-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DIhlv4kdfkMLw3bkPL/PrymGxtwj4kfFHUiPXlIDSpzILO9df1rrGvv0FXzsjlrQ Orha6136yrG9cX0+yQqTdg== 0000950135-97-003384.txt : 19970813 0000950135-97-003384.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950135-97-003384 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARIAD PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000884731 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 223106987 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21696 FILM NUMBER: 97656863 BUSINESS ADDRESS: STREET 1: 26 LANDSDOWNE ST CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6174940400 MAIL ADDRESS: STREET 2: 26 LANDSDOWNE CITY: CAMBRIDGE STATE: MA ZIP: 02139 10-Q 1 ARIAD PHARMACEUTICALS 2ND QUARTER REPORT 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: JUNE 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ COMMISSION FILE NUMBER: 0-21696 ARIAD PHARMACEUTICALS, INC. (Exact name of Registrant as specified in its charter) DELAWARE 22-3106987 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 26 LANDSDOWNE STREET, CAMBRIDGE, MASSACHUSETTS 02139 (Address of principal executive offices)(Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 494-0400 Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report: Not Applicable Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- The number of shares of the Registrant's common stock outstanding as of August 6, 1997 was 19,298,777. ================================================================================ 2 ARIAD PHARMACEUTICALS, INC. TABLE OF CONTENTS ----------------- PART I. FINANCIAL INFORMATION PAGE NO. - -------------------------------- -------- ITEM 1. UNAUDITED FINANCIAL STATEMENTS: Condensed Consolidated Balance Sheets - June 30, 1997 and December 31, 1996 ............................................ 1 Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 1997 and 1996 ......... 2 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 .......................... 3 Notes to Unaudited Condensed Consolidated Financial Statements ... 4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .............................. 7 PART II. OTHER INFORMATION - ---------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .............. 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................. 13 3 PART I. FINANCIAL INFORMATION ITEM 1. UNAUDITED FINANCIAL STATEMENTS ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS JUNE 30, DECEMBER 31, 1997 1996 ------------ ------------ Current assets: Cash and cash equivalents $ 19,457,445 $ 2,906,851 Marketable securities 20,322,694 12,795,449 Accounts receivable and other 638,803 2,569,404 ------------ ------------ Total current assets 40,418,942 18,271,704 ------------ ------------ Property and equipment: Leasehold improvements 7,003,769 7,000,873 Equipment and furniture 5,165,297 4,256,805 Construction in progress 2,663,431 ------------ ------------ Total 14,832,497 11,257,678 Less accumulated depreciation and amortization 5,540,932 4,748,275 ------------ ------------ Property and equipment, net 9,291,565 6,509,403 ------------ ------------ Licensed technology and patent application costs, net 1,564,402 1,357,470 ------------ ------------ Investment in Genomics Center 796,679 ------------ Other assets, net 1,257,363 1,466,416 ------------ ------------ Total $ 53,328,951 $ 27,604,993 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,695,814 $ 1,275,956 Accounts payable 2,468,127 788,282 Accrued liabilities 790,226 639,026 Advance from Genomics Center 1,205,272 Deferred revenue 3,666,665 3,666,665 ------------ ------------ Total current liabilities 9,826,104 6,369,929 ------------ ------------ Long-term debt 6,069,832 1,472,812 ------------ ------------ Deferred revenue 1,411,115 3,077,781 ------------ ------------ Stockholders' equity: Series B convertible preferred stock, $.01 par value; authorized, 5,000,000 shares; issued and outstanding, 2,526,316 shares in 1997 (liquidation preference, $24,000,000) 25,263 Common stock, $.001 par value; authorized, 60,000,000 shares; issued and outstanding, 19,282,020 in 1997 and 19,036,723 shares in 1996 19,282 19,037 Additional paid-in capital 94,726,708 70,593,840 Net unrealized loss on marketable securities (78,495) (102,699) Accumulated deficit (58,670,858) (53,825,707) ------------ ------------ Stockholders' equity 36,021,900 16,684,471 ------------ ------------ Total $ 53,328,951 $ 27,604,993 ============ ============
See notes to unaudited condensed consolidated financial statements. 1 4 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- -------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenue: Research revenue (principally related parties) $ 2,489,209 $ 2,093,332 $ 4,462,542 $ 4,151,666 Interest income 525,213 288,598 817,930 636,323 ----------- ----------- ----------- ----------- Total revenue 3,014,422 2,381,930 5,280,472 4,787,989 ----------- ----------- ----------- ----------- Operating expenses: Research and development 4,273,087 3,685,457 8,530,228 7,387,662 General and administrative 725,817 519,345 1,483,882 1,202,316 Interest expense 54,038 66,654 111,513 138,270 ----------- ----------- ----------- ----------- Total operating expenses 5,052,942 4,271,456 10,125,623 8,728,248 ----------- ----------- ----------- ----------- Net loss $(2,038,520) $(1,889,526) $(4,845,151) $(3,940,259) =========== =========== =========== =========== Net loss per share $ (.11) $ (.10) $ (.25) $ (.21) =========== =========== =========== =========== Weighted average number of shares of common stock outstanding 19,264,673 18,986,829 19,205,125 18,981,684
See notes to unaudited condensed consolidated financial statements. 2 5 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------------ 1997 1996 ------------ ------------ Cash flows from operating activities: Net loss $ (4,845,151) $ (3,940,259) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,181,444 1,062,430 Deferred revenue (1,666,666) (1,666,666) Stock-based compensation 35,151 9,930 Increase (decrease) from: Accounts receivable and other 1,930,601 (106,162) Other assets (84,630) (154,326) Accounts payable 1,679,845 190,081 Accrued liabilities 151,200 (323,426) Advance from Genomics Center 1,205,272 ------------ ------------ Net cash used in operating activities (412,934) (4,928,398) ------------ ------------ Cash flows from investing activities: Acquisitions of marketable securities (18,126,062) (11,121,994) Proceeds from sales and maturities of marketable securities 10,589,470 19,873,770 Investment in Genomics Center (806,891) Investment in property and equipment, net (3,574,819) (1,140,052) Acquisitions of licensed technology and patents (258,272) (325,126) ------------ ------------ Net cash (used in) provided by investing activities (12,176,574) 7,286,598 ------------ ------------ Cash flows from financing activities: Proceeds from issuance of series B preferred stock 24,000,000 Proceeds from borrowings 6,000,000 Repayment of borrowings (983,122) (736,530) Proceeds from sale/leaseback of equipment 836,057 Proceeds from exercise of stock options 123,224 70,220 ------------ ------------ Net cash provided by financing activities 29,140,102 169,747 ------------ ------------ Net increase in cash and equivalents 16,550,594 2,527,947 Cash and equivalents, beginning of period 2,906,851 3,750,082 ------------ ------------ Cash and equivalents, end of period $ 19,457,445 $ 6,278,029 ============ ============
See notes to unaudited condensed consolidated financial statements. 3 6 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Management Statement -------------------- In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1997 and December 31, 1996 and the results of operations for the three-month and six-month periods ended June 30, 1997 and 1996. The results of operations for the three-month and six-month periods ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. 2. Marketable Securities --------------------- The Company has classified its marketable securities as available for sale and, accordingly, carries such securities at aggregate fair value. At June 30, 1997 and December 31, 1996, the Company's marketable securities consisted of the following:
Aggregate Amortized Gross Unrealized JUNE 30, 1997 Fair Value Cost Basis Gains Losses - ------------- ---------- ---------- ------ -------- U.S. Government obligations $ 6,020,288 $ 6,086,006 $ 1,166 $ (66,884) Corporate debt securities 14,302,406 14,315,183 15,146 (27,923) ----------- ----------- ------- --------- Total $20,322,694 $20,401,189 $16,312 $ (94,807) =========== =========== ======= ========= DECEMBER 31, 1996 - ----------------- U.S. Government obligations $ 4,444,217 $4,507,983 $ 580 $ (64,346) Corporate debt securities 8,101,761 8,140,694 3,120 (42,053) Certificate of deposit 249,471 249,471 ----------- ----------- ------- --------- Total $12,795,449 $12,898,148 $ 3,700 $(106,399) =========== =========== ======= =========
