<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER: 0-21696
ARIAD PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-3106987
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26 LANDSDOWNE STREET, CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices)(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 494-0400
Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report: Not Applicable
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
The number of shares of the Registrant's common stock outstanding as of May 12,
1999 was 22,005,149.
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ARIAD PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - March 31, 1999
and December 31, 1998 ........................................... 1
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998 ...................... 2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 ...................... 3
Notes to Unaudited Condensed Consolidated Financial Statements .. 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............................. 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ...... 13
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ....................... 14
ITEM 5. OTHER INFORMATION ............................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................ 15
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,271,390 $ 6,501,648
Marketable securities 6,598,294 7,674,488
Inventory and other 1,788,945 2,018,846
Due from Genomics Center 394,401 332,571
------------- -------------
Total current assets 18,053,030 16,527,553
------------- -------------
Property and equipment:
Leasehold improvements 12,560,210 12,555,301
Equipment and furniture 4,546,463 4,438,399
------------- -------------
Total 17,106,673 16,993,700
Less accumulated depreciation and amortization 9,562,690 8,944,027
------------- -------------
Property and equipment, net 7,543,983 8,049,673
------------- -------------
Investment in Genomics Center 2,501,438 1,902,129
------------- -------------
Intangible and other assets, net 4,052,164 4,306,585
------------- -------------
Total $ 32,150,615 $ 30,785,940
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,758,770 $ 1,861,021
Accounts payable 3,354,719 3,322,439
Accrued liabilities 2,429,883 2,042,641
Advance from Genomics Center 3,621,091 3,162,463
Deferred revenue 333,333 333,333
------------- -------------
Total current liabilities 11,497,796 10,721,897
------------- -------------
Long-term debt 2,936,442 3,295,139
------------- -------------
Redeemable convertible preferred stock, at liquidation value 5,097,260 5,035,616
------------- -------------
Stockholders' equity:
Series B convertible preferred stock, $.01 par value; authorized,
5,000,000 shares; issued and outstanding, 3,004,436 shares in 1999 and
2,526,316 shares in 1998 (liquidation preference, $29,747,000) 30,044 25,263
Common stock, $.001 par value; authorized, 60,000,000 shares; issued and
outstanding, 21,992,880 shares in 1999 and 21,938,754 shares in 1998 21,993 21,939
Additional paid-in capital 110,243,346 104,360,924
Accumulated other comprehensive loss (45,070) (34,381)
Accumulated deficit (97,631,196) (92,640,457)
------------- -------------
Stockholders' equity 12,619,117 11,733,288
------------- -------------
Total $ 32,150,615 $ 30,785,940
============= =============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
1
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenue:
Research revenue (principally related parties) $ 4,582,897 $ 2,846,586
Interest income 172,891 313,045
------------ ------------
Total revenue 4,755,788 3,159,631
------------ ------------
Operating expenses:
Research and development 8,510,816 7,735,955
General and administrative 730,247 699,029
Interest expense 105,781 130,582
------------ ------------
Total operating expenses 9,346,844 8,565,566
Equity in net loss of Genomics Center 338,039
------------ ------------
Net loss (4,929,095) (5,405,935)
------------ ------------
Preferred stock dividends 61,644
------------ ------------
Net loss attributable to common stockholders $ (4,990,739) $ (5,405,935)
============ ============
Net loss per common share (basic and diluted) $ (.23) $ (.28)
============ ============
Weighted average number of shares
of common stock outstanding 21,963,809 19,317,955
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,929,095) $ (5,405,935)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,096,830 842,336
Deferred revenue (833,333)
Stock-based compensation 18,346 19,773
Increase (decrease) from:
Inventory and other 229,901 (1,047,442)
Due from Genomics Center (61,830)
Other assets 117,110 (9,910)
Accounts payable 32,280 (402,802)
Accrued liabilities 387,242 (1,036,208)
Advance from Genomics Center 458,628 459,534
------------ ------------
Net cash used in operating activities (2,650,588) (7,413,987)
------------ ------------
Cash flows from investing activities:
Acquisitions of marketable securities (3,625,867)
Proceeds from sales and maturities of marketable securities 1,044,000 5,201,488
Investment in Genomics Center (2,655,369) (1,186,020)
Return of investment in Genomics Center 1,920,936 956,253
Investment in property and equipment, net (188,377) (1,109,613)
Acquisition of intangible assets (184,229) (252,547)
------------ ------------
Net cash used in investing activities (63,039) (16,306)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of series B preferred stock 5,747,000
Repayment of borrowings (460,948) (450,208)
Proceeds from sale/leaseback of equipment 75,404 1,425,209
Proceeds from issuance of stock pursuant to stock option and
purchase plans 121,913 77,949
------------ ------------
Net cash provided by financing activities 5,483,369 1,052,950
------------ ------------
Net (decrease) increase in cash and equivalents 2,769,742 (6,377,343)
Cash and equivalents, beginning of period 6,501,648 13,858,910
------------ ------------
Cash and equivalents, end of period $ 9,271,390 $ 7,481,567
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Management Statement
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position as of March 31, 1999 and the results of operations
for the three-month periods ended March 31, 1999 and 1998. These financial
statements should be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended December 31, 1998, which includes
consolidated financial statements and notes thereto for the years ended
December 31, 1998, 1997 and 1996.
The results of operations for the three-month period ended March 31, 1999
are not necessarily indicative of the results to be expected for the full
year.
2. Marketable Securities
The Company has classified its marketable securities as available for sale
and, accordingly, carries such securities at aggregate fair value. At
March 31, 1999 and December 31, 1998, the Company's marketable securities
consisted of the following:
<TABLE>
<CAPTION>
Aggregate Amortized Gross Unrealized
1999 Fair Value Cost Basis Gains Losses
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. Government obligations $ 574,034 $ 602,311 $ (28,277)
Corporate debt securities 6,024,260 6,041,253 $ 1,813 (18,606)
----------- ----------- ----------- -----------
Total $ 6,598,294 $ 6,643,364 $ 1,813 $ (46,883)
=========== =========== =========== ===========
1998
U.S. Government obligations $ 583,720 $ 603,222 $ (19,502)
Corporate debt securities 7,090,768 7,105,647 $ 3,772 (18,651)
----------- ----------- ----------- -----------
Total $ 7,674,488 $ 7,708,869 $ 3,772 $ (38,153)
=========== =========== ========== ===========
</TABLE>
At March 31, 1999, approximately $5,625,000 of investments in marketable
securities had contractual maturities of one year or less. Realized gains
and losses on sales of marketable securities were not material during the
quarter ended March 31, 1999; the net unrealized loss of $45,070 is
included in stockholders' equity.
3. Net Loss Per Share
Net loss per share amounts have been computed based on the weighted
average number of shares outstanding during each period. Because of the
net loss reported in each period, diluted and basic per share amounts are
the same.
4
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4. Hoechst-ARIAD Genomics Center, LLC
In March 1997, the Company entered into an agreement which established a
50/50 joint venture with Hoechst Marion Roussel, Inc. ("HMR") to pursue
functional genomics with the goal of identifying genes that encode novel
therapeutic proteins and small-molecule drug targets (the "1997 HMR
Genomics Agreement"). The joint venture, named the Hoechst-ARIAD Genomics
Center, LLC (the "Genomics Center"), is located at the Company's research
facilities in Cambridge, Massachusetts. Under the terms of the 1997 HMR
Genomics Agreement, the Company and HMR agreed to commit $85,000,000 to
the establishment of the Genomics Center and its first five years of
operation. The Company and HMR agreed to jointly fund $78,500,000 of
operating and related costs, and ARIAD agreed to invest up to $6,500,000
in leasehold improvements and equipment for use by ARIAD in conducting
research on behalf of the Genomics Center. From the formation of the
Genomics Center through March 31, 1999, the Company has invested
$6,500,000 in leasehold improvements and equipment and funded $11,494,000
in operating and related costs. HMR committed to provide ARIAD with
capital adequate to fund ARIAD's share of such costs through the purchase
of up to $49,000,000 of ARIAD series B convertible preferred stock over
the five-year period, including an initial investment of $24,000,000,
which was completed in March 1997 and a subsequent investment of
$5,747,000 which was completed in January 1999. Should ARIAD and HMR
determine that the Genomics Center requires funds in excess of those
committed, ARIAD may fund its share of the excess through a loan facility
made available by HMR. Funds borrowed by ARIAD pursuant to such loan
facility, if any, will bear interest at the ninety (90) day LIBOR rate
plus 0.25% and are repayable by June 30, 2003 in cash or series B
convertible preferred stock, at the Company's option.
The Company also entered into agreements with the Genomics Center to
provide research and administrative services (the "Services Agreements")
to the Genomics Center on a cost reimbursement basis. ARIAD's costs of
providing the research and administrative services to the Genomics Center
are charged to research and development expense and general and
administrative expense in the condensed consolidated financial statements.
Under the Services Agreements, ARIAD bills the Genomics Center for 100% of
its costs of providing the research and administrative services; however,
because ARIAD is providing 50% of the funding of the Genomics Center,
ARIAD recognizes as revenue only 50% of the billings to the Genomics
Center. The remaining 50% is accounted for as a return of ARIAD's
investment in the Genomics Center. Under the Services Agreements, the
Company bills the Genomics Center in advance for the next quarter's
projected services. At March 31, 1999, the balance sheet advance amount of
$3,621,091 represents the projected amount for the second quarter of 1999.
Revenue recognized pursuant to the Services Agreements amounted to
$1,583,000 and $956,000 for the quarters ended March 31, 1999 and 1998,
respectively. The Genomics Center had total assets of $5,832,000 and
$2,969,000 at March 31, 1999 and 1998 respectively, and incurred a net
loss of $3,836,000 and $1,913,000 for the quarter ended March 31, 1999 and
1998 respectively.
5
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The major components of the Genomics Center's financial position and
results of operations are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
Advance to ARIAD $ 3,621,000 $ 3,162,000
Other assets 2,211,000 804,000
----------- -----------
Total assets $ 5,832,000 $ 3,966,000
=========== ===========
Total liabilities-due to ARIAD $ 791,000 $ 400,000
Equity 5,041,000 3,566,000
----------- -----------
Total liabilities and equity $ 5,832,000 $ 3,966,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ - $ -
Operating expenses:
ARIAD 3,166,000 1,913,000
Other 670,000 -
------------ ------------
Net Loss $ (3,836,000) $ (1,913,000)
============ ============
ARIAD's 50% share of net loss $ (1,918,000) $ (956,000)
Elimination of intercompany transactions 1,580,000 956,000
------------ ------------
ARIAD's equity in the net (loss) of
Genomics Center $ (338,000) $ -
============ ============
</TABLE>
5. Comprehensive Net Loss
Effective January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income, which requires businesses to disclose comprehensive
income and its components in their general-purpose financial statements.
In accordance with SFAS No. 130, the comprehensive loss for the first
quarter of 1999 would include the net unrealized loss on marketable
securities of $10,689 for the three months ended March 31, 1999 resulting
in a comprehensive loss of $5,001,428.
6. Accounting Change
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, Reporting on the Cost of
Start-Up Activities, which will require that all organizational costs will
be expensed as incurred. The Company adopted this SOP effective January 1,
1999 and recorded charges of $364,000 to research and development
expenses.
6
<PAGE> 9
7. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities,
effective for fiscal years beginning after June 15, 1999. The new standard
requires that all companies record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting
from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. Management is currently assessing the impact of SFAS No. 133
on the consolidated financial statements of the Company. The Company will
adopt this accounting standard on January 1, 2000, as required.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company focuses on the discovery and development of novel and proprietary
drugs based on its understanding of the inner-workings of cells and the genes
involved in disease. The Company has developed a product based on its gene
regulation technology to treat graft-versus-host disease, a complication of bone
marrow transplantation involving an attack by a patient's immune system on
healthy tissue. This product entered Phase 1 human clinical trials in December
1998. All of the Company's other drug candidates are in the pre-clinical stage.
ARIAD's research and development programs involve three areas: signal
transduction inhibitors, regulated gene therapy and functional genomics. Signal
transduction inhibitors are drugs designed to block specific molecular targets
in bone cells and white blood cells. In November 1995, the Company entered into
an agreement with Hoechst Marion Roussel, Inc. ("HMR") to collaborate on the
discovery and development of such drugs to treat osteoporosis and other bone
diseases. The Company also has developed a system referred to as "ARIAD
Regulated Gene Expression Technology" or "ARGENT(TM)" which is designed to
control cellular activities using small molecule drugs. This system can be
applied in research for discovery of new drugs and new genes, in gene and cell
therapy, and in the manufacture of biological products. The leading application
of this system is the controlled production of protein drugs by regulated gene
therapy. Another use of this system is ARIAD's product to treat
graft-versus-host disease. This product may improve the safety and effectiveness
of certain types of bone marrow transplants by selectively killing the cells
responsible for graft-versus-host disease. In addition, the Company is working
in an area known as functional genomics, which involves the discovery of new
genes and the validation of molecular targets that may be useful in the
treatment of diseases. ARIAD is developing this information as a tool to
accelerate the discovery of new drugs to treat these diseases, such as
osteoporosis (bones), atherosclerosis (heart and blood vessels) and cancer. In
March 1997, the Company established a joint venture with HMR, named the
Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"), to pursue this area.
Since its inception in 1991, the Company has devoted substantially all of its
resources to its research and development programs. The Company receives no
revenue from the sale of
7
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pharmaceutical products and substantially all revenue to date has been received
in connection with the Company's research collaborations. The Company has not
been profitable since inception and expects to incur substantial and increasing
operating losses for the foreseeable future, primarily due to the expansion of
its research and development programs, including the services the Company
provides to the Genomics Center pursuant to certain research and administrative
services agreements (the "Services Agreements"), which services are accounted
for on a cost reimbursement basis. The Company expects that losses will
fluctuate from quarter to quarter and that such fluctuations may be substantial.
As of March 31, 1999, the Company had an accumulated deficit of $97,631,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 1998
REVENUE
The Company recognized research revenue of $4,583,000 for the quarter ended
March 31, 1999 compared to $2,847,000 for the same period in 1998. Research
revenue in 1999 is comprised principally of research revenue recognized under
the Company's 1995 collaborative research and development agreement with HMR
(the "1995 HMR Osteoporosis Agreement") and the 1997 HMR Genomics Agreement. The
increase in research revenue of $1,736,000 for the quarter ended March 31, 1999
when compared to the corresponding period in 1998 is a result of increased
services provided to the Genomics Center under the Services Agreements, and the
achievement of the second milestone of $2,000,000 under the 1995 HMR
Osteoporosis Agreement offset by a reduction of $833,000 in deferred revenue
recognized in the prior year relating to this agreement. Research revenue
resulting from the Services Agreements with the Genomics Center is expected to
increase over the next two years.
Interest income decreased by $140,000 to $173,000 for the quarter ended March
31, 1999 compared to $313,000 for the same period in 1998 primarily as a result
of lower levels of funds invested during the period.
OPERATING EXPENSES
Research and development expenses increased to $8,511,000 for the quarter ended
March 31, 1999 compared to $7,736,000 for the same period in 1998 due primarily
to increased research services provided to the Genomics Center under the
Services Agreements. The Company expects its research and development expenses
to increase over the next two years as a result of research services to be
provided to the Genomics Center.
General and administrative expenses increased slightly to $730,000 for the
quarter ended March 31, 1999 compared to $699,000 for the corresponding period
in 1998.
8
<PAGE> 11
The Company incurred interest expense of $106,000 for the quarter ended March
31, 1999 compared to $131,000 for the corresponding period in 1998. The decrease
resulted from a lower level of long-term debt during the period.
