their successors are duly elected and qualified. As the term of
one class expires, a successor class is elected at the Annual Meeting of
Stockholders for that year. At this Meeting, four Class 3 Directors are to be
elected to serve until the 2000 Annual Meeting and until their successors are
duly elected and qualified.
It is intended that, if no contrary specification is made, the persons named
as proxies shall vote for the four nominees named below. The Board of Directors
believes that all of the nominees will be available and able to serve as
directors, but if for any reason one or more of the nominees named below should
not be available to stand for election or be able to serve, the proxies may
exercise discretionary authority to vote for a substitute or substitutes
recommended by the Board of Directors. The four nominees receiving the highest
number of votes will be elected to serve as Class 3 Directors.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF HARVEY J. BERGER,
M.D., VAUGHN D. BRYSON, SANDFORD D. SMITH AND RAYMOND S. TROUBH AS DIRECTORS,
AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
14
<PAGE> 18
PROPOSAL 2
INCREASE IN THE AGGREGATE NUMBER OF SHARES
FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE COMPANY'S
1991 EMPLOYEE PLAN
On March 11, 1997, the Board of Directors voted to approve an amendment to
the 1991 Employee Plan to increase the aggregate number of shares of Common
Stock for which stock options may be granted under such plan by 2,200,000
shares. This amendment is being submitted for stockholder approval at the Annual
Meeting. The Board believes that the increase is advisable to give the Company
the flexibility needed to attract, retain and motivate employees and consultants
including those who will be employed by ARIAD to staff the Hoechst-ARIAD
Genomics Center, LLC. All employees and consultants of the Company are eligible
to participate in the 1991 Employee Plan.
The affirmative vote of a majority of the votes present or represented and
entitled to vote at the Meeting is required to approve the increase in the
aggregate number of shares of Common Stock for which stock options may be
granted under the 1991 Employee Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT
TO THE 1991 EMPLOYEE PLAN TO INCREASE BY 2,200,000 SHARES THE AGGREGATE NUMBER
OF SHARES FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE 1991 EMPLOYEE PLAN,
AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 3
INCREASE IN THE AGGREGATE NUMBER OF SHARES FOR WHICH STOCK OPTIONS MAY BE
GRANTED UNDER THE COMPANY'S 1994 DIRECTOR PLAN.
On March 11, 1997, the Board of Directors voted to approve an amendment to
the 1994 Director Plan to increase the aggregate number of shares of Common
Stock for which stock options may be granted under such plan by 300,000 shares.
This amendment is being submitted for stockholder approval at the Meeting. The
Board believes that the increase is advisable to give the Company the
flexibility needed to attract, retain and motivate non-employee directors.
Members of the Board of Directors who are not employees of the Company are
eligible to participate in the 1994 Directors Plan.
The affirmative vote of a majority of the votes present or represented and
entitled to vote at the Meeting is required to approve the increase in the
aggregate number of shares of Common Stock for which stock options may be
granted under the 1994 Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT
TO THE 1994 DIRECTOR PLAN TO INCREASE BY 300,000 SHARES THE AGGREGATE NUMBER OF
SHARES FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE 1994 DIRECTOR PLAN, AND
PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 4
ADOPTION OF 1997 EMPLOYEE STOCK PURCHASE PLAN
On March 11, 1997, the Board of Directors approved the 1997 Employee Stock
Purchase Plan (the "Purchase Plan") and authorized a total of 500,000 shares of
Common Stock to be issued under the Purchase Plan, subject to stockholder
approval.
MATERIAL FEATURES OF THE PURCHASE PLAN
The number of shares of Common Stock which may be purchased by eligible
employees under the Purchase Plan is 500,000 shares. All full-time or part-time
employees of the Company who have been employed for at least three months by the
Company are eligible to participate in the Purchase Plan, except for persons who
are deemed
15
<PAGE> 19
under Section 423(b)(3) of the Code to own five percent (5%) or more of the
Voting Stock of the Company. As of March 31, 1997, approximately 95 persons
would be eligible to participate in the Purchase Plan.