At June 30, 1997, approximately $18,700,000 of investments in marketable securities had contractual maturities of one year or less. Realized gains and losses on sales of marketable securities were not material during the quarter ended June 30, 1997; the net unrealized loss of $78,495 is included in stockholders' equity. 3. Hoechst-ARIAD Genomics Center, LLC ---------------------------------- In March 1997, the Company entered into an agreement which established a 50/50 joint venture with Hoechst Marion Roussel, Inc. ("HMR") to pursue functional genomics (the "1997 HMR Genomics Agreement") with the goal of identifying novel therapeutic proteins and small-molecule drug targets. The joint venture, named the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"), is located at the Company's research facilities in Cambridge, Massachusetts. Under the terms of the 1997 HMR Genomics 4 7 Agreement, the Company and HMR agreed to commit up to $85,000,000 to the establishment of the Genomics Center and its first five years of operation. The Company and HMR will jointly fund $78,500,000 of operating and related costs, and ARIAD will fund up to $6,500,000 in leasehold improvements and equipment. HMR committed to provide ARIAD with capital adequate to fund ARIAD's share of such costs through the purchase of up to $49,000,000 of series B preferred stock over the five-year period, including an initial investment of $24,000,000, which was completed in March 1997. The Company also entered into agreements with the Genomics Center to provide research and administrative services (the "Services Agreements") to the Genomics Center on a cost reimbursement basis. ARIAD's costs of providing the research and administrative services to the Genomics Center will be charged to research and development expense and general and administrative expense in the consolidated financial statements. Under the Services Agreements, ARIAD will bill the Genomics Center for 100% of its costs of providing the research and administrative services; however, because ARIAD is providing 50% of the funding of the Genomics Center, ARIAD will recognize as revenue only 50% of the costs. ARIAD accounts for its investment in the Genomics Center using the equity method. Revenue recognized pursuant to the Services Agreements amounted to $378,000 for the six-month period ended June 30, 1997. Costs incurred in the development of the joint venture are being amortized over a five-year period beginning April 1, 1997. 4. Long-Term Debt -------------- On June 27, 1997, the Company amended its existing debt agreement with its principal bank and borrowed $6,000,000 that is repayable in 60 monthly installments of $100,000, commencing August 1, 1997. Existing terms and conditions, including pricing, collateral and covenants, were unchanged. 5. Commitments ----------- In March 1997, in connection with the formation of the Genomics Center, the Company entered into a collaborative agreement with Incyte Pharmaceuticals, Inc. ("Incyte") providing access to the LifeSeq(R) Database. As required by the agreement, in order to secure the Company's obligation for installation and payment of certain access fees, the Company obtained an irrevocable standby letter of credit in the amount of $3,000,000 to the benefit of Incyte, which expires on January 10, 1998. 6. Net Loss Per Share ------------------ The shares of series B convertible preferred stock issued in March 1997 are common stock equivalents, but have been excluded from the computation of net loss per share because their effect is not dilutive. 5 8 7. New Accounting Pronouncement ---------------------------- The Company will adopt Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," in the fourth quarter of 1997, as required. The standard specifies the computation, presentation and disclosure requirements for earnings per share. The Company will continue to apply Accounting Principle Board Opinion No. 15, "Earnings Per Share," until the adoption of SFAS No. 128. 6 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW ARIAD Pharmaceuticals, Inc. (the "Company" or "ARIAD") is engaged in the discovery and development of novel pharmaceuticals based on signal transduction pathways and the genes that regulate them. The Company is currently focusing its efforts in three areas: (i) the development of orally administered drugs to block intracellular signal transduction pathways that are critical to major diseases such as osteoporosis, allergy/asthma and immune-related disorders; (ii) the development of a system to regulate gene therapy using orally administered drugs; and (iii) the identification of new small-molecule drug targets and therapeutic proteins through functional genomics. ARIAD has assembled a broad portfolio of advanced technologies for the identification, validation and optimization of novel drugs. These technologies have been integrated into a drug discovery platform that, in conjunction with the Company's expertise in signal transduction, forms the basis for multiple business opportunities, each with a diversity of potential products. In each of its three areas of drug discovery, the Company has entered into a strategic alliance with a collaborator to complement its drug discovery technologies or to support its commercialization efforts. Since its inception in 1991, the Company has devoted substantially all of its resources to its research and development programs. The Company receives no revenue from the sale of pharmaceutical products, and substantially all revenue to date has been received in connection with the Company's research collaborations. The Company has not been profitable since inception and expects to incur substantial losses for the foreseeable future, primarily due to the expansion of its research and development programs, including the establishment of the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center") . The Company expects that losses will fluctuate from quarter to quarter and that such fluctuations may be substantial. As of June 30, 1997, the Company had an accumulated deficit of $58,671,000. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1996 REVENUE The Company recognized research revenue of $2,489,000 for the quarter ended June 30, 1997 compared to $2,093,000 for the same period in 1996. Research revenue is comprised principally of revenue from the Company's 1995 collaborative research and development agreement with Hoechst Marion Roussel ("HMR") (the "1995 HMR Osteoporosis Agreement") government-sponsored research grants, and beginning in 1997, research revenue recognized for services provided to the Genomics Center. The 7 10 increase in research revenue of $396,000 is principally the result of services provided to the Genomics Center. Although research revenue recognized under the 1995 HMR Osteoporosis Agreement is expected to remain substantially equivalent in 1997, research revenue resulting from the services agreements with the Genomics Center is expected to increase over the next three years. Interest income increased to $525,000 for the quarter ended June 30, 1997, up $236,000 from $289,000 for the same period in 1996 primarily as a result of higher levels of funds invested. OPERATING EXPENSES Research and development expenses increased to $4,273,000 for the quarter ended June 30, 1997 from $3,685,000 for the same period in 1996 due to increased expenses incurred in the regulated gene therapy program, including manufacturing development and other preclinical development costs, as well as increased research activity under the 1995 HMR Osteoporosis Agreement. The Company expects its research and development expenses to increase significantly as a result of research services to be provided to the Genomics Center, as well as increased manufacturing and preclinical development costs associated with advanced preclinical studies of its gene therapy drug candidate. General and administrative expenses increased to $726,000 for the quarter ended June 30, 1997 from $519,000 for the corresponding period in 1996 primarily due to increased expenses in connection with the formation of the Genomics Center and other administrative expenses. The Company incurred interest expense of $54,000 for the quarter ended June 30, 1997 compared to $67,000 for the corresponding period in 1996. The decrease resulted from a lower level of long-term debt during the period. However, the Company expects that interest expense will increase as a result of the increase in long-term debt in June 1997. OPERATING RESULTS The Company incurred losses of $2,039,000 for the quarter ended June 30, 1997 and $1,890,000 for the corresponding period in 1996, or $.11 and $.10 per share, respectively. The Company expects that substantial operating losses will continue for several