OPERATING RESULTS
The Company incurred losses of $4,929,000 for the quarter ended March 31, 1999
and $5,406,000 for the corresponding period in 1998, or $.23 and $.28 per share,
respectively. The Company expects that substantial operating losses will
continue for several more years, will increase as its product development
activities expand and increased services are provided to the Genomics Center and
will fluctuate as a result of differences in the timing and composition of
revenue earned and expenses incurred.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and investments in property and
equipment primarily through the private placement and public offering of its
securities, including the sale of Series B Convertible Preferred Stock ("Series
B Preferred Stock") to HMR in connection with the formation and operation of the
Genomics Center in March 1997 and in January 1999, supplemented by the issuance
of long-term debt, sale/leaseback and capital lease transactions, interest
income, government-sponsored research grants and research revenue under the 1995
HMR Osteoporosis Agreement, the 1997 HMR Genomics Agreement and the Services
Agreements.
At March 31, 1999, the Company had cash, cash equivalents and marketable
securities totaling $15,870,000, and working capital of $6,555,000 compared to
cash, cash equivalents and marketable securities totaling $14,176,000 and
working capital amounting to $5,806,000 at December 31, 1998.
The primary uses of cash during the three months ended March 31, 1999 were
$2,651,000 to finance the Company's operations and working capital requirements,
$188,000 to purchase laboratory equipment, $461,000 to repay long-term debt,
$734,000 for net investment in the Genomics Center and $184,000 to acquire
intellectual property. The primary sources of cash during the quarter ended
March 31, 1999 were $3,000,000 of research funding from the 1995 HMR
Osteoporosis Agreement, including $2,000,000 received upon the achievement of
the second research milestone under such agreement, $459,000 in advances from
the Genomics Center, $75,000 from the sale/leaseback of laboratory equipment and
$1,044,000 of net proceeds from the sale and maturity of marketable securities
and $5,747,000 from the sale of Series B Convertible Preferred Stock.
In March 1997, the Company entered into a 50/50 joint venture with HMR to pursue
functional genomics with the goal of identifying genes that encode novel
therapeutic proteins and small-molecule drug targets. The Company and HMR agreed
to commit up to $85,000,000 to the establishment of the Genomics Center and its
first five years of operation. The Company and HMR agreed to jointly fund
$78,500,000 of operating and related costs, and ARIAD agreed to fund up to
$6,500,000 in leasehold improvements and equipment for use by ARIAD in
conducting research on behalf of the Genomics Center. From the formation of the
Genomics
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<PAGE> 12
Center through March 31, 1999, the Company invested $6,500,000 in leasehold
improvements and equipment and funded $11,494,000 in operating and related
costs. HMR committed to provide ARIAD with capital adequate to fund ARIAD's
share of such costs through the purchase of up to $49,000,000 of Series B
Preferred Stock over the five-year period, including an initial investment of
$24,000,000 and a subsequent investment of $5,747,000, each of which is
discussed below. The Company also entered into the Services Agreements with the
Genomics Center to provide research and administrative services to the Genomics
Center on a cost reimbursement basis.
Pursuant to the 1997 HMR Genomics Agreement, on March 18, 1997, HMR purchased
2,526,316 shares of the Company's Series B Preferred Stock for $24,000,000.
During the period from 1999 to 2002, to fund its commitment to the Genomics
Center, the Company may, at its option, require HMR to make additional purchases
of up to $25,000,000 of Series B preferred stock at purchase prices based on a
premium to the market price of the common stock at the time of each subsequent
purchase (unless the market price of the common stock exceeds a predetermined
ceiling, in which case the purchase price will be equal to the market price). On
January 5, 1999, HMR purchased 478,120 shares of Series B Preferred Stock for
$5,747,000 representing the amount of the subsequent purchase available to ARIAD
for 1999 under the agreement. Subsequent commitments by HMR to purchase Series B
Preferred Stock are $8,536,000 and $8,691,000 for each of the years ended
December 31, 2000 and 2001, respectively, and $2,026,000 for the three months
ended March 31, 2002. Should ARIAD and HMR determine that the Genomics Center
requires funds in excess of those committed, ARIAD may fund its share of the
excess through a loan facility made available by HMR. Funds borrowed by ARIAD
pursuant to such loan facility, if any, will bear interest at the ninety (90)
day LIBOR rate plus 0.25% and are repayable by June 30, 2003 in cash or series B
convertible preferred stock, at the Company's option.
In November 1995, the Company entered into an agreement with HMR to collaborate
on the discovery and development of drugs to treat osteoporosis and related bone
diseases, one of the Company's signal transduction inhibitor programs. Under the
terms of the 1995 HMR Osteoporosis Agreement, HMR made an initial cash payment
to the Company of $10,000,000, agreed to provide research funding in equal
quarterly amounts of $1,000,000 up to an aggregate of $20,000,000 over a
five-year period and agreed to provide an aggregate of up to $10,000,000 upon
the attainment of certain research milestones, including a payment of $2,000,000
which was received on February 23, 1999 following the achievement of the second
milestone. In addition, HMR has established a dedicated research group to
collaborate with the Company on the discovery of osteoporosis drugs and has
agreed to fund all of the preclinical and clinical development costs for
products that emerge from the collaboration. The 1995 HMR Osteoporosis Agreement
further provides for the payment of royalties to the Company based on product
sales. To date, revenue recognized under the 1995 HMR Osteoporosis Agreement has
amounted to $27,666,000.
The Company has substantial fixed commitments under various research and
licensing agreements, consulting and employment agreements, lease agreements and
long-term debt instruments. Such fixed commitments currently aggregate in excess
of $12,000,000 per year and may increase. The Company will require substantial
additional funding for its research and
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<PAGE> 13
product development programs, including preclinical development and clinical
trials, for operating expenses, for the pursuit of regulatory clearances and for
establishing manufacturing, marketing and sales capabilities. Adequate funds for
these purposes, whether obtained through financial markets or collaborative or
other arrangements with collaborative partners, or from other sources, may not
be available when needed or on terms acceptable to the Company.
The Company believes that its existing capital resources, plus interest income
and planned research and development funding and other sources of funding,
including anticipated strategic alliances, will be adequate to satisfy its
capital and operating requirements through 1999. However, there can be no
assurance that changes in the Company's research and development plans or other
events affecting the Company's revenues or operating expenses will not result in
the earlier depletion of the Company's funds.
IMPACT OF THE YEAR 2000 ISSUE
The year 2000 issue relates to numerous potential problems arising from the ways
in which computer software can handle dates. Many older systems use a two-digit
date format, as opposed to four digits, to indicate the year. Some of the
Company's computer programs or other information systems that have
time-sensitive software or embedded microcontrollers may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations.
The Company's plan to address year 2000 issues consists of three phases:
assessment, testing and implementation. The Company is in the process of
completing an initial assessment of its information technology infrastructure,
hardware and software which began in 1998. Based on this review, the Company
believes that the costs and/or consequences associated with the year 2000 issue
are not expected to have a material effect on its business, operations or
financial condition.
A second, more in-depth analysis is also currently ongoing. Internally, this
review will include the testing of systems developed by the Company. Although
the internal portion of this analysis just recently commenced, the Company
believes that, with modifications to existing software and conversions to new
software and systems, the year 2000 issue will not pose significant operational
problems for its computer and other information systems. If required, the
Company will utilize additional internal and external resources to reprogram,
replace, and test the software and systems for year 2000 modifications.
Externally, the Company's preparations for the year 2000 issue will consist of
soliciting and, where feasible, obtaining certification of year 2000 compliance
from third-party software vendors and determining the readiness of its
significant suppliers. The Company is working with external suppliers and
service providers to ensure that they and their systems will be able to support
our needs and, where necessary, interact with our server and hardware and
software infrastructure in preparation for the year 2000. This testing phase is
expected to be completed by September 30, 1999.
If any necessary modifications, conversions and/or replacements are not made,
are not completed timely, or if any of the Company's suppliers or customers do
not successfully deal with the year 2000 issue, such circumstances could have a
material adverse impact on the operations of the
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<PAGE> 14
Company. The Company's research and development efforts, which rely heavily on
the storage and retrieval of electronic information, could be interrupted
resulting in significant delays in any one or all of the Company's research and
development programs. The severity of these possible problems would depend on
the nature of the problem and how quickly it could be corrected or an
alternative implemented, which is unknown at this time. In the extreme, such
problems could disrupt a significant portion of the Company's operations.
While management has not yet specifically determined the costs associated with
its year 2000 readiness efforts, monitoring and managing the year 2000 issue
will result in additional direct and indirect costs to the Company. Direct costs
include potential charges by third-party software vendors for product
enhancements, costs involved in testing software products for year 2000
compliance and any resulting costs for developing and implementing contingency
plans for critical software products which are not enhanced. The Company
estimates the total cost for upgrading its computer system, hardware and
software is not likely to exceed $200,000. Indirect costs will principally
consist of the time devoted by existing employees in monitoring software vendor
progress, testing enhanced software products and implementing any necessary
contingency plans. Such costs have not been material to date. Both direct and
indirect costs of addressing the year 2000 issue will be charged to earnings as
incurred.
At the present time, a contingency plan has not been completed. After evaluating
its internal compliance efforts as well as the compliance of third parties as
described above, the Company expects to have contingency plans in place by
November 30, 1999 to address situations in which various systems of the Company,
or of third parties with which the Company does business, are not year 2000
compliant. Some risks of the year 2000 issue, however, are beyond the control of
the Company and its suppliers and customers. For example, no preparations or
contingency plan will protect the Company from a downturn in economic activity
caused by the possible ripple effect throughout the entire economy caused by the
year 2000 issue.
SECURITIES LITIGATION REFORM ACT
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Except for the historical information contained in this Quarterly Report
on Form 10-Q, the matters discussed herein are forward-looking statements that
involve risks and uncertainties, including but not limited to risks and
uncertainties regarding the receipt of revenues under the Company's 1995 HMR
Osteoporosis Agreement and the Services Agreements, the actual research and
development expenses and other costs associated with the Genomics Center, the
success of the Company's preclinical studies, the ability of the Company to
commence clinical studies, the adequacy of the Company's capital resources and
the availability of additional funding, as well as general economic,
competitive, governmental and technological factors affecting the Company's
operations, markets, products, services and prices, and other factors discussed
under the heading "Cautionary Statement Regarding Forward-Looking Statements" in
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission. As a result of these factors, actual events or results could differ
materially from those described herein.
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<PAGE> 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company maintains an investment portfolio in accordance with its Investment
Policy. The primary objectives of the Company's Investment Policy are to
preserve principal, maintain proper liquidity to meet operating needs and
maximize yields. The Company's Investment Policy specifies credit quality
standards for the Company's investments and limits the amount of credit exposure
to any single issue, issuer or type of investment.
The Company invests cash balances in excess of operating requirements in
short-term securities, generally with maturities of 90 days or less. The
Company's marketable securities consist of corporate debt and U.S. Government
securities primarily with maturities of one year or less, but generally less
than six months. These securities are classified as available-for-sale.
Available-for-sale securities are recorded on the balance sheet at fair market
value with unrealized gains or losses reported as a separate component of
stockholders' equity (accumulated other comprehensive loss). Gains and losses on
investment security transactions are reported on the specific-identification
method. Interest income is recognized when earned. A decline in the market value
of any available-for-sale security below cost that is deemed other than
temporary results in a charge to earnings and establishes a new cost basis for
the security. These investments are sensitive to interest rate risk. The Company
believes that the effect, if any, of reasonable possible near-term changes in
the interest rates on its financial position, results of operations and cash
flows would not be material due to the short-term nature of these investments.
At March 31, 1999, the Company has a bank term note at prime plus 1% and a
government sponsored term note at prime plus 2.75%. These notes are sensitive to
interest rate risk. In the event of a hypothetical 10% increase in the prime
rate, the Company would incur approximately $425,000 of additional interest
expense per year.
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<PAGE> 16
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) (1) Securities sold. (A) On January 5, 1999 the Company sold 478,120
shares (the "Preferred Shares") of Series B Convertible Preferred Stock.
(B) On February 12 and March 8, 1999 the Company issued an aggregate of
41,250 shares (the "Option Shares") of Common Stock, par value $.001 per
share (the "Common Stock"). (C) On January 5, 1999 the Company issued an
aggregate of 12,876 shares (the "Plan Shares") of Common Stock. (D) On
January 15, 1999 the Company issued an aggregate of 300 options (the
"Options") to purchase 300 shares of Common Stock.
(2) Underwriters and other purchasers. No underwriters were involved in
any of the transactions. (A) The Company sold the Preferred Shares to
Hoechst Marion Roussel, Inc. (B) The Company sold the Option Shares to an
aggregate of two employees upon the exercise of an aggregate of 41,250
stock options. (C) The Company sold the Plan Shares to an aggregate of 22
employees pursuant to the terms of the Company's 1997 Employee Stock
Purchase Plan. (D) The Company issued the Options to one employee pursuant
to the terms of the Company's 1991 Stock Option Plan for Employees and
Consultants.
(3) Consideration. (A) The Preferred Shares were sold for an aggregate
purchase price of $5,747,000. (B) The Option Shares were sold for an
aggregate exercise price of $66,000. (C) The Plan Shares were sold for an
aggregate purchase price of $18,413. (D) The Options were issued in
exchange for services to be rendered.
(4) Exemption from registration claimed. All of the Preferred Shares, the
Option Shares, the Plan Shares and the Options were issued in reliance
upon Section 4(2) of the Securities Act of 1933, as amended, because none
of the transactions involved any public offering by the Company.
(5) Terms of conversion or exercise. (A) Each Preferred Share is
convertible into one share of Common Stock. (B) Not applicable. (C) Not
applicable. (D) The Options vest equally over a period of 4 years and are
exercisable at a price of $2.09 per share until January 15, 2009.
(6) Use of Proceeds. Not applicable.
(d) Not applicable.
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<PAGE> 17
ITEM 5. OTHER INFORMATION
On April 30, 1999, the Board of Directors of the Company amended the Company's
By-laws to change the notification requirements for proposals to be submitted at
stockholders' meetings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith:
Exhibit
No. Title
3.1 By-Laws, as amended.
10.1+ Executive Employment Agreement between the Company and
Laurie A. Allen, Esq., dated as of November 25, 1998.
10.2+ Executive Employment Agreement between the Company and Mark
Zoller, Ph.D., dated as of November 1, 1994, with First
Amendment to Employment Agreement, dated as of January 1,
1997, and Second Amendment to Employment Agreement, dated as
of November 1, 1998.
10.3+ Executive Employment Agreement between the Company and John
D. Iuliucci, Ph.D., dated as of May 1, 1992, with First
Amendment to Employment Agreement, dated as of March 2, 1994,
and Second Amendment to Employment Agreement, dated as of
January 1, 1997.
27.1 Financial Data Schedule.
+ Management contract or compensatory plan, contract or arrangement
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the quarter
ended March 31, 1999, which report was filed on January 8,
1999 to report the sale of 478,120 shares of the Company's
Series B Convertible Preferred Stock for a total purchase
price of $5,747,000.
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<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARIAD Pharmaceuticals, Inc.
(Registrant)
By: /s/ Jay R. LaMarche
--------------------------------------
Jay R. LaMarche
Executive Vice President and
Chief Financial Officer
(Duly authorized Officer and Principal
Financial Officer)
Date: May 17, 1999
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<PAGE> 1
EXHIBIT 3.1
BY-LAWS
of
ARIAD CORPORATION,
as amended
(A Delaware Corporation)
---------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as amended
from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Chairman" means the Chairman of the Board of Directors of the
Corporation.
