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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
Xxxxxx X. Xxxxx, 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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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.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Employee:
Xxxxxx X. Xxxxx, Esq.
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00000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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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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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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ARIAD PHARMACEUTICALS, INC.
By /s/ Xxxxxx X. Xxxxxx, M.D.
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Xxxxxx X. Xxxxxx, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Esq.
November 25, 1998
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Date
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