more years, will increase as its activities expand and increased research services are provided to the Genomics Center and will fluctuate as a result of differences in the timing and composition of revenue earned and expenses incurred. SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996 REVENUE Revenues for the six months ended June 30, 1997 were $5,280,000 compared to $4,788,000 for the corresponding period in 1996. Research revenue earned in 1997 increased by 8 11 $311,000 over 1996 principally as a result of services provided to the Genomics Center. Interest income for the six months ended June 30, 1997 increased by $182,000 over the corresponding period in 1996 primarily as a result of a higher level of funds invested. OPERATING EXPENSES Research and development expenses increased to $8,530,000 for the six months ended June 30, 1997, up 15% from $7,388,000 for the corresponding period in 1996, primarily due to increased expenses incurred in the regulated gene therapy program, including manufacturing development and other preclinical development costs, and increased research activity as a result of the 1995 HMR Osteoporosis Agreement. General and administrative expenses increased by 23% to $1,484,000 for the six months ended June 30, 1997 compared to $1,202,000 for the corresponding period in 1996, primarily due to increased expenses in connection with the formation of the Genomics Center, the joint venture with Genovo Inc. and other administrative expenses. The Company incurred interest expense of $112,000 for the six months ended June 30, 1997 compared to $138,000 for the corresponding period in 1996 as a result of a lower level of long-term debt. OPERATING RESULTS The Company incurred losses of $4,845,000 for the six months ended June 30, 1997 and $3,940,000 for the corresponding period in 1996, or $.25 and $.21 per share, respectively. The Company expects that substantial operating losses will continue for several more years, will increase as its activities expand and increased research services are provided to the Genomics Center and will fluctuate as a result of differences in the timing and composition of revenue earned and expenses incurred. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations and investments in property and equipment primarily through the private placement and public offering of its securities, including, most recently, the sale of series B preferred stock to HMR in connection with the formation of the Genomics Center in March 1997, the increase in June 1997 of its long-term debt and, commencing in April 1997, the services agreements with the Genomics Center. Other sources of funds have included sale/leaseback and capital lease transactions, interest income, government-sponsored research grants and research revenue under the 1995 HMR Osteoporosis Agreement. As of June 30, 1997, the Company had cash, cash equivalents and marketable securities totaling $39,780,000 and working capital of $30,593,000 compared to cash, cash equivalents and marketable securities totaling $15,702,000 and working capital amounting to $11,902,000 at December 31, 1996. 9 12 The primary uses of cash during the six months ended June 30, 1997 were $413,000 to finance the Company's operations and working capital requirements, $3,575,000 to purchase laboratory equipment and to renovate space for the Genomics Center, $983,000 to repay long-term debt, $807,000 for investment in the Genomics Center and $258,000 to acquire licensed technology and patents. The primary sources of cash during the six months ended June 30, 1997 were $24,000,000 from the issuance of series B preferred stock to HMR, $4,000,000 of research funding from the 1995 HMR Osteoporosis Agreement, $6,000,000 in additional long-term debt and $1,205,000 in advances from the Genomics Center. In February 1997, the Company began renovation of approximately 35,000 square feet of previously leased space to provide laboratories and offices for the Genomics Center and to expand existing chemistry and pharmacology laboratories. The leasehold improvements are expected to be completed in the third quarter of 1997 at an aggregate cost of approximately $5,500,000. In June 1997, the Company amended its existing debt agreement with its principal bank and borrowed $6,000,000. The five-year bank term note bears interest at prime plus 1% and is repayable in monthly installments of $100,000, commencing August 1, 1997. The Company has substantial fixed commitments under various research and licensing agreements, consulting and employment agreements, lease agreements, long-term debt instruments and funding obligations related to the operations of the Genomics Center. The Company will require substantial additional funding for its research and product development programs, for operating expenses, for the pursuit of regulatory clearances and for building manufacturing, sales and marketing capabilities. Adequate funds for these purposes, whether obtained through financial markets or collaborative or other arrangements with corporate partners, or from other sources, may not be available when needed or on terms acceptable to the Company. The Company believes that its available cash and existing sources of funding will be adequate to satisfy its capital and operating requirements through 1998. However, there can be no assurance that changes in the Company's research and development plans or other events affecting the Company's operating expenses will not result in the Company depleting its funds earlier. SECURITIES LITIGATION REFORM ACT Safe harbor statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained in this Quarterly Report on Form 10-Q, the matters discussed herein are forward-looking statements that involve risks and uncertainties, including but not limited to risks and uncertainties regarding the receipt of revenues under the Company's 1995 HMR Osteoporosis Agreement and the services agreements, the actual research and development expenses and other costs associated with the Genomics Center, the adequacy of the Company's capital resources and the availability of additional funding, as well as general economic, competitive, governmental and 10 13 technological factors affecting the Company's operations, markets, products, services and prices, and other factors discussed under the heading "Cautionary Statement Regarding Forward-Looking Statements" in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. As a result of these factors, actual events or results could differ materially from those described herein. 11 14 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders was held on June 20, 1997. Of 21,788,288 shares issued and outstanding and eligible to vote as of the record date of April 22, 1997, a quorum of 18,254,789 shares or 83.8% of the eligible shares were present in person or represented by proxy. The following actions were taken at such meeting: (a) Reelection of the following Class 3 Directors:
Number of Shares --------------------------------------- For Withheld Authority ---------- ------------------ Harvey J. Berger, M.D. 18,168,531 86,258 Vaughn D. Bryson 18,170,273 84,516 Sandford D. Smith 18,170,273 84,516 Raymond S. Troubh 18,158,673 96,116
Continuing Class 1 Directors (terms to expire 1998): Joan S. Brugge, Ph.D. Edgar Haber, M.D. Frank J. Hoenemeyer John M. Deutch, Ph.D. Continuing Class 2 Directors (terms to expire 1999): Philip Felig, M.D. Peter T. Joseph Jay R. LaMarche Joel S. Marcus (b) Increase by 2,200,000 shares the aggregate number of shares for which stock options may be granted under the ARIAD Pharmaceuticals, Inc. 1991 Stock Option Plan for Employees and Consultants (11,184,495 shares for approval, 2,591,875 shares against approval, 60,197 shares abstaining and 4,418,222 broker non-votes). 12 15 (c) Increase by 300,000 shares the aggregate number of shares for which stock options may be granted under the ARIAD Pharmaceuticals, Inc. 1994 Stock Option Plan for Non-Employee Directors (12,643,242 shares for approval, 1,554,777 shares against approval, 50,164 shares abstaining and 4,006,606 broker non-votes). (d) Adoption and approval of the ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan (13,887,035 shares for approval, 313,113 shares against approval, 48,035 shares abstaining and 4,006,606 broker non-votes). ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are filed herewith: Exhibit 10.29 Amendment, dated January 1, 1997, to Executive Employment Agreement between ARIAD Pharmaceuticals, Inc. and Harvey J. Berger, M.D. Exhibit 10.30 Amendment, dated January 1, 1997, to Executive Employment Agreement between ARIAD Pharmaceuticals, Inc. and Jay R. LaMarche. Exhibit 10.31 Amendment, dated January 1, 1997, to Executive Employment Agreement between ARIAD Pharmaceuticals, Inc. and Charles C. Cabot III. Exhibit 10.32 Amendment, dated January 1, 1997, to Executive Employment Agreement between ARIAD Pharmaceuticals, Inc. and Manfred Weigele, Ph.D. Exhibit 10.33 Amendment, dated January 1, 1997, to Executive Employment Agreement between ARIAD Pharmaceuticals, Inc. and Michael Gilman, Ph.D. Exhibit 10.34 Consulting Agreement, dated July 1, 1997, between ARIAD Pharmaceuticals, Inc. and Joan S. Brugge, Ph.D. Exhibit 10.35 ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan Exhibit 10.36 Amendment to the 1991 Stock Option Plan for Employees and Consultants Exhibit 10.37 Amendment to the 1994 Stock Option Plan for Non-Employee Directors 13 16 Exhibit 10.38 Fourth Amendment to Loan And Security Agreement dated June 27, 1997 with BankBoston, N.A. as successor in interest to BayBank, N.A. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended June 30, 1997. 14 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ARIAD Pharmaceuticals, Inc. (Registrant) By: /s/ Jay R. LaMarche --------------------------------------- Jay R. LaMarche Executive Vice President, and Chief Financial Officer (Duly authorized Officer and Principal Financial Officer) Date: August 12, 1997 15 EX-10.29 2 AMENDED EMPLOYMENT AGREEMENT WITH HARVEY BERGER 1 EXHIBIT 10.29 THIRD AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------------- This THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (the "Third Amendment") made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Harvey J. Berger (the "Employee"). The Company and the Employee have entered into an Employment Agreement dated as of January 1, 1992, as amended as of April 19, 1994 and June 30, 1994 (the "Agreement"), and the parties hereto desire to further amend certain provisions of the Agreement. NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree to further amend the Agreement as follows: I. TERMINATION OF EMPLOYMENT. The first clause of Section 2 of the Agreement is hereby amended to read as follows: "The term of the Employee's employment under this Agreement (the "term") commenced as of January 1, 1992 (the "Effective Date") and shall end on December 31, 2001 unless sooner terminated pursuant to Section 4 or 5 of this Agreement;" II. COMPENSATION. The first sentence of Section 3.1 is hereby amended to read as follows: "3.1 As full compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Employee, during the Term, a salary at the fixed rate of $300,000 per annum during the first year of the Term and increased each year thereafter as set forth below, payable in equal semi-monthly installments, less such deductions or amounts to be withheld as shall be required by applicable law and regulations." 1 2 III. DEFINITIONS. The definition of the "Company's Field of Interest" in Section 16 (c) of the Agreement is hereby amended to read as follows: "The Company's 'Field of Interest' is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics." IV. This Third Amendment shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely in Massachusetts. V. Except as modified by this Third Amendment, the Agreement remains in full force and effect and unchanged. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. ARIAD PHARMACEUTICALS, INC. By: /s/ David T. Washburn ----------------------------------- David T. Washburn Secretary EMPLOYEE /s/ Harvey J. Berger, M.D. ------------------------------------- Harvey J. Berger, M.D. 2 EX-10.30 3 AMENDED EMPLOYMENT AGREEMENT WITH JAY LAMARCHE 1 EXHIBIT 10.30 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Jay R. LaMarche (the "Employee"). The Company and the Employee have entered into an Employment Agreement dated as of January 1, 1992 and amended as of March 2, 1994 (the "Agreement"), and the parties hereto desire to further amend certain provisions of the Agreement. NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree to further amend the Agreement as follows: I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of Section 1.1 is hereby amended to read as follows: "The Employee's title shall be designated by the Chief Executive Officer and initially shall be Executive Vice President and Chief Financial Officer." II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby amended to read as follows: "The term of the Employee's employment under the Agreement is hereby extended to December 31, 2000 (the "Term"), unless sooner terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED, however, that this Agreement shall automatically be renewed for successive one-year terms (the Term and, if the period of employment is so renewed, such additional period(s) of employment are 1 2 collectively referred to herein as the "Term") unless terminated by written notice given by either party to the other at least 90 days prior to the end of the applicable Term." III. COMPENSATION. Section 3.1 is hereby replaced and amended in its entirety as follows: "3.1. As full compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Employee, during the Term, a salary at the fixed rate of $215,000 per annum during the first year of the Term and increased each year thereafter, by amounts, if any, to be determined by the Board of Directors of the Company (the "Board") in its sole discretion, payable in equal semi-monthly installments, less such deductions or amounts to be withheld as shall be required by applicable law and regulations." IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and amended in its entirety as follows: "5.1. The Employee may terminate this Agreement, if any one or more of the following shall occur: (a) a material breach of the terms of this Agreement by the Company and such breach continues for 30 days after the Employee gives the Company written notice of such breach; (b) the Company shall make a general assignment for benefit of creditors; or any proceeding shall be instituted by the Company seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking entry of an order for relief of the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property or the Company shall take any corporate action to authorize any of the actions set forth above in this subsection 5.1(b); (c) an involuntary petition shall be filed or an action or proceeding otherwise commenced against the Company seeking reorganization, arrangement or readjustment of the Company's debts or for any other relief under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and remain undismissed or unstayed for a period of 30 days; (d) a receiver, assignee, liquidator, trustee or similar officer for the Company or for all or any part of its property shall be appointed involuntarily, or (e) a Change in Control as defined in Section 14." 2 3 V. SEVERANCE. Section 6 is hereby replaced and amended in its entirety as follows: "6. If (i) the Company terminates this Agreement without Cause or (ii) the Employee terminates this Agreement pursuant to Section 5.1(a), then: (1) except in the case of death or disability, the Company shall continue to pay Employee his current salary for the remaining period of the applicable Term; (2) all options granted pursuant to this Agreement that would have vested during the Term shall vest immediately prior to such termination; (3) the Company shall continue to provide all benefits subject to COBRA at its expense for up to one year. In the event of a consummation of a Change in Control of the Company, and if the Employee gives notice of termination within 90 days after such occurrence, then (i) all stock, stock options, stock awards and similar equity rights granted to the Employee shall immediately vest and remain fully exercisable through their original term with all rights; and (ii) the Company shall continue to pay Employee his current salary for the shorter of (a) six months, or (b) the remaining period of the applicable Term." VI. DEFINITIONS. The definition of the Company's "Field of Interest" in Section 14(b) of the Agreement is hereby amended to read as follows: "The Company's 'Field of Interest' is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics. The Company's Field of Interest may be changed at the sole discretion of the Company from time to time." The definition of "Change in Control" shall be added as Section 14(e) of the Agreement as follows: " 'Change in Control' means the occurrence of any of the following events (without the consent of the Employee): (i) Any corporation, person or other entity makes a tender or exchange offer for shares of the Company's Common Stock pursuant to which such corporation, person or other entity acquires more than 50% of the issued and outstanding shares of the Company's Common Stock; (ii) The stockholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation or to sell or otherwise dispose of all or substantially all of the Company's assets; or (iii) Any person within the meaning of Section 3 (a) (9) or Section 13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of the combined voting power of Company's issued and outstanding voting securities entitled to vote in the election of the Board." 