1.7 "Chief Executive Officer" means the Chief Executive Officer of the
Corporation.
1.8 "Vice Chairman" means the Vice Chairman of the Board of Directors of
the Corporation.
<PAGE> 2
1.9 "Corporation" means ARIAD Corporation.
1.10 "Directors" means directors of the Corporation.
1.11 "Entire Board" means all directors of the Corporation in office,
whether or not present at a meeting of the Board, but disregarding vacancies.
1.12 "General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
1.13 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.14 "President" means the President of the Corporation.
1.15 "Secretary" means the Secretary of the Corporation.
1.16 "Stockholders" means stockholders of the Corporation.
1.17 "Treasurer" means the Treasurer of the Corporation.
1.18 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of stockholders shall be held at the
Office of the Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notice of such meeting or in the
waiver of notice thereof.
2.2 Annual Meeting. A meeting of stockholders shall be held annually for
the election of Directors and the transaction of other business at such hour and
on such business day in April or May or as may be determined by the Board and
designated in the notice of meeting.
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<PAGE> 3
2.3 Deferred Meeting for Election of Directors. Etc. If the annual meeting
of stockholders for the election of Directors and the transaction of other
business is not held within the months specified in Section 2.2 hereof, the
Board shall call a meeting of stockholders for the election of Directors and the
transaction of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of stockholders (other than
a special meeting for the election of Directors), unless otherwise prescribed by
statute may be called at any time by the Board or by the Chief Executive Officer
or by the Secretary. At any special meeting of stockholders only such business
may be transacted as is related to the purpose or purposes of such meeting set
forth in the notice thereof given pursuant to Section 2.6 hereof or in any
waiver of notice thereof given pursuant to Section 2.7 hereof.
2.5 Fixing Record Date. For the purpose of (a) determining the
stockholders entitled (i) to notice of or to vote at any meeting of stockholders
or any adjournment thereof, (ii) to express consent to corporate action in
writing without a meeting or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock; or (b) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date shall not be (x) in the case of clause (a) (i) above, more
than 60 nor less than 10 days before the date of such meeting, (y) in the case
of clause (a) (ii) above, more than 10 days after the date upon which the
resolution fixing the record date was adopted by the Board and (z) in the case
of clause (a) (iii) or (b) above, more than 60 days prior to such action. If no
such record date is fixed:
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<PAGE> 4
2.5.1 the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
2.5.2 the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is required under the General Corporation Law,
shall be the first day on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded; and when prior action by the Board is required under the General
Corporation Law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board adopts the resolution
taking such prior action; and
2.5.3 the record date for determining stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting.
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<PAGE> 5
Delivery made to the Corporation's registered office in accordance with Section
2.5.2 shall be by hand or by certified or registered mail, return receipt
requested.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided in
Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute, the
Certificate of Incorporation or these By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid, directed to the stockholder at his or her address as it
appears on the records of the Corporation. An affidavit of the Secretary or an
Assistant Secretary or of the transfer agent of the Corporation that the notice
required by this Section 2.6 has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the meeting as originally called. If, however, the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
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<PAGE> 6
2.7 Waivers of Notice. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the stockholder or stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by a stockholder at a meeting shall
constitute a waiver of notice of such meeting except when the stockholder
attends a meeting for the express purpose of objection, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these By-laws.
2.8 Notice of Stockholder Business and Nominations.
2.8.1 Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board and the
proposal of business to be considered by the Stockholders may be made at an
annual meeting of Stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board or (c) by any Stockholder of
the Corporation who was a stockholder of record at the time of giving of notice
provided for in this Section, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section.
(2) For nominations or other business to be properly brought before
an annual meeting by a Stockholder pursuant to clause (c) of paragraph 2.8.1(1)
of this Section, the Stockholder must have (i) given timely notice thereof in
writing to the Secretary of the Corporation, (ii) such other business must
otherwise be a proper matter for Stockholder action,
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<PAGE> 7
(iii) if the Stockholder, or the beneficial owner on whose behalf any such
proposal or nomination is made, has provided the Corporation with a Solicitation
Notice, as that term is defined below in this paragraph 2.8.1(2), such
Stockholder or beneficial owner must, in the case of a proposal, have delivered
a proxy statement and form of proxy to holders of at least the percentage of the
Corporation's voting shares required under applicable law to carry any such
proposal, or in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of at least a percentage of the
Corporation's voting shares reasonably believed by such Stockholder or
beneficial owner to be sufficient to elect the nominee or nominees proposed to
be nominated by such Stockholder, and must, in either case, have included in
such materials the Solicitation Notice and (iv) if no Solicitation Notice
relating thereto has been timely provided pursuant to this Section, the
Stockholder or beneficial holder proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this Section. To be timely, a Stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than the close of business on the forty-fifth (45th)
day nor earlier than the close of business on the seventy-fifth (75th) day prior
to the first anniversary of the preceding year's mailing date for Stockholder
proxy materials; provided, however, that in the event that the date of the
annual meeting is more than thirty (30) days before or more than sixty (60) days
after the date of the annual meeting in the preceding year or if an annual
meeting was not held in the preceding year, notice by the Stockholder to be
timely must be so delivered not earlier than the close of business on the
ninetieth (90) day prior to such annual meeting and not later than the close of
business on the later of the sixtieth (60th) day prior to such annual meeting or
the close of business on the
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<PAGE> 8
tenth (10th) day following the day on which public announcement of the date of
such meeting is first made by the Corporation. Such Stockholder's notice shall
set forth (a) as to each person whom the Stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any other
business that the Stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such Stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; (c) as to the Stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such Stockholder, as they appear on the Corporation's
books, and of such beneficial owner and (ii) the class and number of shares of
the Corporation that are owned beneficially and held of record by such
Stockholder and such beneficial owner; and (d) whether either such Stockholder
or the beneficial owner intends to deliver a proxy statement and form of proxy
to holders of, in the case of a proposal, at least the percentage of the
Corporation's voting shares required under applicable law to carry the proposal
or, in the case of a nomination or nominations, a sufficient number of holders
of the Corporation's voting shares to elect such nominee or nominees (an
affirmative statement of such intent, a "Solicitation Notice").
8
<PAGE> 9
(3) Notwithstanding anything in the second sentence of paragraph
2.8.1(2) of this Section to the contrary, in the event that the number of
directors to be elected to the Board is increased and there is no public
announcement by the Corporation naming all of the nominees for director or
specifying the size of the increased Board at least seventy (70) days prior to
the first anniversary of the preceding year's annual meeting (or, if the annual
meeting is held more than thirty (30) days before or sixty (60) days after such
anniversary date, at least seventy (70) days prior to such annual meeting), a
Stockholder's notice required by this Section shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
office of the Corporation not later than the close of business on the tenth
(10th) day following the day on which such public announcement is first made by
the Corporation.
2.8.2 Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
Stockholders as shall have been set forth in the Corporation's notice of
meeting. Nominations of persons for election to the Board may be made at a
special meeting of Stockholders at which directors are to be elected pursuant to
the Corporation's notice of meeting (a) by or at the direction of the Board or
(b) provided that the Board has determined that directors shall be elected at
such meeting, by any Stockholder of the Corporation who is a stockholder of
record at the time of giving of notice of the special meeting, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section. In the event the Corporation calls a special meeting of
Stockholders for the purpose of electing one or more directors to the Board, any
such Stockholder may nominate a person or persons (as the case may be), for
election to such
9
<PAGE> 10
position(s) as specified in the Corporation's notice of meeting, if the
Stockholder's notice required by paragraph 2.8.1(2) of this Section shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the ninetieth (90th) day prior to such special meeting nor
later than the close of business on the later of the sixtieth (60th) day prior
to such special meeting, or the tenth (10th) day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board to be elected at such meeting.
2.8.3 General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible to serve as directors and
only such business shall be conducted at a meeting of Stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Section. Except as otherwise provided by law or these By-laws, the Chairman
of the meeting shall have the power and duty to determine whether a nomination
or any business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this Section
and, if any proposed nomination or business is not in compliance herewith to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
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(3) Notwithstanding the foregoing provisions of this Section,
a Stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section shall be deemed to affect any rights (i)
of Stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
2.9 List of Stockholders. The Secretary shall prepare and make, or cause
to be prepared and made, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, the stockholder's agent, or attorney, at the
stockholder's expense, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The Corporation shall maintain the
stockholder list in written form or in another form capable of conversion into
written form within a reasonable time. Upon the willful neglect or refusal of
the Directors to produce such a list at any meeting for the election of
Directors, they shall be ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the
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<PAGE> 12
stock ledger, the list of stockholders or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
2.10 Quorum of Stockholders; Adjournment. Except as otherwise provided by
any statute, the Certificate of Incorporation or these By-laws, the holders of
one-third of all outstanding shares of stock entitled to vote at any meeting of
stockholders, present in person or represented by proxy, shall constitute a
quorum for the transaction of any business at such meeting. When a quorum is
once present to organize a meeting of stockholders, it is not broken by the
subsequent withdrawal of any stockholders. The holders of a majority of the
shares of stock present in person or represented by proxy at any meeting of
stockholders, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
2.11 Voting; Proxies. Unless otherwise provided in the Certificate of
Incorporation, every stockholder of record shall be entitled at every meeting of
stockholders to one vote for each share of capital stock standing in his or her
name on the record of stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other
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proportion of the votes of such stock. The provisions of Sections 212 and 217 of
the General Corporation Law shall apply in determining whether any shares of
capital stock may be voted and the persons, if any, entitled to vote such
shares; but the Corporation shall be protected in assuming that the persons in
whose names shares of capital stock stand on the stock ledger of the Corporation
are entitled to vote such shares. Holders of redeemable shares of stock are not
entitled to vote after the notice of redemption is mailed to such holders and a
sum sufficient to redeem the stocks has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to pay
the holders the redemption price on surrender of the shares of stock. At any
meeting of stockholders (at which a quorum was present to organize the meeting),
all matters, except as otherwise provided by statute or by the Certificate of
Incorporation or by these By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of Directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
stockholder entitled to vote, the voting shall be by ballot. Each ballot shall
be signed by the stockholder voting or the stockholder's proxy and shall state
the number of shares voted. On all other questions, the voting may be viva voce.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy. The
validity and enforceability of any proxy shall be determined in accordance with
Section 212 of the General Corporation Law. A stockholder may revoke any proxy
that is not irrevocable by attending the
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meeting and voting in person or by filing an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a later
date to the Secretary.
2.12 Voting Procedures and Inspectors of Election at Meetings of
Stockholders. The Board, in advance of any meeting of stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting, the person presiding at the meeting may appoint, and on the request of
any stockholder entitled to vote thereat shall appoint, one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall (a) ascertain the number of shares outstanding and
the voting power of each, (b) determine the shares represented at the meeting
and the validity of proxies and ballots, (c) count all votes and ballots, (d)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (e) certify their
determination of the number of shares represented at the meeting and their count
of all votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of their duties. Unless
otherwise provided by the Board, the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting shall be determined by the person presiding at the meeting and shall be
announced at the meeting. No ballot, proxies or votes, or any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court
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of Chancery of the State of Delaware upon application by a stockholder shall
determine otherwise.
2.13 Organization. At each meeting of stockholders, the Chairman, or in
the absence of the Chairman the Chief Executive Officer, or in the absence of
the Chief Executive Officer the President, or in the absence of the President a
Vice President, and in case more than one Vice President shall be present, that
Vice President designated by the Board (or in the absence of any such
designation, the most senior Vice President, based on age, present), shall act
as chairman of the meeting. The Secretary, or in his or her absence one of the
Assistant Secretaries, shall act as secretary of the meeting. In case none of
the officers above designated to act as chairman or secretary of the meeting,
respectively, shall be present, a chairman or a secretary of the meeting, as the
case may be, shall be chosen by a majority of the votes cast at such meeting by
the holders of shares of capital stock present in person or represented by proxy
and entitled to vote at the meeting.
2.14 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.15 Written Consent of Stockholders Without a Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so
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taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered (by hand or by certified or registered mail,
return receipt requested) to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent shall bear the date
of signature of each stockholder who signs the consent and no written consent
shall be effective to take the corporate action referred to therein unless,
within 60 days of the earliest dated consent delivered in the manner required by
this Section 2.15, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation as aforesaid. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 3
Directors
3.1 General Powers. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required,
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by these By-laws or the Certificate of Incorporation or by statute, to be
exercised and performed by the stockholders.
3.2 Number: Qualification: Term of Office. The Board shall consist of one
or more members. The number of Directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or by action of the Board. Directors need not be stockholders. Each
Director shall hold office until a successor is elected and qualified or until
the Director's death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by statute or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise provided
in the Certificate of Incorporation, newly created Directorships resulting from
an increase in the number of Directors and vacancies occurring in the Board for
any other reason, including the removal of Directors without cause, may be
filled by the affirmative votes of a majority of the entire Board, although less
than a quorum, or by a sole remaining Director, or may be elected by a plurality
of the votes cast by the holders of shares of capital stock entitled to vote in
the election at a special meeting of stockholders called for that purpose. A
Director elected to fill a vacancy shall be elected to hold office until a
successor is elected and qualified, or until the Director's earlier death,
resignation or removal.
3.5 Resignation. Any Director may resign at any time by written notice to
the Corporation. Such resignation shall take effect at the time therein
specified, and, unless otherwise
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specified in such resignation, the acceptance of such resignation shall not be
necessary to make it effective.
3.6 Removal. Subject to the provisions of Section 141(k) of the General
Corporation Law, any or all of the Directors may be removed with or without
cause by vote of the holders of a majority of the shares then entitled to vote
at an election of Directors.
3.7 Compensation. Each Director, in consideration of his or her service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in connection with the
performance of his or her duties. Each Director who shall serve as a member of
any committee of Directors in consideration of serving as such shall be entitled
to such additional amount per annum or such fees for attendance at committee
meetings, or both, as the Board may from time to time determine, together with
reimbursement for the reasonable out-of-pocket expenses, if any, incurred by
such Director in the performance of his or her duties. Nothing contained in this
Section 3.7 shall preclude any Director from serving the Corporation or its
subsidiaries in any other capacity and receiving proper compensation therefor.
3.8 Times and Places of Meetings. The Board may hold meetings, both
regular and special, either within or without the State of Delaware. The times
and places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the annual
meeting of stockholders for the election of Directors is held, and as soon as
practicable thereafter, the Board
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may hold its annual meeting, without notice of such meeting, for the purposes of
organization, the election of officers and the transaction of other business.
The annual meeting of the Board may be held at any other time and place
specified in a notice given as provided in Section 3.11 hereof for special
meetings of the Board or in a waiver of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held without
notice at such times and at such places as shall from time to time be determined
by the Board.
3.11 Special Meetings. Special meetings of the Board may be called by the
Chairman, the Chief Executive Officer or the Secretary or by any two or more
Directors then serving on at least one day's notice to each Director given by
one of the means specified in Section 3.14 hereof other than by mail, or on at
least three days' notice if given by mail. Special meetings shall be called by
the Chairman, the Chief Executive Officer or the Secretary in like manner and on
like notice on the written request of any two or more of the Directors then
serving.
3.12 Telephone Meetings. Directors or members of any committee designated
by the Board may participate in a meeting of the Board or of such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
3.13 Adjourned Meetings. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least one day's
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.14 hereof other than by
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mail, or at least three days' notice if by mail. Any business may be transacted
at an adjourned meeting that might have been transacted at the meeting as
originally called.