The Purchase Plan provides for a series of four three-month "offering
periods" within each year commencing on January 1, April 1, July 1 and October
1, with the first offering period commencing on a date to be determined by the
Board of Directors. Eligible employees may elect to become participants in the
Purchase Plan by enrolling during specified enrollment periods. During each
offering period, eligible employees are granted an option to purchase shares
through the accumulation of payroll deductions of not less than 1% nor more than
10% of each participant's compensation (up to a maximum of $25,000 per calendar
year, based on the fair market value of the shares determined as of the date the
option to purchase such shares is granted). The number of shares to be purchased
will be determined by dividing the participant's balance in the Purchase Plan
account on the last day of the offering period by the purchase price per share
for the stock. The purchase price per share will be the lower of: (i) 85% of the
fair market value of the Common Stock at the beginning of the offering period,
or (ii) 85% of the fair market value of the Common Stock at the end of the
offering period. The option to purchase shares will be granted on the last day
of the offering period, unless the participant has withdrawn or is deemed to
have withdrawn from participation in the Purchase Plan in a manner or at a time
that results in the option being unexercisable under the Purchase Plan. Each
option to purchase shares under the Purchase Plan terminates on the last day of
the respective offering period if not exercised on that date. The closing price
of the Company's Common Stock on April 1, 1997, was $5.50 per share, as reported
on The Nasdaq National Market.
A participant will be deemed to have withdrawn from the Purchase Plan: (i)
on his or her voluntary withdrawal from the Purchase Plan, (ii) on termination
of the participant's employment (other than termination due to retirement,
disability or death), (iii) upon termination of the participant's employment due
to normal retirement, (iv) on termination of the participant's employment due to
death or disability, or (v) on the termination of the Purchase Plan or
expiration of the Purchase Plan. Upon withdrawal or deemed withdrawal from the
Purchase Plan, all funds withheld by the Company at the direction of the
participant either shall be returned to the participant or used to purchase
shares in accordance with the Purchase Plan, depending on the circumstances of
the withdrawal. The option to purchase stock granted under the Purchase Plan is
not transferable by the participant except by will or by the laws of descent and
distribution, and is exercisable during a participant's lifetime only by the
participant, or by his or her legal representative if permitted by the Code, and
is exercisable by his or her estate or the person who has the right to exercise
the option upon the participant's death. Employees may cease their participation
in the Purchase Plan during a specified period during the offering period, but
thereby will be ineligible to participate in the next offering period.
In the event of the 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 of Directors. Upon a
merger or consolidation of the Company, in which the Company is not the
surviving corporation, or upon the sale of substantially all of the Company's
assets, each option to purchase shares under the plan shall be assumed by the
successor corporation or an equivalent option shall be substituted by such
successor corporation, unless the Board of Directors, in its sole discretion,
determines to shorten the offering period then in progress.
The Purchase Plan is administered by the Compensation and Stock Option
Committee. Subject to the provisions of the Purchase Plan, the Compensation and
Stock Option Committee has the authority to determine the terms and provisions
of options to purchase shares granted under the Purchase Plan and to interpret
any provision of the Purchase Plan and any option granted under it. The Purchase
Plan may be terminated or amended by the Company's stockholders, the
Compensation and Stock Option Committee or the Board of Directors of the Company
at any time. Amendments increasing the aggregate number of shares which may be
issued under the Purchase Plan, or changing the designation of corporations
whose employees may participate, must be approved by the stockholders within
twelve months after the amendment is adopted by the Board of Directors or the
Compensation and Stock Option Committee. If the scope of any amendment is such
as to require stockholder approval in order to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, such amendment also requires stockholder
approval.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of certain U.S. federal income tax
consequences of the issuance and exercise of options to purchase shares under
the Purchase Plan. The options granted under the Purchase Plan are intended to
constitute qualified stock options in an "employee stock purchase plan" under
Section 423 of the Code. No taxable
16
<PAGE> 20
income is realized at the time options are granted pursuant to the Purchase Plan
or at the time of purchase of shares pursuant to the Purchase Plan. Upon the
death of a participant owning Purchase Plan shares or upon the disposition of
shares two years or more after the date of the grant of the option to purchase
such shares and at least one year after acquiring such shares, the participant
will recognize as ordinary compensation income an amount equal to the lesser of:
(i) the excess of the fair value of the shares on the date of disposition
over the amount paid for such shares, or
(ii) 15% of the fair market value of the shares at the time of grant of
the option.