3 4 VII. This Amendment shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely in Massachusetts. VIII. Except as modified by this Second Amendment, the Agreement remains in full force and effect and unchanged. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. ARIAD PHARMACEUTICALS, INC. By: /s/ Harvey J. Berger --------------------------------------- Harvey J. Berger, M.D. Chairman and Chief Executive Officer EMPLOYEE /s/ Jay R. LaMarche ------------------------------------------ Jay R. LaMarche 4 EX-10.31 4 AMENDED EMPLOYMENT AGREEMENT WITH CHARLES CABOT 1 EXHIBIT 10.31 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Charles C. Cabot III (the "Employee"). The Company and the Employee have entered into an Employment Agreement dated as of January 1, 1992 and amended as of March 2, 1994 (the "Agreement"), and the parties hereto desire to further amend certain provisions of the Agreement. NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree to further amend the Agreement as follows: I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of Section 1.1 is hereby amended to read as follows: "The Employee's title shall be designated by the Chief Executive Officer and initially shall be Executive Vice President and Chief Operating Officer." II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby amended to read as follows: "The term of the Employee's employment under the Agreement is hereby extended to December 31, 2000 (the "Term"), unless sooner terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED, however, that this Agreement shall automatically be renewed for successive one-year terms (the Term and, if the period of employment is so renewed, such additional period(s) of employment are 1 2 collectively referred to herein as the "Term") unless terminated by written notice given by either party to the other at least 90 days prior to the end of the applicable Term." III. COMPENSATION. Section 3.1 is hereby replaced and amended in its entirety as follows: "3.1. As full compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Employee, during the Term, a salary at the fixed rate of $215,000 per annum during the first year of the Term and increased each year thereafter, by amounts, if any, to be determined by the Board of Directors of the Company (the "Board") in its sole discretion, payable in equal semi-monthly installments, less such deductions or amounts to be withheld as shall be required by applicable law and regulations." IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and amended in its entirety as follows: "5.1. The Employee may terminate this Agreement, if any one or more of the following shall occur: (a) a material breach of the terms of this Agreement by the Company and such breach continues for 30 days after the Employee gives the Company written notice of such breach; (b) the Company shall make a general assignment for benefit of creditors; or any proceeding shall be instituted by the Company seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking entry of an order for relief of the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property or the Company shall take any corporate action to authorize any of the actions set forth above in this subsection 5.1(b); (c) an involuntary petition shall be filed or an action or proceeding otherwise commenced against the Company seeking reorganization, arrangement or readjustment of the Company's debts or for any other relief under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and remain undismissed or unstayed for a period of 30 days; (d) a receiver, assignee, liquidator, trustee or similar officer for the Company or for all or any part of its property shall be appointed involuntarily, or (e) a Change in Control as defined in Section 14." 2 3 V. SEVERANCE. Section 6 is hereby replaced and amended in its entirety as follows: "6. If (i) the Company terminates this Agreement without Cause or (ii) the Employee terminates this Agreement pursuant to Section 5.1(a), then: (1) except in the case of death or disability, the Company shall continue to pay Employee his current salary for the remaining period of the applicable Term; (2) all options granted pursuant to this Agreement that would have vested during the Term shall vest immediately prior to such termination; (3) the Company shall continue to provide all benefits subject to COBRA at its expense for up to one year. In the event of a consummation of a Change in Control of the Company, and if the Employee gives notice of termination within 90 days after such occurrence, then (i) all stock, stock options, stock awards and similar equity rights granted to the Employee shall immediately vest and remain fully exercisable through their original term with all rights; and (ii) the Company shall continue to pay Employee his current salary for the shorter of (a) six months, or (b) the remaining period of the applicable Term." VI. DEFINITIONS. The definition of the Company's "Field of Interest" in Section 14(b) of the Agreement is hereby amended to read as follows: "The Company's 'Field of Interest' is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics. The Company's Field of Interest may be changed at the sole discretion of the Company from time to time." The definition of "Change in Control" shall be added as Section 14(e) of the Agreement as follows: " 'Change in Control' means the occurrence of any of the following events (without the consent of the Employee): (i) Any corporation, person or other entity makes a tender or exchange offer for shares of the Company's Common Stock pursuant to which such corporation, person or other entity acquires more than 50% of the issued and outstanding shares of the Company's Common Stock; (ii) The stockholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation or to sell or otherwise dispose of all or substantially all of the Company's assets; or (iii) Any person within the meaning of Section 3 (a) (9) or Section 13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of the combined voting power of Company's issued and outstanding voting securities entitled to vote in the election of the Board." 3 4 VII. This Amendment shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely in Massachusetts. VIII. Except as modified by this Second Amendment, the Agreement remains in full force and effect and unchanged. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. ARIAD PHARMACEUTICALS, INC. By: /s/ Harvey J. Berger ---------------------------------------- Harvey J. Berger, M.D. Chairman and Chief Executive Officer EMPLOYEE /s/ Charles C. Cabot III ------------------------------------------- Charles C. Cabot III 4 EX-10.32 5 AMENDED EMPLOYMENT AGREEMENT WITH MANFRED WEIGELE 1 EXHIBIT 10.32 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Manfred Weigele, Ph.D. (the "Employee"). The Company and the Employee have entered into an Employment Agreement dated as of October 14, 1991 and amended as of March 2, 1994 (the "Agreement"), and the parties hereto desire to further amend certain provisions of the Agreement. NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree to further amend the Agreement as follows: I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of Section 1.1 is hereby amended to read as follows: "The Employee's title shall be designated by the Chief Executive Officer and initially shall be Senior Vice President, Physical and Chemical Sciences." II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby amended to read as follows: "The term of the Employee's employment under the Agreement is hereby extended to December 31, 1998 (the "Term"), unless sooner terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED, however, that this Agreement shall automatically be renewed for successive one-year terms (the Term and, if the period of employment is so renewed, such additional period(s) of employment are collectively referred to herein as the "Term") 1 2 unless terminated by written notice given by either party to the other at least 90 days prior to the end of the applicable Term." III. COMPENSATION. Section 3.1 is hereby replaced and amended in its entirety as follows: "3.1. As full compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Employee, during the Term, a salary at the fixed rate of $215,000 per annum during the first year of the Term and increased each year thereafter, by amounts, if any, to be determined by the Board of Directors of the Company (the "Board") in its sole discretion, payable in equal semi-monthly installments, less such deductions or amounts to be withheld as shall be required by applicable law and regulations." IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and amended in its entirety as follows: "5.1. The Employee may terminate this Agreement, if any one or more