3.14 Notice Procedure. Subject to Sections 3.11 and 3.17 hereof, whenever,
under the provisions of any statute, the Certificate of Incorporation or these
By-laws, notice is required to be given to any Director, such notice shall be
deemed given effectively if given in person or by telephone, by mail addressed
to such Director at such Director's address as it appears on the records of the
Corporation, with postage thereon prepaid, or by telegram, telex, telecopy or
similar means addressed as aforesaid.
3.15 Waiver of Notice. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the person or persons entitled to said notice, whether before
or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Directors or a committee of Directors
need be specified in any written waiver of notice unless so required by statute,
the Certificate of Incorporation or these By-laws.
3.16 Organization. At each meeting of the Board, the Chairman, or in the
absence of the Chairman the Vice Chairman, or in the absence of the Vice
Chairman the Chief Executive Officer, or in the absence of the Chief Executive
Officer the President, or in the absence of the President a chairman chosen by a
majority of the Directors present, shall preside. The Secretary
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shall act as secretary at each meeting of the Board. In case the Secretary shall
be absent from any meeting of the Board, an Assistant Secretary shall perform
the duties of secretary at such meeting; and in the absence from any such
meeting of the Secretary and all Assistant Secretaries, the person presiding at
the meeting may appoint any person to act as secretary of the meeting.
3.17 Quorum of Directors. The presence in person of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board, but a majority of a smaller
number may adjourn any such meeting to a later date.
3.18 Action by Majority Vote. Except as otherwise expressly required by
statute, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board.
3.19 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all Directors or members of such committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of a majority of the entire
Board, designate one or more committees, each committee to consist of one or
more of the Directors of the Corporation. The Board may designate one or more
Directors as alternate members of any
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committee to replace absent or disqualified members at any meeting of such
committee. If a member of a committee shall be absent from any meeting, or
disqualified from voting thereat, the remaining member or members present and
not disqualified from voting, whether or not such member or members constitute a
quorum, may, by a unanimous vote, appoint another member of the Board to act at
the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in a resolution of the Board passed as
aforesaid, shall have and may exercise all the powers and authority of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority of the Board
in reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation under Section 251 or 252 of the General Corporation
Law, selling, leasing or exchanging all or substantially all of the
Corporation's property and assets, dissolving or revoking the dissolution of the
Corporation or amending the By-laws of the Corporation; and, unless the
resolution designating it expressly so provides, no such committee shall have
the power and authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board. Unless otherwise specified in the resolution of the Board designating
a committee, at all meetings of such committee a majority of the total number of
members of the committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the committee present at
any meeting at which there is a quorum shall be the act of the committee. Each
committee shall keep regular minutes of its
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meetings. Unless the Board otherwise provides, each committee designated by the
Board may make, alter and repeal rules for the conduct of its business. In the
absence of such rules each committee shall conduct its business in the same
manner as the Board conducts its business pursuant to Article 3 of these
By-laws.
ARTICLE 5
OFFICERS
5.1 Positions. The officers of the Corporation shall be a Chairman, a
Chief Executive Officer, a President, a Secretary, a Treasurer and such other
officers as the Board may appoint, including one or more Vice Presidents and one
or more Assistant Secretaries and Assistant Treasurers, who shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board. The Board may designate one or more Vice Presidents as Executive Vice
Presidents and may use descriptive words or phrases to designate the standing,
seniority or areas of special competence of the Vice Presidents elected or
appointed by it. Any number of offices may be held by the same person unless the
Certificate of Incorporation or these By-laws otherwise provide.
5.2 Appointment. The officers of the Corporation shall be chosen by the
Board annually or at such other time or times as the Board shall determine.
5.3 Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board. No officer shall be prevented from receiving a
salary or other compensation by reason of the fact that the officer is also a
Director.
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5.4 Term of Office. Each officer of the Corporation shall hold office
until such officer's successor is chosen and qualifies or until such officer's
earlier death, resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Such resignation shall take effect at the
date of receipt of such notice or at such later time as is therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the contract rights of the Corporation, if any. Any officer elected
or appointed by the Board may be removed at any time, with or without cause, by
vote of a majority of the entire Board. Any vacancy occurring in any office of
the Corporation shall be filled by the Board. The removal of an officer without
cause shall be without prejudice to the officer's contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights.
5.5 Fidelity Bonds. The Corporation may secure the fidelity of any or all
of its officers or agents by bond or otherwise.
5.6 Chairman; Vice Chairman. The Chairman shall preside at all meetings of
the Board and of the Stockholders and shall exercise such powers and perform
such other duties as shall be determined from time to time by the Board. The
Board may appoint, from among its members, a Vice Chairman. The Vice Chairman
shall preside at all meetings of the Board when the Chairman is absent. The Vice
Chairman shall not be an officer of the Corporation. The Vice Chairman may be
removed from his position as Vice Chairman at any time, with or without cause,
by the Board.
5.7 Chief Executive Officer. The Chief Executive Officer shall be the
Chief Executive Officer of the Corporation and shall have general supervision
over the business of the
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Corporation, subject, however, to the control of the Board and of any duly
authorized committee of Directors. All officers shall be subject to the
direction of the Chief Executive Officer. The Chief Executive Officer may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts
and other instruments except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation or shall be required by statute otherwise to
be signed or executed and, in general, the Chief Executive Officer shall perform
all duties incident to the office of Chief Executive Officer of a corporation
and such other duties as may from time to time be assigned to the Chief
Executive Officer by the Board.
5.8 President. At the request of the Chief Executive Officer, or, in the
Chief Executive Officer's absence, at the request of the Board, the President
shall perform all of the duties of the Chief Executive Officer and, in so
performing, shall have all the powers of, and be subject to all restrictions
upon, the Chief Executive Officer. The President may sign and execute in the
name of the Corporation deeds, mortgages, bonds, contracts or other instruments,
except in cases in which the signing and execution thereof shall be expressly
delegated by the Board or by these By-laws to some other officer or agent of the
Corporation, or shall be required by statute otherwise to be signed or executed,
and the President shall perform such other duties as from time to time may be
assigned to the President by the Board or by the Chief Executive Officer.
5.9 Vice Presidents. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to
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all restrictions upon, the President. Any Vice President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments, except in cases in which the signing and execution thereof shall be
expressly delegated by the Board or by these By-laws to some other officer or
agent of the Corporation, or shall be required by statute otherwise to be signed
or executed, and each Vice President shall perform such other duties as from
time to time may be assigned to such Vice President by the Board, by the Chief
Executive Officer or by the President.
5.10 Secretary. The Secretary shall attend all meetings of the Board and
of the stockholders and shall record all the proceedings of the meetings of the
Board and of the stockholders in a book to be kept for that purpose, and shall
perform like duties for committees of the Board, when required. The Secretary
shall give, or cause to be given, notice of all special meetings of the Board
and of the stockholders and shall perform such other duties as may be prescribed
by the Board or by the Chief Executive Officer, under whose supervision the
Secretary shall be. The Secretary shall have custody of the corporate seal of
the Corporation, and the Secretary, or an Assistant Secretary, shall have
authority to impress the same on any instrument requiring it, and when so
impressed the seal may be attested by the signature of the Secretary or by the
signature of such Assistant Secretary. The Board may give general authority to
any other officer to impress the seal of the Corporation and to attest the same
by such officer's signature. The Secretary or an Assistant Secretary may also
attest all instruments signed by the Chief Executive Officer, the President or
any Vice President. The Secretary shall have charge of all the books, records
and papers of the Corporation relating to its organization and management, shall
see that the reports, statements and other documents required by statute are
properly kept
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and filed and, in general, shall perform all duties incident to the office of
Secretary of a corporation and such other duties as may from time to time be
assigned to the Secretary by the Board or by the Chief Executive Officer.
5.11 Treasurer. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; render to the
Chief Executive Officer or the Board, whenever the Chief Executive Officer or
the Board shall require the Treasurer so to do, an account of the financial
condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account to
any of the Directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board; and, in general, perform all duties incident to the office
of Treasurer of a corporation and such other duties as may from time to time be
assigned to the Treasurer by the Board or the Chief Executive Officer.
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5.12 Assistant Secretaries and Assistant Treasurers. Assistant Secretaries
and Assistant Treasurers shall perform such duties as shall be assigned to them
by the Secretary or by the Treasurer, respectively, or by the Board or by the
Chief Executive Officer.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board, except as otherwise provided in
these By-laws, may prospectively or retroactively authorize any officer or
officers, employee or employees or agent or agents, in the name and on behalf of
the Corporation, to enter into any contract or execute and deliver any
instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 Loans. The Board may prospectively or retroactively authorize the
Chief Executive Officer or any other officer, employee or agent of the
Corporation to effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances the person so authorized may make,
execute and deliver promissory notes, bonds or other certificates or evidences
of indebtedness of the Corporation, and, when authorized by the Board so to do,
may pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances, or otherwise
limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be
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signed on behalf of the Corporation in such manner as shall from time to time be
determined by resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed shall be
deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
Chief Executive Officer, the President or a Vice President and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be
impressed with the seal of the Corporation or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may, unless otherwise
ordered by the Board, be issued by the Corporation with the same effect as if
such person were such officer, transfer agent or registrar at the date of issue.
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7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder of any
shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require
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the owner of the lost, destroyed, stolen or mutilated certificate, or his or her
legal representatives, to make proof satisfactory to the Board of such loss,
destruction, theft or mutilation and to advertise such fact in such manner as
the Board may require, and to give the Corporation and its transfer agents and
registrars, or such of them as the Board may require, a bond in such form, in
such sums and with such surety or sureties as the Board may direct, to indemnify
the Corporation and its transfer agents and registrars against any claim that
may be made against any of them on account of the continued existence of any
such certificate so alleged to have been lost, destroyed, stolen or mutilated
and against any expense in connection with such claim.
7.5 Rules and Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-laws or with the
Certificate of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder, including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law, shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of
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Incorporation or by an agreement among any number of stockholders or among such
stockholders and the Corporation. No restriction so imposed shall be binding
with respect to capital stock issued prior to the adoption of the restriction
unless the holders of such capital stock are parties to an agreement or voted in
favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the Certificate
of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time
or times as it, in its discretion, shall deem advisable giving due
consideration to the condition of the affairs of the Corporation;
7.7.2 may use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock of
the Corporation, or purchase warrants therefor, in accordance with law, or
any of its bonds, debentures, notes, scrip or other securities or
evidences of indebtedness; and
7.7.3 may set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
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ARTICLE 8
INDEMNIFICATION
8.1 Indemnity Undertaking. To the extent not prohibited by law, the
Corporation shall indemnify any person who is or was made, or threatened to be
made, a party to any threatened, pending or completed action, suit or proceeding
(a "Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2 Advancement of Expenses. The Corporation shall, from time to time,
reimburse or advance to any Director or officer or other person entitled to
indemnification hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; provided, however, that,
if required by the General Corporation Law, such expenses incurred by or on
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behalf of any Director or officer or other person may be paid in advance of the
final disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 Rights Not Exclusive. The rights to indemnification and reimbursement
or advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, the Certificate of Incorporation, these
By-laws, any agreement, any vote of stockholders or disinterested Directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.
8.4 Continuation of Benefits. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall continue as to a person who has ceased to be a Director or
officer (or other person indemnified hereunder) and shall inure to the benefit
of the executors, administrators, legatees and distributees of such person.
8.5 Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this
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Section 8, the Certificate of Incorporation or under Section 145 of the General
Corporation Law or any other provision of law.
8.6 Binding Effect. The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer or other person intend to be legally
bound. No repeal or modification of this Section 8 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
8.7 Procedural Rights. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that such person is not entitled
to such indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that such person is
not so entitled. Such a person shall also be
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indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 Service Deemed at Corporation's Request. Any Director or officer of
the Corporation serving in any capacity (a) another corporation of which a
majority of the shares entitled to vote in the election of its directors is
held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed to be doing so at the request of the Corporation.
8.9 Election of Applicable Law. Any person entitled to be indemnified or
to reimbursement or advancement of expenses as a matter of right pursuant to
this Section 8 may elect to have the right to indemnification or reimbursement
or advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification or reimbursement or
advancement of expenses is sought. Such election shall be made, by a notice in
writing to the Corporation, at the time indemnification or reimbursement or
advancement of expenses is sought; provided, however, that if no such notice is
given, the right to indemnification or reimbursement or advancement of expenses
shall be determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
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ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. There shall be kept at the principal office of the
Corporation correct and complete records and books of account recording the
financial transactions of the Corporation and minutes of the proceedings of the
stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided by law,
the Board shall determine from time to time whether, and, if allowed, when and
under what conditions and regulations, the accounts, books, minutes and other
records of the Corporation, or any of them, shall be open to the stockholders
for inspection.
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ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be changed, by
resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the Chief Executive
Officer, the President, any Vice President, the Secretary or the Treasurer, or
any one of them, may execute and deliver on behalf of the Corporation proxies
respecting any and all shares or other ownership interests of any Other Entity
owned by the Corporation appointing such person or persons as the officer
executing the same shall deem proper to represent and vote the shares or other
ownership interests so owned at any and all meetings of holders of shares or
other ownership interests, whether general or special, and/or to execute and
deliver consents respecting such shares or other ownership interests; or any of
the aforesaid officers may attend any meeting of the holders of
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shares or other ownership interests of such Other Entity and thereat vote or
exercise any or all other powers of the Corporation as the holder of such shares
or other ownership interests.
ARTICLE 13
EMERGENCY BY-LAWS
Unless the Certificate of Incorporation provides otherwise, the following
provisions of this Article 13 shall be effective during an emergency, which is
defined as when a quorum of the Corporation's Directors cannot be readily
assembled because of some catastrophic event. During such emergency:
13.1 Notice to Board Members. Any one member of the Board or any one of
the following officers: Chairman, Chief Executive Officer, President, any Vice
President, Secretary, or Treasurer, may call a meeting of the Board. Notice of
such meeting need be given only to those Directors whom it is practicable to
reach, and may be given in any practical manner, including by publication and
radio. Such notice shall be given at least six hours prior to commencement of
the meeting.
13.2 Temporary Directors and Quorum. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order of rank, and within the same rank, in order of seniority. In the event
that less than a quorum of the Directors are present (including any officers who
are to serve as Directors for the meeting), those Directors present (including
the officers serving as Directors) shall constitute a quorum.
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13.3 Actions Permitted To Be Taken. The Board as constituted in Section
13.2, and after notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the Corporation;
13.3.2 delegate to any officer or Director, any of the powers of the
Board;
13.3.3 designate lines of succession of officers and agents, in the
event that any of them are unable to discharge their duties;
13.3.4 relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
13.3.5 take any other convenient, helpful or necessary action to
carry on the business of the Corporation.
ARTICLE 14
AMENDMENTS
These By-laws may be altered, amended, or repealed and new By-laws may be
adopted by a vote of the holders of shares entitled to vote in the election of
Directors or by a vote of two-thirds of the entire Board. Notwithstanding the
preceding sentence, none of the provisions of this Article 14 shall be altered,
amended or repealed by the Board. Any By-laws adopted, altered or amended by the
Board may be altered, amended or repealed by the stockholders entitled to vote
thereon only to the extent and in the manner provided in the Certificate of
Incorporation and these By-laws.
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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of November 25, 1998
between ARIAD Pharmaceuticals, Inc. (the "Company") a Delaware corporation, and
Laurie A. Allen, Esq. (the "Employee").
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs the Employee, for the Term (as
hereinafter defined), to render full-time services to the Company, and to
perform such duties as she shall reasonably be directed by the Chief Executive
Officer of the Company to perform. The Employee's title shall be designated by
the Chief Executive Officer and initially shall be Senior Vice President,
Corporate Development and Legal Affairs, General Counsel, and Secretary.