Any loss on such a disposition or the balance of any gain will be
long-term capital loss or gain. The Company will not be entitled to a deduction
corresponding to the participant's compensation income.
Upon disposition of the shares within two years after the date when a
participant was granted an option to purchase such shares or within one year
after the date the participant acquired such shares, the participant generally
will then recognize compensation income, and the Company will have a
corresponding deduction, equal to the fair market value of the shares on the
date of purchase less the amount paid for the shares. The difference between the
amount realized on such a disqualifying disposition and the participant's basis
in the shares (his or her purchase price plus the amount of related compensation
income recognized) will generally constitute capital gain or loss.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF THE 1997
EMPLOYEE STOCK PURCHASE PLAN, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY
STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders who wish to have their proposals presented at the 1998 Annual
Meeting of Stockholders must deliver such proposals in writing to the Secretary
of the Company at the Company's principal executive offices no later than
December 1, 1997 for inclusion in the Company's proxy statement and form of
proxy relating to that meeting.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the Meeting other than that
referred to herein. If any other business should come before the Meeting, the
persons named in the enclosed proxy will have discretionary authority to vote
all proxies received and not therefore revoked in accordance with their best
judgment.
BY ORDER OF THE BOARD OF DIRECTORS
David T. Washburn
Secretary
Cambridge, Massachusetts
April 24, 1997
17
<PAGE> 21
APPENDIX A
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.
(g) "Contributions" shall mean all amounts credited to the account of a
participant pursuant to the Plan.
<PAGE> 22
(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.
(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> 23
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> 24
(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> 25
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
<PAGE> 26
hereunder 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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- - ------------------------------------------------------
ARIAD PHARMACEUTICALS, INC.
- - ------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT
THE ANNUAL MEETING OF STOCKHOLDERS. ACCORDINGLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THIS
PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
IF YOU SO CHOOSE, YOU MAY VOTE YOUR SHARES IN PERSON
AT THE MEETING.
RECORD DATE SHARES:
-----------------
Please be sure to sign and date Date
this Proxy.
- - ------------------------------------------------------
Stockholder sign here Co-owner sign here
- - ------------------------------------------------------
1. To elect four class 3 Directors to hold office
until the 2000 Annual Meeting of
Stockholders and until their successors are
duly elected and qualified. With- For All
For hold Except
Harvey J. Berger, M.D. [ ] [ ] [ ]
Vaughn D. Bryson
Sandford D. Smith
Raymond S. Troubh
Note: If you do not wish your shares voted "For" a particular nominee(s), mark
the "For all Except" box and strike a line through the nominee's(s) name(s).
Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Proposal to 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.
3. Proposal to 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.
4. Proposal to adopt and approve [ ] [ ] [ ]
the ARIAD Pharmaceuticals, Inc.
1997 Employee Stock Purchase
Plan.
5. To transact such other business as may properly come
before the Meeting and any adjournments or
postponements thereof.
Mark box at right if an address change or comment has [ ]
been noted on the reverse side of this card.
DETACH CARD DETACH CARD
ARIAD PHARMACEUTICALS, INC.
Dear Stockholder:
Please take note of the important information enclosed with the Proxy Card.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your voice counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held June 20, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
ARIAD Pharmaceuticals, Inc.
<PAGE> 33
ARIAD PHARMACEUTICALS, INC.
26 Landsdowne Street
Cambridge, Massachusetts 02139
Annual Meeting of Stockholders - June 20, 1997
Proxy Solicited on Behalf of the Board of Directors
The undersigned revoking all prior proxies, hereby appoints Harvey J. Berger,
M.D. and Jay R. LaMarche as Proxies, with full power of substitution to each, to
vote for and on behalf of the undersigned at the 1997 Annual Meeting of
Stockholders of ARIAD Pharmaceuticals, Inc. to be held at the Company's offices
at 26 Landsdowne Street, Cambridge, Massachusetts 02139, on Friday, June 20,
1997 at 10:00 a.m. Eastern Time, and at any adjournment or postponements
thereof. The undersigned hereby directs the said Proxies to vote in accordance
with their judgment on any matters which may properly come before the Annual
Meeting, all as indicated in the Notice of Annual Meeting, receipt of which is
hereby acknowledged, and to act on the matters set forth on the reverse side
hereof, as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1,2,3 AND 4.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED?
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