of the following shall occur: (a) a material breach of the terms of this Agreement by the Company and such breach continues for 30 days after the Employee gives the Company written notice of such breach; (b) the Company shall make a general assignment for benefit of creditors; or any proceeding shall be instituted by the Company seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking entry of an order for relief of the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property or the Company shall take any corporate action to authorize any of the actions set forth above in this subsection 5.1(b); (c) an involuntary petition shall be filed or an action or proceeding otherwise commenced against the Company seeking reorganization, arrangement or readjustment of the Company's debts or for any other relief under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and remain undismissed or unstayed for a period of 30 days; (d) a receiver, assignee, liquidator, trustee or similar officer for the Company or for all or any part of its property shall be appointed involuntarily, or (e) a Change in Control as defined in Section 14." V. SEVERANCE. Section 6 is hereby replaced and amended in its entirety as follows: 2 3 "6. If (i) the Company terminates this Agreement without Cause or (ii) the Employee terminates this Agreement pursuant to Section 5.1(a), then: (1) except in the case of death or disability, the Company shall continue to pay Employee his current salary for the remaining period of the applicable Term; (2) all options granted pursuant to this Agreement that would have vested during the Term shall vest immediately prior to such termination; (3) the Company shall continue to provide all benefits subject to COBRA at its expense for up to one year. In the event of a consummation of a Change in Control of the Company, and if the Employee gives notice of termination within 90 days after such occurrence, then (i) all stock, stock options, stock awards and similar equity rights granted to the Employee shall immediately vest and remain fully exercisable through their original term with all rights; and (ii) the Company shall continue to pay Employee his current salary for the shorter of (a) six months, or (b) the remaining period of the applicable Term." VI. DEFINITIONS. The definition of the Company's "Field of Interest" in Section 14(b) of the Agreement is hereby amended to read as follows: "The Company's 'Field of Interest' is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics. The Company's Field of Interest may be changed at the sole discretion of the Company from time to time." The definition of "Change in Control" shall be added as Section 14(e) of the Agreement as follows: " 'Change in Control' means the occurrence of any of the following events (without the consent of the Employee): (i) Any corporation, person or other entity makes a tender or exchange offer for shares of the Company's Common Stock pursuant to which such corporation, person or other entity acquires more than 50% of the issued and outstanding shares of the Company's Common Stock; (ii) The stockholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation or to sell or otherwise dispose of all or substantially all of the Company's assets; or (iii) Any person within the meaning of Section 3 (a) (9) or Section 13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of the combined voting power of Company's issued and outstanding voting securities entitled to vote in the election of the Board." 3 4 VII. This Amendment shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely in Massachusetts. VIII. Except as modified by this Second Amendment, the Agreement remains in full force and effect and unchanged. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. ARIAD PHARMACEUTICALS, INC. By: /s/ Harvey J. Berger ---------------------------------------- Harvey J. Berger, M.D. Chairman and Chief Executive Officer EMPLOYEE /s/ Manfred Weigele, Ph.D. ------------------------------------------- Manfred Weigele, Ph.D. 4 EX-10.33 6 AMENDED EMPLOYMENT AGREEMENT WITH MICHAEL GILMAN 1 EXHIBIT 10.33 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") made as of January 1, 1997, between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Michael Gilman, Ph.D. (the "Employee"). The Company and the Employee have entered into an Employment Agreement dated as of March 25, 1994 (the "Agreement"), and the parties hereto desire to further amend certain provisions of the Agreement. NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree to further amend the Agreement as follows: I. EMPLOYMENT, DUTIES AND ACCEPTANCE. The second sentence of Section 1.1 is hereby amended to read as follows: "The Employee's title shall be designated by the Chief Executive Officer and initially shall be Senior Vice President, Drug Discovery and Scientific Director, ARIAD Gene Therapeutics, Inc.; as of March 11, 1997, the title shall be Executive Vice President and Chief Scientific Officer, ARIAD Pharmaceuticals, Inc. and Scientific Director, ARIAD Gene Therapeutics, Inc." II. TERM OF EMPLOYMENT. The first sentence of Section 2 is hereby amended to read as follows: "The term of the Employee's employment under the Agreement is hereby extended to December 31, 2000 (the "Term"), unless sooner terminated pursuant to Section 4 or 5 of this Agreement; PROVIDED, however, that this Agreement shall automatically be renewed for successive one-year terms (the Term and, if the period of employment is so renewed, such additional period(s) of employment are collectively referred to herein as the "Term") 2 unless terminated by written notice given by either party to the other at least 90 days prior to the end of the applicable Term." III. COMPENSATION. Section 3.1 is hereby replaced and amended in its entirety as follows: "3.1. As full compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Employee, during the Term, a salary at the fixed rate of $215,000 per annum during the first year of the Term and increased each year thereafter, by amounts, if any, to be determined by the Board of Directors of the Company (the "Board") in its sole discretion, payable in equal semi-monthly installments, less such deductions or amounts to be withheld as shall be required by applicable law and regulations." IV. TERMINATION BY THE EMPLOYEE. Section 5 is hereby replaced and amended in its entirety as follows: "5.1. The Employee may terminate this Agreement, if any one or more of the following shall occur: (a) a material breach of the terms of this Agreement by the Company and such breach continues for 30 days after the Employee gives the Company written notice of such breach; (b) the Company shall make a general assignment for benefit of creditors; or any proceeding shall be instituted by the Company seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking entry of an order for relief of the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property or the Company shall take any corporate action to authorize any of the actions set forth above in this subsection 5.1(b); (c) an involuntary petition shall be filed or an action or proceeding otherwise commenced against the Company seeking reorganization, arrangement or readjustment of the Company's debts or for any other relief under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and remain undismissed or unstayed for a period of 30 days; (d) a receiver, assignee, liquidator, trustee or similar officer for the Company or for all or any part of its property shall be appointed involuntarily, or (e) a Change in Control as defined in Section 14." V. SEVERANCE. Section 6 is hereby replaced and amended in its entirety as follows: 2 3 "6. If (i) the Company terminates this Agreement without Cause or (ii) the Employee terminates this Agreement pursuant to Section 5.1(a), then: (1) except in the case of death or disability, the Company shall continue to pay Employee his current salary for the remaining period of the applicable Term; (2) all options granted pursuant to this Agreement that would have vested during the Term shall vest immediately prior to such termination; (3) the Company shall continue to provide all benefits subject to COBRA at its expense for up to one year. In the event of a consummation of a Change in Control of the Company, and if the Employee gives notice of termination within 90 days after such occurrence, then (i) all stock, stock options, stock awards and similar equity rights granted to the Employee shall immediately vest and remain fully exercisable through their original term with all rights; and (ii) the Company shall continue to pay Employee his current salary for the shorter of (a) six months, or (b) the remaining period of the applicable Term." VI. DEFINITIONS. The definition of the Company's "Field of Interest" in Section 14(b) of the Agreement is hereby amended to read as follows: "The Company's 'Field of Interest' is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics. The Company's Field of Interest may be changed at the sole discretion of the Company from time to time." The definition of "Change in Control" shall be added as Section 14(e) of the Agreement as follows: " 'Change in Control' means the occurrence of any of the following events (without the consent of the Employee): (i) Any corporation, person or other entity makes a tender or exchange offer for shares of the Company's Common Stock pursuant to which such corporation, person or other entity acquires more than 50% of the issued and outstanding shares of the Company's Common Stock; (ii) The stockholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation or to sell or otherwise dispose of all or substantially all of the Company's assets; or (iii) Any person within the meaning of Section 3 (a) (9) or Section 13 (d) of the Securities Exchange Act of 1934 acquires more than 50% of the combined voting power of Company's issued and outstanding voting securities entitled to vote in the election of the Board." 