1.2 The Employee hereby accepts such employment and agrees to
render the services described above.
1.3 The principal place of employment of the Employee hereunder
shall be in the greater Boston, Massachusetts area, or other locations
reasonably acceptable to the Employee. The Employee acknowledges that for
limited periods of time she may be required to provide services to the Company
outside of the Boston, Massachusetts area.
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1.4 Notwithstanding anything to the contrary herein, although the
Employee shall provide services as a full-time employee, it is understood that
the Employee may (a) have an academic appointment and (b) participate in
professional activities (collectively, "Permitted Activities'); provided,
however, that such Permitted Activities do not interfere with the Employee's
duties to the Company.
2. Term of Employment.
The term of the Employee's employment under this Agreement (the
"Term") shall commence on January 1, 1999 or such date as agreed upon by the
parties (the "Effective Date") and shall end on December 31, 2001 unless sooner
terminated pursuant to Section 4 or 5 of this Agreement; provided that this
Agreement shall automatically be renewed for successive one-year terms (the Term
and, if the period of employment is so renewed, such additional period(s) of
employment are collectively referred to herein as the "Term"), unless terminated
by written notice given by either party to the other at least 90 days prior to
the end of the applicable Term.
3. Compensation.
3.1 As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the Term, a
base salary at the minimum fixed rate of $215,000 per annum during the first
year of the Term and increased
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each year thereafter, by amounts, if any, to be determined by the Board of
Directors of the Company (the "Board"), in its sole discretion, payable in equal
biweekly installments, less such deductions or amounts to be withheld as shall
be required by applicable law and regulations.
3.2 Each year, the Employee shall be eligible for a discretionary
bonus of up to 30% of base salary, which bonus shall be determined annually by
the Board. The bonus, if any, may be paid in the form of stock options, stock
awards, cash, or deferred compensation as determined by the Board.
3.3 The Company shall pay or reimburse the Employee for all
reasonable expenses actually incurred or paid by her during the Term in the
performance of her services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as it may require.
3.4 The Employee shall be eligible under any incentive plan, stock
award plan, bonus, participation or extra compensation plan, pension, group
health, disability and life insurance or other so-called "fringe" benefits which
the Company provides for its senior executive officers. All options, stock
awards, and deferred compensation payments granted to the Employee shall be
subject to a vesting schedule which shall be determined by the Compensation and
Stock Option Committee of the Board. The options and awards, if any,
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to be granted to the Employee shall also be subject to the terms of a stock
option plan and certificate or stock award plan and certificate, as the case may
be.
3.5 As of January 1, 1999, the Company shall grant the Employee an
option to purchase 80,000 shares of the Company's Common Stock at the fair
market value on the date of the Board's approval (the "Initial Stock Options"),
in accordance with the Company's 1991 Stock Option Plan for Employees, as
amended. The Employee agrees that all such options shall be subject to a
four-year vesting schedule, vesting in equal increments of 25% on each
anniversary of their issuance. Except as specified in Section 6.1 with respect
to the Initial Stock Options, any unvested options shall be forfeited to the
Company in the event (a) this Agreement is terminated by the Company for Cause
pursuant to Section 4 herein, or (b) either party elects not to renew this
Agreement pursuant to Section 2 herein.
4. Termination by the Company.
The Company may terminate this Agreement, if any one or more of the
following shall occur:
(a) The Employee shall die during the Term; provided,
however, the Employee's legal representatives shall be entitled to receive the
compensation provided for in Section 3 to the last day of the month in which her
death occurs.
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(b) The Employee shall become physically or mentally
disabled, whether totally or partially, so that she is unable substantially to
perform her services hereunder for (i) a period of 180 consecutive days, or (ii)
for shorter periods aggregating 180 days during any twelve month period.
(c) The Employee acts, or fails to act, in a manner that
provides Cause for termination. For purposes of this Agreement, the term "Cause"
means (i) the conviction of the Employee of any felony involving moral
turpitude, (ii) any acts of fraud or embezzlement by the Employee involving the
Company or any of its Affiliates, (iii) the failure by the Employee to perform
any of her material duties hereunder, (iv) violation of any federal, state or
local law, or administrative regulation, (v) conduct that results in publicity,
(vi) failure to comply with the written policies of the Company, or (vii) a
material breach of the terms of this Agreement by the Employee (including,
without limitation, actions taken by Employee which create a conflict of
interest for Employee between the Company and a competitor). As the term "Cause"
applies to clauses (iii) through (vii), such acts, conduct, or failure, as the
case may be, must materially adversely affect the Company's business. The
Company shall provide the Employee written notice of termination pursuant to
this Section 4, and Employee shall have 30 days to cure or
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remedy such failure or breach, in which case this Agreement shall not be
terminated.
5. Termination by the Employee.
5.1 The Employee may terminate this Agreement, if any one or more
of the following shall occur:
(a) a material breach of the terms of this Agreement
by the Company and such breach continues for 30 days after the Employee gives
the Company written notice of such breach;
(b) the Company shall make a general assignment for
benefit of creditors; or any proceeding shall be instituted by the Company
seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking entry of an order for relief of
the appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property or the Company shall take any corporate
action to authorize any of the actions set forth above in this Section 5.1(b);
(c) an involuntary petition shall be filed or an
action or proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or for any
other relief under the Federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or
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law, state or federal, now or hereafter existing and remain undismissed or
unstayed for a period of 30 days;
(d) a receiver, assignee, liquidator, trustee or
similar officer for the Company or for all or any part of its property shall be
appointed involuntarily, or
(e) a Change in Control as defined in Section 14.
6. Severance.
6.1 If (i) the Company terminates this Agreement without Cause or
(ii) the Employee terminates this Agreement pursuant to Section 5.1(a), then:
(1) except in the case of death or disability, the Company shall continue to pay
the Employee her current base salary for the remaining period of the applicable
Term; (2) all options granted pursuant to this Agreement that would have vested
during the Term shall vest immediately prior to such termination; and (3) the
Company shall continue to provide all benefits subject to COBRA at its expense
for up to one year. Notwithstanding the foregoing, if the Company elects not to
renew this Agreement pursuant to Section 2 herein or this Agreement is
terminated according to Section 6.1 (i) or (ii), prior to January 1, 2003, all
Initial Stock Options shall vest immediately.
6.2 In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of
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termination within 90 days after such occurrence, then (i) all stock, stock
options, stock awards and similar equity rights granted to the Employee shall
immediately vest and remain fully exercisable through their original term with
all rights; (ii) the relocation loan provided pursuant to Section 7 (f) shall be
considered fully paid, and all loan obligations shall be forgiven; and (iii) the
Company shall continue to pay Employee her current base salary for the shorter
of (a) six months, or (b) the remaining period of the applicable Term.
7. Other Benefits.
In addition to all other benefits contained herein, the Employee
shall be entitled to:
(a) Relocation expenses for the Employee and her family,
consisting of (i) all reasonable direct out-of-pocket costs of transporting the
Employee, the Employee's family and household items from the Employee's current
residence to a new residence in the greater Boston, Massachusetts area; (ii)
reasonable travel and lodging to visit the greater Boston, Massachusetts area to
search for a new residence; (iii) the cost of storing household items in the
greater Boston, Massachusetts area (and transporting them to and from storage)
for up to one year from the Employee's date of employment; and (iv) except as
described in the next succeeding sentence and subject to prior approval, the
reasonable closing costs associated with the Employee's purchase of a new
residence in the greater Boston,
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Massachusetts area within one year of the Employee's date of employment. The
following closing (settlement) costs will not be paid by the Company: (1) real
estate and other taxes, (2) insurance premiums other than title insurance, and
(3) commitment fees and prepaid interest (i.e., "points") in excess of 2%. If
any payments made to or in respect of the Employee pursuant to this Section 7(a)
become subject to any tax (taking into account relevant deductions), the Company
shall make a special payment to her sufficient, on an after-tax basis (taking
into account federal, state, and local taxes), to put her in the same position
as would have been the case had no such taxes been applicable to any payments of
benefits provided in this subsection. This special payment will be made to the
Employee at the time such taxes actually are paid.
(b) Vacation time of four weeks per year taken in accordance
with the vacation policy of the Company during each year of the Term.
(c) After six years of employment, one three-month period of
fully paid leave of absence in accordance with Company policies in place at that
time; it being understood that such policies may restrict the Employee from
taking such leave of absence until a time that is acceptable to the Company and
may include other such limitations.
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(d) Group health, disability and life insurance.
(e) The Company shall provide the Employee with an
automobile allowance of $750 per month and standard tax preparation and planning
services.
(f) To facilitate the Employee's relocation, the Company
will provide the Employee with a one-time, interest-free, relocation loan (the
"Loan") in the amount of $75,000 to be used towards the purchase of the
Employee's new principal residence (the "Residence"), payable at the time of
closing on such residence. The Loan will be secured by a second mortgage on the
Residence. The principal of the Loan shall be repaid within thirty days of the
occurrence of the following events: (a) the Employee terminates this Agreement
prior to three years of continuous full-time employment with the Company, except
as provided pursuant to Section 5.1 herein, or (b) the Company terminates this
Agreement for Cause pursuant to Section 4 herein. Upon three years of continuous
full-time employment with the Company, the Loan obligation shall be forgiven,
and to the extent that the loan forgiveness becomes subject to any tax (taking
into account relevant deductions and effective tax rates), the Company shall
make a special payment to the Employee equivalent to the actual federal and
state tax due as a result of the loan forgiveness. This special payment shall be
made to the Employee at such time as the
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tax is actually paid by the Employee and will be reported as additional
compensation in the year it is paid.
8. Confidentiality.
8.1 The Employee acknowledges that, during the course of
performing her services hereunder, the Company shall be disclosing information
to the Employee related to the Company's Field of Interest, Inventions, projects
and business plans, as well as other information (collectively, "Confidential
Information"). The Employee acknowledges that the Company's business is
extremely competitive, dependent in part upon the maintenance of secrecy, and
that any disclosure of the Confidential Information would result in serious harm
to the Company.
8.2 The Employee agrees that the Confidential Information only
shall be used by the Employee in connection with her activities hereunder as an
employee of the Company, and shall not be used in any way that is detrimental to
the Company.
8.3 The Employee agrees not to disclose, directly or indirectly,
the Confidential Information to any third person or entity, other than
representatives or agents of the Company. The Employee shall treat all such
information as confidential and proprietary property of the Company.
8.4 The term "Confidential Information" does not include
information that (a) is or becomes generally available to
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the public other than by disclosure in violation of this Agreement, (b) was
within the Employee's possession prior to being furnished to such Employee, (c)
becomes available to the Employee on a nonconfidential basis or (d) was
independently developed by the Employee without reference to the information
provided by the Company.
8.5 The Employee may disclose any Confidential Information that is
required to be disclosed by law, government regulation or court order. If
disclosure is required, the Employee shall give the Company advance notice so
that the Company may seek a protective order or take other action reasonable in
light of the circumstances.
8.6 Upon termination of this Agreement, the Employee shall
promptly return to the Company all materials containing Confidential
Information, as well as data, records, reports and other property, furnished by
the Company to the Employee or produced by the Employee in connection with
services rendered hereunder. Notwithstanding such return or any of the
provisions of this Agreement, the Employee shall continue to be bound by the
terms of the confidentiality provisions contained in this Section 8 for a period
of three years after the termination of this Agreement.
8.7 In connection with her employment by the Company, the Employee
hereby acknowledges that she may enter into more than one agreement with regard
to (a) the confidentiality of
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certain books, records, documents and business, (b) rights to certain
inventions, proprietary information, and writings, (c) publication of certain
materials, and (d) other related matters (the "Confidential Matters") of the
Company (the "Confidentiality Agreements"). In order to clarify any potential
conflicts between certain respective provisions of such Confidentiality
Agreements, the Employee and the Company hereby agree that, as among such
Confidentiality Agreements, the provision (or part thereof) in any such
Confidentiality Agreement which affords the greatest protection to the Company
with respect to the Confidential Matters shall control.
9. Inventions Discovered by the Employee While Performing Services
Hereunder.
During the Term, the Employee shall promptly disclose to the Company
any invention, improvement, discovery, process, formula, or method or other
intellectual property, whether or not patentable, whether or not copyrightable
(collectively, "Inventions") made, conceived or first reduced to practice by the
Employee, either alone or jointly with others, while performing service
hereunder. The Employee hereby assigns to the Company all of her right, title
and interest in and to any such Inventions. During and after the Term, the
Employee shall execute any documents necessary to perfect the assignment of such
Inventions to the Company and to enable the Company to apply for, obtain, and
enforce patents and
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copyrights in any and all countries on such Inventions. The Employee hereby
irrevocably designates the Chief Patent Counsel to the Company as her agent and
attorney-in-fact to execute and file any such document and to do all lawful acts
necessary to apply for and obtain patents and copyrights and to enforce the
Company's rights under this paragraph. This Section 9 shall survive the
termination of this Agreement.
10. Non-Competition and Non-Solicitation.
During the Term and, in the event of an earlier termination of this
Agreement by Employee during the Term (other than any termination by Employee
pursuant to Section 5.1(a)), for a period of one year following the date of such
termination by Employee (the "Section 10 Period"): (a) Employee shall not
compete with the Company or any subsidiary or affiliate of the Company for whom
she is an employee or officer during the Term (each, an "Interested Entity") by
(i) entering the employ of, or rendering services to, any biopharmaceutical
entity which is engaged in a business competitive with the Company's Field of
Interest in such a capacity as to create, on the date of such employment, a
potential conflict of interest for Employee between such biopharmaceutical
entity and an Interested Entity, (ii) engaging, during the Section 10 Period, in
any business for her own account which would be competitive with the Company's
Field of Interest, or (iii) acquiring, during the Section 10 Period, an equity
or financial interest in any business which is competitive with
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the Company's Field of Interest, directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent, employee, trustee,
consultant, or any other relationship or capacity as to create, on the date of
acquisition of such interest, a potential conflict of interest for Employee
between such business and an Interested Entity; provided, however, that nothing
contained in this Section 10 shall be deemed to prohibit Employee during the
Section 10 Period from accepting a position with a law firm, investment bank,
venture capital or investment fund or other professional or financial services
firm or from acquiring, solely as an investment, shares of capital stock of any
public corporation; (b) neither the Employee nor any Affiliate of the Employee
shall solicit or utilize, or assist any person in any way to solicit or utilize,
the services, directly or indirectly, of any of the Company's directors,
consultants, members of the Board of Scientific and Medical Advisors, officers
or employees (collectively, "Associates of the Company"). This non-solicitation
and non-utilization provision shall not apply to Associates of the Company who
have previously terminated their relationship with the Company.
10.1 If the Employee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 10, the Company shall have the
following rights and remedies:
10.1.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any
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<PAGE> 16
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach shall cause irreparable injury to the Company and
that money damages shall not provide an adequate remedy to the Company; and
10.1.2 The right and remedy to require the Employee to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Employee as the result of any transactions constituting a breach of any of
the provisions of the preceding paragraph, and the Employee hereby agrees to
account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
10.2 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
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10.3 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, such provision shall then be
enforceable.
10.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 8, 9 and 10 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold any such covenant wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants, as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being, for this purpose, severable into diverse and
independent covenants.
11. Indemnification.
The Company shall indemnify the Employee, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by her in connection with any action, suit or proceeding to which she
may be made a party by reason
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of her being an officer, director or employee of the Company or of any
subsidiary or affiliate of the Company. The Company shall provide, subject to
its availability upon reasonable terms (which determination shall be made by the
Board) at its expense, directors and officers insurance for the Employee in
reasonable amounts. Determination with respect to (a) the availability of
insurance upon reasonable terms and (b) the amount of such insurance coverage
shall be made by the Board in its sole discretion.
12. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if sent by prepaid telegram (confirmed delivery by the telegram
service), private overnight mail service (delivery confirmed by such service),
registered or certified mail (return receipt requested), or delivered
personally, as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):
If to the Company:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, Massachusetts 02139
Attention: Chief Executive Officer
Telephone: (617) 494-0400
Fax: (617) 494-1828
If to the Employee:
Laurie A. Allen, Esq.
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10785 Weyburn Avenue
Los Angeles, California 90024
13. General.
13.1 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
13.2 The Section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
13.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
13.4 This Agreement and the Employee's rights and obligations
hereunder may not be assigned by the Employee or the Company; provided, however,
the Company may assign this Agreement to a successor-in-interest.
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<PAGE> 20
13.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of a party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by a party of the breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
14. Definitions. As used herein the following terms have the
following meaning:
(a) "Affiliate" means and includes any corporation or other
business entity controlling, controlled by or under common control with the
corporation in question.
(b) The "Company's Field of Interest" is the discovery,
development and commercialization of pharmaceutical products based on (a)
intervention in signal transduction pathways; (b) gene and cell therapy; (c)
functional genomics; and (d) natural products, including without limitation,
studies of microbial diversity. The Company's Field of Interest may be changed
at the sole discretion of the Company from time to time.
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(c) "person" means any natural person, corporation,
partnership, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental body or other entity.
(d) "Subsidiary" means any corporation or other business
entity directly or indirectly controlled by the corporation in question.
(e) "Change in Control" means the occurrence of any of the
following events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a
tender or exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires more than 50% of the
issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a
definitive agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all of the
Company's assets; or
(iii) Any person within the meaning of Section 3 (a) (9)
or Section 13 (d) of the Securities Exchange Act of 1934 acquires more than 50%
of the combined voting power of Company's issued and outstanding voting
securities entitled to vote in the election of the Board.
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(This space intentionally left blank.)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ARIAD PHARMACEUTICALS, INC.
By /s/ Harvey J. Berger, M.D.
------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Laurie A. Allen
------------------------------------
Laurie A. Allen, Esq.
November 25, 1998
------------------------------------
Date
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<PAGE> 1
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of November 1, 1994 between
ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Mark
Zoller, Ph.D. (the "Employee").
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs the Employee, for the Term (as
hereinafter defined), to render full-time services to the Company, and to
perform such duties as he shall reasonably be directed by the Chief Executive
Officer of the Company to perform. The Employee's title shall be designated by
the Chief Executive Officer and initially shall be Vice President, Research -
Molecular Biology.
1.2 The Employee hereby accepts such employment and agrees to
render the services described above.
1.3 The principal place of employment of the Employee hereunder
shall be in the greater Boston, Massachusetts area, or other locations
reasonably acceptable to the Employee. The Employee acknowledges that for
limited periods of time he may be required to provide services to the Company
outside of the Boston, Massachusetts area.
1.4 Notwithstanding anything to the contrary herein, although the
Employee shall provide services as a full time employee, it is understood that
the Employee may (a) have an academic appointment and (b) participate in
professional activities (collectively, "Permitted Activities"); provided,
however, that such
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Permitted Activities do not interfere with the Employee's duties to the Company.
2. Term of Employment.
The term of the Employee's employment under this Agreement (the "Term")
shall commence November 1, 1994 (the "Effective Date") and shall end on December
31, 1996 unless sooner terminated pursuant to Section 4 or 5 of this Agreement;
provided that this Agreement shall automatically be renewed for successive
one-year terms (the Term and, if the period of employment is so renewed, such
additional period(s) of employment are collectively referred to herein as the
"Term") unless terminated by written notice given by either party to the other
at least 90 days prior to the end of the applicable Term.
3. Compensation.
3.1 As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the Term, a
salary at the fixed rate of $135,000 per annum during the first year of the Term
and increased each year thereafter, by amounts, if any, to be determined by the
Board of Directors of the Company (the "Board"), in its sole discretion, payable
in equal semimonthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations.
3.2 Each year, the Company shall pay the Employee a discretionary
bonus of up to 30% of base salary, which bonus shall be determined annually by
the Board. The bonus, if any, may be paid in the form of stock options, stock
awards or cash, as determined by the Board.
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<PAGE> 3
3.3 The Company shall pay or reimburse the Employee for all
reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as it may require.
3.4 The Employee shall be eligible under any incentive plan, stock
award plan, bonus, participation or extra compensation plan, pension, group
health, disability and life insurance or other so-called "fringe" benefits which
the Company provides for its executives. All options and stock awards granted to
the Employee shall be subject to a vesting schedule which shall be determined by
the Compensation and Stock Option Committee of the Board. The options and
awards, if any, to be granted to the Employee shall also be subject to the terms
of a stock option plan and certificate and stock award plan and certificate.
4. Termination by the Company.
The Company may terminate this Agreement, if any one or more of the
following shall occur:
(a) The Employee shall die during the Term; provided,
however, the Employee's legal representatives shall be entitled to receive the
compensation provided for hereunder to the last day of the month in which his
death occurs.
(b) The Employee shall become physically or mentally
disabled, whether totally or partially, so that he is unable substantially to
perform his services hereunder for (i) a period of 180
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consecutive days, or (ii) for shorter periods aggregating 180 days during any
twelve month period.
(c) The Employee acts, or fails to act, in a manner that
provides Cause for termination. For purposes of this Agreement, the term "Cause"
means (i) the failure by the Employee to perform any of his material duties
hereunder, (ii) the conviction of the Employee of any felony involving moral
turpitude, (iii) any acts of fraud or embezzlement by the Employee involving the
Company or any of its Affiliates, (iv) violation of any federal, state or local
law, or administrative regulation related to the business of the Company, (v) a
conflict of interest, (vi) conduct that could result in publicity reflecting
unfavorably on the Company in a material way, (vii) failure to comply with the
written policies of the Company, or (viii) a breach of the terms of this
Agreement by the Employee. The Company shall provide the Employee written notice
of termination pursuant to this Section 4, and Employee shall have 30 days to
cure or remedy such failure or breach, in which case this Agreement shall not be
terminated.
5. Termination by the Employee.
5.1 The Employee may terminate this Agreement, if any one or more
of the following shall occur:
(a) a material breach of the terms of this Agreement
by the Company and such breach continues for 30 days after the Employee gives
the Company written notice of such breach;
(b) The Company shall make a general assignment for
benefit of creditors; or any proceeding shall be instituted by the Company
seeking to adjudicate it as bankrupt or insolvent, or
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<PAGE> 5
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking entry
of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property or the
Company shall take any corporate action to authorize any of the actions set
forth above in this subsection 5(b);
(c) an involuntary petition shall be filed or an
action or proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or for any
other relief under the Federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter existing
and remain undismissed or unstayed for a period of 30 days; or
(d) a receiver, assignee, liquidator, trustee or
similar officer for the Company or for all or any part of its property shall be
appointed involuntarily.
6. Severance.
If (i) the Company terminates this Agreement without Cause or (ii)
the Employee terminates this Agreement pursuant to Section 5.1(a), then: (1)
except in the case of death or disability, ARIAD shall continue to pay Employee
his current salary for the remaining period of the applicable Term; (2) all
options granted by the Company to the Employee that would have vested during the
Term shall vest immediately prior to such termination; and (3) the Company shall
continue to provide all benefits subject to COBRA at its expense for up to one
year.
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7. Other Benefits.
In addition to all other benefits contained herein, the Employee shall be
entitled to:
(a) Vacation time of four weeks per year taken in accordance
with the vacation policy of the Company during each year of the Term.
(b) After six years from the Effective Date, one three-month
period of fully paid leave of absence in accordance with Company policies in
place at that time; it being understood that such policies may restrict the
Employee from taking such leave of absence until a time that is acceptable to
the Company and may include other such limitations.
(c) Group health, disability and life insurance.
(d) The Company shall, in its sole discretion, provide the
Employee with either (i) an automobile for the Employee's exclusive use, at a
cost to the Company not exceeding $750 per month or (ii) an automobile allowance
of $750 per month toward the cost of maintaining the Employee's car, effective
as of January 1, 1995.
8. Confidentiality.
8.1 The Employee acknowledges that, during the course of
performing his services hereunder, the Company shall be disclosing information
to the Employee related to the Company's Field of Interest, Inventions, projects
and business plans, as well as other information (collectively, "Confidential
Information"). The Employee acknowledges that the Company's business is
extremely competitive, dependent in part upon the maintenance of secrecy, and
that any
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disclosure of the Confidential Information would result in serious harm to the
Company.
8.2 The Employee agrees that the Confidential Information only
shall be used by the Employee in connection with his activities hereunder as an
employee of the Company, and shall not be used in any way that is detrimental to
the Company.
8.3 The Employee agrees not to disclose, directly or indirectly,
the Confidential Information to any third person or entity, other than
representatives or agents of the Company. The Employee shall treat all such
information as confidential and proprietary property of the Company.
8.4 The term "Confidential Information" does not include
information that (a) is or becomes generally available to the public other than
by disclosure in violation of this Agreement, (b) was within the Employee's
possession prior to being furnished to such Employee, (c) becomes available to
the Employee on a nonconfidential basis or (d) was independently developed by
the Employee without reference to the information provided by the Company.
8.5 The Employee may disclose any Confidential Information that is
required to be disclosed by law, government regulation or court order. If
disclosure is required, the Employee shall give the Company advance notice so
that the Company may seek a protective order or take other action reasonable in
light of the circumstances.
8.6 Upon termination of this Agreement, the Employee shall
promptly return to the Company all materials containing Confidential
Information, as well as data, records, reports
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and other property, furnished by the Company to the Employee or produced by the
Employee in connection with services rendered hereunder. Notwithstanding such
return or any of the provisions of this Agreement, the Employee shall continue
to be bound by the terms of the confidentiality provisions contained in this
Section 8 for a period of three years after the termination of this Agreement.
8.7 In connection with his employment by the Company, the Employee
hereby acknowledges that he may enter into more than one agreement with regard
to (a) the confidentiality of certain books, records, documents and business,
(b) rights to certain inventions, proprietary information, and writings, (c)
publication of certain materials, and (d) other related matters (the
"Confidential Matters") of the Company (the "Confidentiality Agreements"). In
order to clarify any potential conflicts between certain respective provisions
of such Confidentiality Agreements, the Employee and the Company hereby agree
that, as among such Confidentiality Agreements, the provision (or part thereof)
in any such Confidentiality Agreement which affords the greatest protection to
the Company with respect to the Confidential Matters shall control.
9. Inventions Discovered by the Employee While Performing Services
Hereunder.
During the Term, the Employee shall promptly disclose to the Company
any invention, improvement, discovery, process, formula, or method or other
intellectual property, whether or not patentable, whether or not copyrightable
(collectively, "Inventions") made, conceived or first reduced to practice by the
Employee, either alone or jointly with others, while performing
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<PAGE> 9
service hereunder. The Employee hereby assigns to the Company all of his right,
title and interest in and to any such Inventions. During and after the Term, the
Employee shall execute any documents necessary to perfect the assignment of such
Inventions to the Company and to enable the Company to apply for, obtain, and
enforce patents and copyrights in any and all countries on such Inventions. The
Employee hereby irrevocably designates the Chief Patent Counsel to the Company
as his agent and attorney-in-fact to execute and file any such document and to
do all lawful acts necessary to apply for and obtain patents and copyrights and
to enforce the Company's rights under this paragraph. This Section 9 shall
survive the termination of this Agreement.
10. Non-Competition and Non-Solicitation.
During the Term and for a period of one year following the date of
termination or nonrenewal for any reason (other than termination pursuant to
Section 5.1(a):
(a) the Employee shall not in the United States or in any country
in which the Company shall then be doing business, directly or indirectly, enter
the employ of, or render any services to, any person, firm or corporation
engaged in any business competitive with the business of the Company or of any
of its subsidiaries or affiliates of which the Employee may become an employee
or officer during the Term; he shall not engage in such business on his own
account; and he shall not become interested in any such business, directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or any other relationship or
capacity; provided, however, that nothing contained in this Section 10 shall be
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<PAGE> 10
deemed to prohibit the Employee from acquiring, solely as an investment, shares
of capital stock of any public corporation;
(b) neither the Employee nor any Affiliate of the Employee shall
solicit or utilize, or assist any person in any way to solicit or utilize, the
services, directly or indirectly, of any of the Company's directors,
consultants, members of the Board of Scientific and Medical Advisors, officers
or employees (collectively, "Associates of the Company"). This nonsolicitation
and nonutilization provision shall not apply to Associates of the Company who
have previously terminated their relationship with the Company.
10.1 If the Employee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 10, the Company shall have the
following rights and remedies:
10.1.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to the Company and that money damages shall not provide
an adequate remedy to the Company; and
10.1.2 The right and remedy to require the Employee to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Employee as the result of any transactions constituting a breach of any of
the provisions of the preceding paragraph, and the Employee hereby agrees to
account for and pay over such Benefits to the Company.
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Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
10.2 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
10.3 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, such provision shall then be
enforceable.
10.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 8, 9 and 10 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold any such covenant wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants, as to breaches of
such covenants in such other respective jurisdictions, the
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above covenants as they relate to each state being, for this purpose, severable
into diverse and independent covenants.
11. Indemnification.
The Company shall indemnify the Employee, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he
may be made a party by reason of his being an officer, director or employee of
the Company or of any subsidiary or affiliate of the Company. The Company shall
provide, subject to its availability upon reasonable terms (which determination
shall be made by the Board) at its expense, directors and officers insurance for
the Employee in reasonable amounts. Determination with respect to (a) the
availability of insurance upon reasonable terms and (b) the amount of such
insurance coverage shall be made by the Board in its sole discretion.
12. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if sent by prepaid telegram (confirmed delivery by the telegram
service), private overnight mail service (delivery confirmed by such service),
registered or certified mail (return receipt requested), or delivered
personally, as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):
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If to the Company:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, Massachusetts 02139
Attention: Chief Executive Officer
Telephone: (617) 494-0400
Fax: (617) 494-8144
If to the Employee:
Mark Zoller, Ph.D.
7 Sutton Place
Weston, Massachusetts 02193
13. General.
13.1 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
13.2 The Section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
13.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
13.4 This Agreement and the Employee's rights and obligations
hereunder may not be assigned by the Employee or the
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Company; provided, however, the Company may assign this Agreement to an
Affiliate or a successor-in interest.
13.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of a party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by a party of the breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
14. Definitions. As used herein the following terms have the following
meaning:
(a) "Affiliate" means and includes any corporation or other
business entity controlling, controlled by or under common control with the
corporation in question.
(b) "The Companys Field of Interest" means: (1) the discovery,
development and commercialization of pharmaceutical products, diagnostic
products, or research reagents that target or intervene with intracellular
regulatory or control mechanisms (e.g., signal transduction, gene transcription
and protein trafficking); (2) gene therapy; (3) drug discovery based on
molecular structure or diversity; (4) any platelet substitute product; and (5)
other related areas.
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The Company's Field of Interest may be changed at the Company's sole discretion
from time to time.
(c) "person" means any natural person, corporation, partnership,
firm, joint venture, association, joint stock company, trust, unincorporated
organization, governmental body or other entity.
(d) "Subsidiary" means any corporation or other business entity
directly or indirectly controlled by the corporation in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ARIAD PHARMACEUTICALS, INC.