3 4 VII. This Amendment shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely in Massachusetts. VIII. Except as modified by this Amendment, the Agreement remains in full force and effect and unchanged. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. ARIAD PHARMACEUTICALS, INC. By: /s/ Harvey J. Berger ---------------------------------------- Harvey J. Berger, M.D. Chairman and Chief Executive Officer EMPLOYEE /s/ Michael Gilman, Ph.D. ------------------------------------------- Michael Gilman, Ph.D. 4 EX-10.34 7 CONSULTING AGREEMENT FOR MEMBERS 1 EXHIBIT 10.34 CONSULTING AGREEMENT FOR MEMBERS OF THE ARIAD BOARD OF SCIENTIFIC AND MEDICAL ADVISORS This Agreement is made between ARIAD Pharmaceuticals, Inc. (the "Company") and Joan S. Brugge, Ph.D. (the "Consultant") and shall be effective as of July 1, 1997 (the "Effective Date"). The Consultant has been involved in scientific research in fields of particular interest to the Company. The Company wishes to retain the Consultant in a consulting capacity and as a Co-chair of the Board of Scientific and Medical Advisors of the Company, and the Consultant desires to perform such consulting services. The duties of the Consultant will be within the guidelines of the Harvard University Faculty of Medicine Policy on Conflicts of Interest and Commitment, as well as other regulations and policies of Harvard University. Accordingly, the parties agree as follows: 1. SERVICES. 1.1 The Consultant will advise the Company's management, employees and agents, at reasonable times, in the Company's field of interest. The Company's field of interest is: the discovery, development and commercialization of pharmaceutical products based on (a) intervention in signal transduction pathways; (b) gene and cell therapy; and (c) functional genomics (the Company's "Field of Interest"). The Company's Field of Interest may be changed at the sole discretion of the Company from time to time. 1 2 1.2 Consultation may be sought by the Company over the telephone, in person at the Consultant's office, or through written correspondence, and will involve reviewing activities and developments in the Company's Field of Interest. In addition, the Consultant will make herself available in person at the Company's offices or other reasonable locations. The Consultant's time commitment shall be sufficient for the Consultant to meet objectives established by the Company and agreed upon by the parties. The Consultant also will co-chair the Board of Scientific and Medical Advisors of the Company, will be a member of the Board of Directors of the Company (subject to nomination by the Board of Directors and election by the shareholders of the Company), and agrees to use her best efforts to attend all such meetings. Time spent at such meetings will accrue against the Consultant's time commitment hereunder. 1.3 The position of Co-chair of the Board of Scientific and Medical Advisors of the Company is not an executive officer position of the Company and does not include direct responsibilities for the operation of a material segment of the Company's business. 1.4 The Consultant acknowledges that in her capacity as a member of the Board of Directors of the Company, she will have fiduciary responsibilities to the Company and its shareholders which extend beyond, and are independent of, her obligations as set forth in this Agreement. 2. CASH COMPENSATION. As consideration for the consulting services provided by the Consultant, the Company shall pay to the Consultant the amount of $95,000 per year. The annual fee shall be paid in installments of $7,917 per month. Reasonable expenses of the Consultant 3 3 incurred at the request of the Company will be reimbursed promptly by the Company, subject to customary verification. 3. STOCK OPTIONS. All options for shares of Common Stock of the Company and its subsidiary, ARIAD Gene Therapeutics, Inc., previously granted to the Consultant, shall continue to vest and be exerciseable through their original terms, subject to the terms and conditions of the stock option plans for employees and consultants of the Company and its subsidiary. 4. TERM. The term of this Agreement will begin on the Effective Date of this Agreement and will end at the end of the calendar quarter in which the fifth anniversary of this Agreement occurs or upon earlier termination as provided below (the "Term"). This Agreement may be terminated at any earlier time prior to the fifth anniversary hereof by either party with at least 30 days written notice. The Term will be automatically renewed for successive one-year periods, unless either party provides written notice at least 30 days prior to the end of the Term that such party does not wish to renew this Agreement. 5. CERTAIN OTHER CONTRACTS. 5.1 As of the Effective Date, the Consultant will be employed by an academic or research institution (the "Institution"). The Company recognizes that the Consultant's primary responsibility will be to the Institution. In connection with such employment, the Consultant may enter into certain agreements with the Institution relating to ownership of intellectual property rights, conflicts of interest and other matters, and will be 3 4 subject to certain policy statements of the Institution (collectively, the "Institutional Agreement"). If any provision of this Agreement is in conflict with the Institutional Agreement, then the Institutional Agreement will govern to the extent of such conflict, and the conflicting provisions of this Agreement will not apply. 5.2 The Consultant will not disclose to the Company any information that the Consultant is obligated to keep secret pursuant to a confidentiality agreement with a third party, and nothing in this Agreement will impose any obligation on the Consultant to the contrary. If any provision of this Agreement is in conflict with any such confidentiality agreement, then such confidentiality agreement will govern to the extent of such conflict, and the conflicting provisions of this Agreement will not apply. 5.3 The consulting work performed hereunder will not be conducted on time that is required to be devoted to the Institution or any other third party. The Consultant shall not use the funding, resources and facilities of the Institution or any third party to perform consulting work hereunder and shall not perform the consulting work hereunder in any manner that would give the Institution or any third party rights to the product of such work. 5.4 The Consultant has disclosed and, during the Term, will disclose to the Chief Executive Officer of the Company any potential conflicts between this Agreement and other contracts binding the Consultant. 6. EXCLUSIVE SERVICES DURING THE TERM. Subject to written waivers that may be provided by the Company upon request, the Consultant agrees that (i) during the Term of this Agreement and (ii) if the Consultant terminates this Agreement pursuant to the provisions contained in Section 4, 4 5 for three (3) months after such termination, she will not (a) provide any services as an employee, director, advisor, or consultant to any other business or commercial entity in the biotechnology and/or pharmaceutical fields or (b) participate in the formation of any business or commercial entity in the biotechnology and/or pharmaceutical fields. The foregoing restriction shall not prohibit the Institution or the Consultant's laboratory from performing research for a biotechnology and/or pharmaceutical company pursuant to a sponsored research agreement, so long as Consultant does not perform services for the sponsor other than as required by the sponsored research agreement. 