By /s/ Harvey J. Berger, M.D.
------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Mark Zoller, Ph.D.
---------------------------------------
Mark Zoller, Ph.D.
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AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of
January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Mark Zoller Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of November 1, 1994 (the "Agreement"), and the parties hereto desire to
further amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. Employment, Duties and Acceptance. The second sentence of Section
1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Vice President, Drug Discovery - Signal
Transduction."
II. Term of Employment. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is hereby
extended to December 31, 1999 (the "Term"), unless sooner terminated
pursuant to Section 4 or 5 of this Agreement; provided, however, that this
Agreement shall automatically be renewed for
16
<PAGE> 17
successive one-year terms (the Term and, if the period of employment is so
renewed, such additional period(s) of employment are collectively referred
to herein as the "Term") unless terminated by written notice given by
either party to the other at least 90 days prior to the end of the
applicable Term."
III. Compensation. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the
Term, a salary at the fixed rate of $165,000 per annum during the first
year of the Term and increased each year thereafter, by amounts, if any,
to be determined by the Board of Directors of the Company (the "Board") in
its sole discretion, payable in equal semi-monthly installments, less such
deductions or amounts to be withheld as shall be required by applicable
law and regulations."
IV. Definitions. The definition of the Company's "Field of Interest" in
Section 14 (b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery, development
and commercialization of pharmaceutical products based on (a) intervention
in signal transduction pathways; (b) gene and cell therapy; and (c)
functional genomics. The Company's Field of Interest may be changed at the
sole discretion of the Company from time to time."
V. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VI. Except as modified by this Amendment, the Agreement remains in full
force and effect and unchanged.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
---------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Mark Zoller, Ph.D.
------------------------------------
Mark Zoller, Ph.D.
18
<PAGE> 19
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment")
made as of November 1, 1998, between ARIAD Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and Mark Zoller, Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of November 1, 1994 (the "Agreement"), as previously amended, and the
parties hereto desire to further amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. Employment, Duties and Acceptance. The second sentence of Section
1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Senior Vice President, Genomics and
Scientific Director, Hoechst-ARIAD Genomics Center, LLC.
II. Compensation. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the
Term, a salary at the fixed rate of $200,000 per annum during the first
19
<PAGE> 20
year of the Term and increased each year thereafter, by amounts, if any,
to be determined by the Board of Directors of the Company (the "Board") in
its sole discretion, payable in equal semi-monthly installments, less such
deductions or amounts to be withheld as shall be required by applicable
law and regulations."
III. Termination by the Employee. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or more
of the following shall occur:
(a) a material breach of the terms of this Agreement by the
Company and such breach continues for 30 days after the Employee gives the
Company written notice of such breach;
(b) the Company shall make a general assignment for benefit
of creditors; or any proceeding shall be instituted by the Company seeking
to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking entry of an
order for relief of the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property or the
Company shall take any corporate action to authorize any of the actions
set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against the Company seeking reorganization,
arrangement or readjustment of the Company's debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and remain undismissed or unstayed for a period of 30 days;
(d) a receiver, assignee, liquidator, trustee or similar
officer for the Company or for all or any part of its property shall be
appointed involuntarily, or
(e) a Change in Control as defined in Section 14."
20
<PAGE> 21
IV. Severance. Section 6 is hereby replaced and amended in its entirety
as follows:
"6. If (i) the Company terminates this Agreement without Cause or
(ii) the Employee terminates this Agreement pursuant to Section 5.1(a),
then: (1) except in the case of death or disability, the Company shall
continue to pay Employee his current salary for the remaining period of
the applicable Term; (2) all options granted pursuant to this Agreement
that would have vested during the Term shall vest immediately prior to
such termination; (3) the Company shall continue to provide all benefits
subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards and
similar equity rights granted to the Employee shall immediately vest and
remain fully exercisable through their original term with all rights; and
(ii) the Company shall continue to pay Employee his current salary for the
shorter of (a) six months, or (b) the remaining period of the applicable
Term."
V. Definitions. The definition of the Company's "Field of Interest" in
Section 14 (b) of the Agreement is hereby amended to read as follows:
"The `Company's Field of Interest' is the discovery, development and
commercialization of pharmaceutical products based on (a) intervention in
signal transduction pathways; (b) gene and cell therapy; (c) functional
genomics; and (d) natural products, including without limitation, studies
of microbial diversity. The Company's Field of Interest may be changed at
the sole discretion of the Company from time to time."
The definition of "Change in Control" shall be added as Section 14
(e) of the Agreement as follows:
21
<PAGE> 22
" 'Change in Control' means the occurrence of any of the following
events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender or
exchange offer for shares of the Company's Common Stock pursuant to which
such corporation, person or other entity acquires more than 50% of the
issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another corporation or to
sell or otherwise dispose of all or substantially all of the Company's
assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or Section
13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of
the combined voting power of Company's issued and outstanding voting
securities entitled to vote in the election of the Board."
VI. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VII. Except as modified by this Amendment, the Agreement remains in full
force and effect and unchanged.
22
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
-------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Mark Zoller, Ph.D.
------------------------------------
Mark Zoller, Ph.D.
23
<PAGE> 1
EXHIBIT 10.3
Executive Employment Agreement
EMPLOYMENT AGREEMENT (the "Agreement") made as of May 1, 1992 between
ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and John D.
Iuliucci, Ph.D. (the "Employee").
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs the Employee, for the Term (as
hereinafter defined), to render full-time services to the Company, and to
perform such duties as he shall reasonably be directed by the Chief Executive
Officer of the Company to perform. The Employee's title shall be designated by
the Chief Executive Officer and initially shall be Vice President, Preclinical
Development.
1.2 The Employee hereby accepts such employment and agrees to
render the services described above.
1.3 The principal place of employment of the Employee hereunder
shall be in the greater Boston, Massachusetts area, or other locations
reasonably acceptable to the Employee. The Employee acknowledges that for
limited periods of time he may be required to provide services to the Company
outside of the Boston, Massachusetts area.
1.4 Notwithstanding anything to the contrary herein, although the
Employee shall provide services as a full time employee, it is understood that
the Employee may (a) have an academic appointment and (b) participate in
professional activities (collectively, "Permitted Activities"); provided,
however, that such Permitted Activities do not interfere with the Employee's
duties to the Company.
2. Term of Employment.
The term of the Employee's employment under this Agreement (the "Term")
shall commence June 15, 1992 (the
<PAGE> 2
"Effective Date") and shall end on December 31, 1995 unless sooner terminated
pursuant to Section 4 or 5 of this Agreement; provided that this Agreement shall
automatically be renewed for successive one-year terms (the Term and, if the
period of employment is so renewed, such additional period(s) of employment are
collectively referred to herein as the "Term") unless terminated by written
notice given by either party to the other at least 90 days prior to the end of
the applicable Term.
3. Compensation.
3.1 As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the Term, a
salary at the fixed rate of $135,000 per annum during the first year of the Term
and increased each year thereafter, by amounts, if any, to be determined by the
Board of Directors of the Company (the"Board"), in its sole discretion, payable
in equal semimonthly installments, less such deductions or amounts to be
withheld as shall be required by applicable law and regulations.
3.2 Each year the Company shall pay the Employee a bonus of up to
30% of base salary, which bonus shall be determined annually by the Board. The
bonus, if any, may be paid in the form of stock options, stock awards or cash,
as determined by the Board.
3.3 The Company shall pay or reimburse the Employee for all
reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as it may require.
3.4 The Employee shall be eligible under any incentive plan, stock
award plan, bonus, participation or extra compensation plan, pension, group
health, disability and life insurance or other so-called "fringe" benefits which
the Company provides for its executives. All options and stock awards granted to
the Employee shall be subject to a vesting schedule which shall
<PAGE> 3
be determined by the Incentive Committee of the Board. The options and awards,
if any, to be granted to the Employee shall also be subject to the terms of a
stock option plan and certificate and stock award plan and certificate.
3.5 The Company will grant the Employee an option to purchase
135,000 shares of the Company's Common Stock at a purchase price of $2.00 per
share (the "Options"). The Employee agrees that all such Options shall be
subject to a four-year vesting schedule, vesting in equal increments of 25% on
each anniversary of the Effective Date. Any unvested Options shall be forfeited
to the Company in the event (a) this Agreement is terminated by the Company for
cause pursuant to Section 4 herein, or (b) either party elects not to renew this
Agreement pursuant to Section 2 herein.
3.6 The Options and any common stock purchased upon the exercise
of any vested Options ("Option Stock") shall not, without the Company's prior
written consent, be transferable until the earlier of (a) March 31, 1996 and (b)
one year after the Company's initial public offering; provided, however, that in
the event of the death of the Employee, any vested Options and any Option Stock
shall be transferable to the legal representatives, legatees and distributees of
the Employee, if such persons agree to be bound by the same restrictions
applicable to such Options and Option Stock. In the event that the Company
commences an initial public offering, the Employee will execute "lock-up"
agreements with respect to the Option Stock and all other equity interests in
the Company HELD BY THE Employee providing that the Employee will not sell
Option Stock or any other equity interests for a period of one year after the
closing of the initial public offering. If the Company elects, the certificates
representing the Option Stock will be transferred to the Company to be held by
the Company pursuant to an escrow agreement consistent with the terms set forth
in this Section 3.6. This Section 3.6 shall survive the termination of this
Agreement.
4. Termination by the Company.
<PAGE> 4
The Company may terminate this Agreement, if any one or more of the
following shall occur:
(a) The Employee shall die during the Term; provided, however, the
Employee's legal representatives shall be entitled to receive the compensation
provided for hereunder to the last day of the month in which his death occurs.
(b) The Employee shall become physically or mentally disabled,
whether totally or partially, so that he is unable substantially to perform his
services hereunder for (i) a period of 180 consecutive days, or (ii) for shorter
periods aggregating 180 days during any twelve month period.
(c) The Employee acts, or fails to act, in a manner that provides
Cause for termination. For purposes of this Agreement, the term "Cause" means
(i) the failure by the Employee to perform any of his material duties hereunder,
(ii) the conviction of the Employee of any felony involving moral turpitude,
(iii) any acts of fraud or embezzlement involving the Company or any of its
Affiliates, (iv) material violation of any federal, state or local law, or any
administrative regulation related to the business of the Company, (v) a conflict
of interest, (vi) conduct that could reasonably be expected to result in
publicity reflecting unfavorably on the Company in a material way, (vii) failure
to comply with the written policies of the Company, or (viii) a breach of the
terms of this Agreement by the Employee.
The Company shall provide the Employee written notice of termination
pursuant to this Section 4.
5. Termination by the Employee.
5.1 The Employee may terminate this Agreement, if any one or more
of the following shall occur:
(a) a material breach of the terms of this Agreement by the
Company and such breach continues for 30 days after the Employee gives the
company written notice of such breach;
<PAGE> 5
(b) the Company shall make a general assignment for benefit
of creditors; or any proceeding shall be instituted by the Company seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or for any substantial
part of its property or the Company shall take any corporate action to authorize
any of the actions set forth above in this subsection 5(b);
(c) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against the Company seeking reorganization,
arrangement or readjustment of the Company's debts or for any other relief under
the Federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing and remain
undismissed or unstayed for a period of 30 days; or
(d) a receiver, assignee, liquidator, trustee or similar
officer for the Company or for all or any part of its property shall be
appointed involuntarily.
6. Severance.
If (i) the Company terminates this Agreement without Cause or (ii) the
Employee terminates this Agreement pursuant to Section 5.1(a), then: (1) except
in the case of death or disability, Employee his current applicable Term; (2)
the Company shall continue to pay salary for the remaining period of the all
Options granted pursuant to Section 3.5 herein that would have vested during the
Term shall vest immediately prior to such termination; and (3) the Company shall
continue to provide all benefits subject to COBRA at its expense for up to one
year.
<PAGE> 6
7. Other Benefits.
In addition to all other benefits contained herein, the Employee shall be
entitled to:
(a) relocation expenses for the Employee and his family,
consisting of (i) real estate taxes, mortgage payments, utilities and routine
maintenance on Employee's principal residence for up to six months from the time
the Employee begins additional mortgage payments on a new principal residence
for the Employee and his family in the greater Boston, Massachusetts area;
provided the Employee shall use his best efforts to sell his current residence
within such six month time period; provided, further, the Company shall
consider, in its sole discretion, reimbursement for additional carrying costs if
the Employee has not sold his residence within such six month period, (ii) all
reasonable costs for rent, storage and primary services (e.g., gas, heat,
electricity, phone hook-up) associated with temporary housing at an approved
location until the Employee finds a suitable residence, (iii) all reasonable
direct out-of-pocket costs of transporting the Employee, the Employee's family
and household items from the Employee's current residence to a new residence
located in the greater Boston, Massachusetts area, and (iv) except as described
in the next succeeding sentence and subject to prior approval, the reasonable
closing costs of the sale of the Employee's current residence and purchase of a
new residence in the greater Boston, Massachusetts area within one year of the
Employee's date of employment. The following closing (settlement) costs will
not be paid by the Company: (1) real estate and other taxes, (2) insurance
premiums other than title insurance, and (3) commitment fees and prepaid
interest (i.e., "points") in excess of 2%. If any payments made to or in respect
of the Employee pursuant to this Section 7(a) become subject to any tax (taking
into account relevant deductions), the Company shall make a special payment to
him sufficient, on an after-tax basis (taking into account federal, state and
local taxes), to put him in the same position as would have been the case had no
<PAGE> 7
such taxes been applicable to any payments or benefits provided in this
subsection. This special payment will be made to the Employee in April 1993.
(b) Vacation time of four weeks per year taken in accordance with
the vacation policy of the Company during each year of the Term.
(c) After six years of employment, one three- month period of
fully paid leave of absence in accordance with Company policies in place at that
time; it being understood that such policies may restrict the Employee from
taking such leave of absence until a time that is acceptable to the Company and
may include other such limitations.
(d) Group health, disability and life insurance.
(e) The Company shall, in its sole discretion, provide the
Employee with either (i) an automobile for the Employee's exclusive use, at a
cost to the Company not exceeding $750 per month or (ii) an automobile allowance
of $750 per month toward the cost of maintaining the Employee's car.
8. Confidentiality.
8.1 The Employee acknowledges that, during the course of
performing his services hereunder, the Company shall be disclosing information
to the Employee related to the Company's Field of Interest, Inventions, projects
and business plans, as well as other information (collectively, "Confidential
Information"). The Employee acknowledges that the Company's business is
extremely competitive, dependent in part upon the maintenance of secrecy, and
that any disclosure of the Confidential Information would result in serious harm
to the Company.
8.2 The Employee agrees that the Confidential Information only
shall be used by the Employee in connection with his activities hereunder as an
employee of the Company, and shall not be used in any way that is detrimental to
the Company.
<PAGE> 8
8.3 The Employee agrees not to disclose, directly or indirectly,
the Confidential Information to any third person or entity, other than
representatives or agents of the Company. The Employee shall treat all such
information as confidential and proprietary property of the Company.
8.4 The term "Confidential Information" does not include
information that (a) is or becomes generally available to the public other than
by disclosure in violation of this Agreement, (b) was within the relevant
party's possession prior to being furnished to such party, (c) becomes available
to the relevant party on a nonconfidential basis or (d) was independently
developed by the relevant party without reference to the information provided by
the Company.
8.5 The Employee may disclose any Confidential Information that is
required to be disclosed by law, government regulation or court order. If
disclosure is required, the Employee shall give the Company advance notice so
that the Company may seek a protective order or take other action reasonable in
light of the circumstances.
8.6 Upon termination of this Agreement, the Employee shall
promptly return to the Company all materials containing Confidential
Information, as well as data, records, reports and other property, furnished by
the Company to the Employee or produced by the Employee in connection with
services rendered hereunder. Notwithstanding such return or any of the
provisions of this Agreement, the Employee shall continue to be bound by the
terms of the confidentiality provisions contained in this Section 8 for a period
of three years after the termination of this Agreement.
9. Inventions Discovered by the EmPloyee While Performing Services
Hereunder. During the Term, the Employee shall promptly disclose to the Company
any invention, improvement, discovery, process, formula, or method or other
intellectual property, whether or not patentable, whether or not copyrightable
(collectively, "Inventions") made, conceived or first reduced to
<PAGE> 9
practice by the Employee, either alone or jointly with others, while PERFORMING
SERVICE hereunder. The Employee hereby assigns to the Company all of his right,
title and interest in and to any such Inventions. During and after the Term, the
Employee shall execute any documents necessary to perfect the assignment of such
Inventions to the Company and to enable the Company to apply for, obtain, and
enforce patents and copyrights in any and all countries on such Inventions. The
Employee hereby irrevocably designates the General Counsel to the Company as his
agent and attorney-in-fact to execute and file any such document and to do all
lawful acts necessary to apply for and obtain patents and copyrights and to
enforce the Company's rights under this paragraph. This Section 9 shall survive
the termination of this Agreement.
10. Non-Competition and Non-Solicitation.
During the Term and for a period of one year following the date of
termination or nonrenewal for any reason (other than termination pursuant to
Section 5.1(a)): (a) the Employee shall not in the United States or in any
country in which the Employer shall then be doing business, directly or
indirectly, enter the employ of, or render any services to, any person, firm or
corporation engaged in any business directly competitive with the business of
the Company or of any of its subsidiaries or affiliates of which the Employee
may become an employee or officer during the Term; he shall not engage in such
business on his own account; and he shall not become interested in any such
business, directly or indirectly, as an individual, partner, shareholder,
director, officer, principal, agent, employee, trustee, consultant, or any other
relationship or capacity; provided, however, that nothing contained in this
Section 10 shall be deemed to prohibit the Employee from acquiring, solely as an
investment, shares of capital stock of any public corporation;
(b) neither the Employee nor any Affiliate of the Employee shall
solicit or utilize, or assist any person in any way to solicit or utilize, the
services, directly or indirectly, of any of the Company's directors,
consultants, members of the Board of Scientific and Medical Advisors, officers
or employees
<PAGE> 10
(collectively, "Associates of the Company"). This nonsolicitation and
nonutilization provision shall not apply to Associates of the Company who have
previously terminated their relationship with the Company.
10.1 If the Employee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 10, the Company shall have the
following rights and remedies:
10.1.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to the Company and that money damages shall not provide
an adequate remedy to the Company; and
10.1.2 The right and remedy to require the Employee to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Employee as the result of any transactions constituting a breach of any of
the provisions of the preceding paragraph, and the Employee hereby agrees to
account for and pay over such Benefits to the Company. Each of the rights and
remedies enumerated above shall be independent of the other, and shall be
severally enforceable, and all of such rights and remedies shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
10.2 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
10.3 If any of the covenants contained in Section 8, 9 or 10, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or
<PAGE> 11
area of such provision and, in its reduced form, such provision shall then be
enforceable.
10.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 8, 9 and 10 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold any such covenant wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants, as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being, for this purpose, severable into diverse and
independent covenants.
11. Indemnification.
The Company shall indemnify the Employee, to the maximum extent permitted
by applicable law, against all costs, charges and expenses incurred or sustained
by him in connection with any action, suit or proceeding to which he may be made
a party by reason of his being an officer, director or employee of the Company
or of any subsidiary or affiliate of the Company. The Company shall provide,
subject to its availability upon reasonable terms (which determination shall be
made by the Board) at its expense, Directors and Officers insurance for the
Employee in reasonable amounts. Determination with respect to (a) the
availability of insurance upon reasonable terms and (b) the amount of such
insurance coverage shall be made by the Board in its sole discretion.
12. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if sent by prepaid telegram (confirmed delivery by the telegram
service), private overnight mail service (delivery confirmed by such service),
registered or
<PAGE> 12
certified mail (return receipt requested), or delivered personally, as follows
(or to such other address as either party shall designate by notice in writing
to the other in accordance herewith):
If to the Company:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Attention: Chief Executive Officer
Telephone: (617) 494-0400
Fax: (617) 494-8144
If to the Employee:
Dr. John D. Iuliucci
3 Pendant Ct.
Andover, MA 01810
13. General.
13.1 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
13.2 The Section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
13.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
<PAGE> 13
13.4 This Agreement and the Employee's rights and obligations
hereunder may not be assigned by the Employee or the Company; provided, however,
the Company may assign this Agreement to an Affiliate or a successor-interest.
13.5 This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms or covenants hereof may be waived,
only by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of a party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by a party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.
14. Definitions. As used herein the following terms have the following
meaning:
(a) "Affiliate" means and includes any corporation or other
business entity controlling, controlled by or under common control with the
corporation in question.
(b) "Company's Field of Interest" means the discovery and
development of pharmaceutical agents that target or intervene with intracellular
regulatory and control mechanisms; associated diagnostic products;
structure-based drug design; any artificial platelet product; and other related
areas. The Company's Field of Interest may be changed at the Company's sole
discretion from time to time.
(c) "person" means any natural person, corporation, partnership,
firm, joint venture, association, joint stock company, trust, unincorporated
organization, governmental body or other entity.
<PAGE> 14
(d) "Subsidiary" means any corporation or other business entity
directly or indirectly controlled by the corporation in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ARIAD PHARMACEUTICALS, INC.
By /s/ Harvey J. Berger, M.D.
---------------------------------
Chairman and Chief Executive Officer
EMPLOYEE
By /s/ John D. Iuliucci, Ph.D.
---------------------------------
John D. Iuliucci, Ph.D.
<PAGE> 15
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of March
2, 1994, between ARIAD Pharmaceuticals, Inc. a Delaware corporation (the
"Company"), and John D. Iuliucci, Ph.D. the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of June 15, 1992 (the "Agreement"), and the parties hereto desire to
amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Section 2. The Term of the Employee's employment under the
Agreement is hereby extended to December 31, 1996.
2. Article 3.
2.1. Section 3.6 is hereby replaced and amended in its
entirety as follows:
"3.6 All shares of the Company's Common Stock or Option Stock (as
defined below) owned by the Employee or with respect to which the Employee
has the power of disposition, shall not, without the Company's prior
written consent, be transferable until the earlier of (a) March 31, 1996
and (b) eighteen months after the Company's initial public offering;
provided, however, that in the event of the death of the Employee, any
Common Stock or Option Stock shall, subject to the terms of such Option
Stock, be transferable to the legal representatives, legatees and
distributees of the Employee, if such persons agree to be bound by the
same restrictions applicable to such security. "Option Stock" shall mean
all Options or any other options or rights to acquire shares of the
Company's Common Stock or any securities convertible into or exchangeable
or exercisable into shares of the Company's Common Stock. In the event
that the Company commences an initial public offering, the Employee will
execute "lock-up" agreements with respect to the Common Stock or Option
Stock held by the Employee providing that the Employee will not sell the
Common Stock or Option Stock for a period of eighteen months after the
closing of the initial public offering
<PAGE> 16
If the Company elects, the certificates representing the Common Stock or
Option Stock will be transferred to the Company to be held by the Company
pursuant to an escrow agreement consistent with the terms set forth in
this Section 3.6. This Section 3.6 shall survive termination of this
Agreement."
2.2. Section 3.7 is hereby added to the Agreement to read in
its entirety as follows:
"3.7 Any shares of common stock ("Subsidiary Common Stock") of any
current or future subsidiary of the Company, including, without
limitation, ARIAD Gene Therapeutics, Inc., or any Subsidiary Option Stock
(as defined below) owned by the Employee or with respect to which the
Employee has the power of disposition shall not, without the Company's
prior written consent, be transferable until eighteen months after the
applicable subsidiary's initial public offering; provided, however, that
in the event of the death of the Employee, all such Subsidiary Common
Stock or Subsidiary Option Stock shall, subject to the terms of such
Subsidiary Option Stock, be transferable to the legal representatives,
legatees, and distributees of the Employee, if such persons agree to be
bound by the same restrictions applicable to such security. "Subsidiary
Option Stock" shall mean all options or rights to acquire shares of
Subsidiary Common Stock or any securities convertible into or exchangeable
or exercisable for shares of Subsidiary Common Stock. If the Company
elects, the certificates representing the Subsidiary Common Stock or
Subsidiary Option Stock will be transferred to the Company to be held by
the Company pursuant to an escrow agreement consistent with the terms set
forth in this Section 3.7. This Section 3.7 shall survive the termination
of this Agreement."
3. The definition of the "Company's Field of Interest" in Section 14
(b) of the Agreement is hereby amended to read as follows:
"Company's Field of Interest means (1) the discovery, development
and commercialization of pharmaceutical products, diagnostic products, or
research reagents that target or intervene with intracellular regulatory
or control mechanisms (e.g., signal transduction, gene transcription and
protein trafficking); (2) gene therapy; (3) drug discovery based on
molecular structure or diversity; (4) any platelet substitute product; and
(5) other related areas. The Company's Field of Interest may be changed at
the Company's sole discretion from time to time."
4. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
<PAGE> 17
5. Except as modified by this Amendment, the Agreement remains in full
force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ John D. Iuliucci, Ph.D.
----------------------------------------
John D. Iuliucci, Ph.D.
<PAGE> 18
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as of
January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and John D. Iuliucci, Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of May 1, 1992 and amended as of March 2, 1994 (the "Agreement"), and
the parties hereto desire to further amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. Employment, Duties and Acceptance. The second sentence of Section
1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Vice President, Drug Development."
II. Term of Employment. The first sentence of Section 2 is hereby
amended to read as follows:
"The term of the Employee's employment under the Agreement is hereby
extended to December 31, 1999 (the "Term"), unless sooner terminated
pursuant to Section 4 or 5 of this Agreement; provided, however, that this
Agreement shall automatically be renewed for successive one-year terms
(the Term and, if the period of employment is so renewed, such additional
period(s) of employment are collectively referred to herein as the "Term")
unless terminated by written notice given by either party to the other at
least 90 days prior to the end of the applicable Term."
III. Compensation. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the
Term, a
<PAGE> 19
salary at the fixed rate of $165,000 per annum during the first year of
the Term and increased each year thereafter, by amounts, if any, to be
determined by the Board of Directors of the Company (the "Board") in its
sole discretion, payable in equal semi-monthly installments, less such
deductions or amounts to be withheld as shall be required by applicable
law and regulations."
IV. Definitions. The definition of the Company's "Field of Interest" in
Section 14 (b) of the Agreement is hereby amended to read as follows:
"The Company's 'Field of Interest' is: the discovery, development
and commercialization of pharmaceutical products based on (a) intervention
in signal transduction pathways; (b) gene and cell therapy; and (c)
functional genomics. The Company's Field of Interest may be changed at the
sole discretion of the Company from time to time."
V. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VI. Except as modified by this Second Amendment, the Agreement remains
in full force and effect and unchanged.
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ John D. Iuliucci, Ph.D.
----------------------------------------
John D. Iuliucci, Ph.D.
<PAGE> 21
THIRD AMENDMENT EMPLOYMENT AGREEMENT
This THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (the Third "Amendment") made
as of January 1, 1999, between ARIAD Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and John Iuliucci, Ph.D. (the "Employee").
The Company and the Employee have entered into an Employment Agreement
dated as of May 1, 1992 (the "Agreement"), as previously amended, and the
parties hereto desire to further amend certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree to further amend the Agreement as
follows:
I. Employment, Duties and Acceptance. The second sentence of Section
1.1 is hereby amended to read as follows:
"The Employee's title shall be designated by the Chief Executive
Officer and initially shall be Senior Vice President, Drug Development.
II. Compensation. Section 3.1 is hereby replaced and amended in its
entirety as follows:
"3.1. As full compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Employee, during the
Term, a salary at the fixed rate of $200,000 per annum during the first
year of the Term and increased each year thereafter, by amounts, if any,
to be determined by the Board of Directors of the Company (the "Board") in
its sole discretion, payable in equal semi-monthly installments, less such
deductions or amounts to be withheld as shall be required by applicable
law and regulations."
III. Termination by the Employee. Section 5 is hereby replaced and
amended in its entirety as follows:
"5.1. The Employee may terminate this Agreement, if any one or more
of the following shall occur:
(a) a material breach of the terms of this Agreement by the
Company and such breach continues for 30 days after the Employee gives the
Company written notice of such breach;
<PAGE> 22
(b) the Company shall make a general assignment for benefit of
creditors; or any proceeding shall be instituted by the Company seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking entry of an
order for relief of the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property or the
Company shall take any corporate action to authorize any of the actions
set forth above in this subsection 5.1(b);
(c) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against the Company seeking reorganization,
arrangement or readjustment of the Company's debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and remain undismissed or unstayed for a period of 30 days;
(d) a receiver, assignee, liquidator, trustee or similar officer
for the Company or for all or any part of its property shall be appointed
involuntarily, or
(e) a Change in Control as defined in Section 14."
IV. Severance. Section 6 is hereby replaced and amended in its entirety
as follows:
"6. If (i) the Company terminates this Agreement without Cause or
(ii) the Employee terminates this Agreement pursuant to Section 5.1(a),
then: (1) except in the case of death or disability, the Company shall
continue to pay Employee his current salary for the remaining period of
the applicable Term; (2) all options granted pursuant to this Agreement
that would have vested during the Term shall vest immediately prior to
such termination; (3) the Company shall continue to provide all benefits
subject to COBRA at its expense for up to one year.
In the event of a consummation of a Change in Control of the
Company, and if the Employee gives notice of termination within 90 days
after such occurrence, then (i) all stock, stock options, stock awards and
similar equity rights granted to the Employee shall immediately vest and
remain fully exercisable through their original term with all rights; and
(ii) the Company shall continue to pay Employee his current salary for the
shorter of (a) six months, or (b) the remaining period of the applicable
Term."
V. Definitions. The definition of the Company's "Field of Interest" in
Section 14 (b) of the Agreement is hereby amended to read as follows:
"The `Company's Field of Interest' is the discovery, development and
commercialization of pharmaceutical products based on (a) intervention in
signal transduction pathways; (b) gene and cell therapy; (c) functional
genomics; and (d) natural products, including without limitation, studies
of microbial diversity. The Company's Field of Interest may be changed at
the sole discretion of the Company from time to time."
<PAGE> 23
The definition of "Change in Control" shall be added as Section 14 (e) of
the Agreement as follows:
" 'Change in Control' means the occurrence of any of the following
events (without the consent of the Employee):
(i) Any corporation, person or other entity makes a tender or
exchange offer for shares of the Company's Common Stock pursuant to which
such corporation, person or other entity acquires more than 50% of the
issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another corporation or to
sell or otherwise dispose of all or substantially all of the Company's
assets; or
(iii) Any person within the meaning of Section 3 (a) (9) or Section
13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of
the combined voting power of Company's issued and outstanding voting
securities entitled to vote in the election of the Board."
VI. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely in Massachusetts.
VII. Except as modified by this Amendment, the Agreement remains in full
force and effect and unchanged.
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
------------------------------------
Harvey J. Berger, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ John Iuliucci, Ph.D.
----------------------------------------
John Iuliucci, Ph.D.
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