7. DIRECTION OF PROJECTS AND INVENTIONS TO THE COMPANY. Subject to the Consultant's obligations under the Institutional Agreement and confidentiality agreements with third parties, during the Term of this Agreement, the Consultant will use reasonable efforts to disclose to the Chief Executive Officer of the Company, on a confidential basis, technology and product opportunities which come to the attention of the Consultant in the Company's Field of Interest, and any invention, improvement, discovery, process, formula or method or other intellectual property relating to or useful in, the Company's Field of Interest, whether or not patentable, whether or not copyrightable. 8. INVENTIONS DISCOVERED BY THE CONSULTANT WHILE PERFORMING SERVICES HEREUNDER. The Consultant will promptly disclose to the Chief Executive Officer of the Company any invention, improvement, discovery, process, formula, or method or other intellectual property, whether or not patentable, whether or not copyrightable (collectively, 5 6 "Invention") made, conceived or first reduced to practice by the Consultant, either alone or jointly with others, while performing services hereunder. The Consultant hereby assigns to the Company all of her right, title and interest in and to any such Inventions. The Consultant will execute any documents necessary to perfect the assignment of such Inventions to the Company and to enable the Company to apply for, obtain, and enforce patents or copyrights in any and all countries on such Inventions. The Consultant hereby irrevocably designates the Chief Patent Counsel of the Company as her agent and attorney-in-fact to execute and file any such document and to do all lawful acts necessary to apply for and obtain patents and copyrights, and to enforce the Company's rights under this paragraph. This Section 8 will survive the termination of this Agreement. 9. CONFIDENTIALITY. 9.1 The Consultant acknowledges that, during the course of performing her services hereunder, the Company will be disclosing information to the Consultant related to the Company's Field of Interest, Inventions, projects and business plans, as well as other information ("Confidential Information"). The Consultant acknowledges that the Company's business is extremely competitive, dependent in part upon the maintenance of secrecy, and that any disclosure of the Confidential Information would result in serious harm to the Company. 9.2 The Consultant agrees that the Confidential Information only will be used by the Consultant in connection with consulting activities hereunder, and will not be used in any way that is detrimental to the Company. 6 7 9.3 The Consultant agrees not to disclose, directly or indirectly, the Confidential Information to any third person or entity, other than representatives or agents of the Company. The Consultant will treat all such information as confidential and proprietary property of the Company. 9.4 The term "Confidential Information" does not include information that (a) is or becomes generally available to the public other than by disclosure in violation of this Agreement, (b) was within the relevant party's possession prior to being furnished to such party, (c) becomes available to the relevant party on a nonconfidential basis or (d) was independently developed by the relevant party without reference to the information provided by the Company. 9.5 The Consultant may disclose any Confidential Information that is required to be disclosed by law, government regulation or court order. If disclosure is required, the Consultant will give the Company advance notice so that the Company may seek a protective order or take other action reasonable in light of the circumstances. 9.6 Upon termination of this Agreement, the Consultant will promptly return to the Company all materials containing Confidential Information, as well as data, records, reports and other property, furnished by the Company to the Consultant or produced by the Consultant in connection with services rendered hereunder. Notwithstanding such return, the Consultant shall continue to be bound by the terms of the confidentiality provisions contained in this Section 9 for a period of three years after the termination of this Agreement. 10. FREEDOM TO PUBLISH. 7 8 10.1 The Company acknowledges the Consultant's obligation to disseminate new knowledge and research findings. Notwithstanding the confidentiality provisions, or any other provision, of this Agreement, the Consultant may publish the results of the Consultant's work performed in the Company's Field of Interest pursuant to this Agreement. 10.2 The Consultant acknowledges that publication or oral disclosure of any Invention or other work prior to filing for patent or copyright protection could result in the complete loss of any commercial value of the Consultant's research to the Institution, the Company, and/or the Consultant, as the case may be. The Consultant agrees to provide the Company with prompt notice of the intention to publish, or disclose, any work directly involving the Company or services provided under this Agreement. A draft of the relevant paper, chapter, report, presentation or other document (except scientific abstracts), which will be held in confidence by the Company, will be provided to the Company at least 60 days prior to publication or disclosure, but no later than the date of initial submission, in order to allow the Company to have relevant patent or copyright applications prepared, if appropriate. All relevant scientific abstracts (e.g., research summaries of less than 250 words) will be provided to the Company at least seven days prior to submission for publication or presentation. 11. USE OF NAME. It is understood that the name of the Consultant and the Institution will appear in disclosure documents required by securities laws, and in other regulatory and administrative filings in the ordinary course of the Company's business. It is also understood that the name of the Consultant and the Institution will appear in connection with 8 9 the Company's Board of Scientific and Medical Advisors. The above-described uses will be deemed to be non-commercial uses. The name of the Consultant and the Institution will not be used for any commercial purpose without the Consultant's consent. 12. NO CONFLICT; VALID AND BINDING. The Consultant represents that neither the execution of this Agreement nor the performance of the Consultant's obligations under this Agreement (as modified to the extent required by Section 5) will result in a violation or breach of any other agreement by which the Consultant is bound. The Company represents that this Agreement has been duly authorized and executed and is a valid and legally binding obligation of the Company, subject to no conflicting agreements. 13. NOTICES. Any notice provided under this Agreement shall be in writing and shall be deemed to have been effectively given when delivered personally, sent by private express mail service (such as Federal Express), or sent by regular mail (and a return receipt is received) to the following address: In the case of the Company: ARIAD Pharmaceuticals, Inc. 26 Landsdowne Street Cambridge, Massachusetts 02139 Attn.: Harvey J. Berger, M.D. Chairman and Chief Executive Officer In the case of the Consultant: Joan S. Brugge, Ph.D. 50 Sarah Way Concord, Massachusetts 01742 9 10 or to such other address as may have been designated by the Company or the Consultant by notice to the other given as provided herein. 14. INDEPENDENT CONTRACTOR; WITHHOLDING. The Consultant will at all times be an independent contractor, and as such will not have authority to bind the Company. The Consultant recognizes that no amount will be withheld from her compensation for payment of any Federal, state or local taxes and that the Consultant has sole responsibility to pay such taxes, if any, and file such returns as shall be required by applicable laws and regulations. 15. ASSIGNMENT. Due to the personal nature of the services to be rendered by the Consultant, the Consultant may not assign this Agreement. The Company may assign all rights and liabilities under this Agreement (as a group with other similar agreements with members of the Board of Scientific and Medical Advisors) to a subsidiary or an affiliate or to a successor to all or a substantial part of its business and assets without the consent of the Consultant. Subject to the foregoing, this Agreement will inure to the benefit of and be binding upon each of the heirs, assigns and successors of the respective parties. 16. SEVERABILITY. If any provision of this Agreement shall be declared invalid, illegal or unenforceable, such provision shall be severed and the remaining provisions shall continue in full force and effect. 10 11 17. REMEDIES. The Consultant acknowledges that the Company would have no adequate remedy at law to enforce Sections 6, 8 and 9 hereof. In the event of a violation by the Consultant of such Sections, the Company shall have the right to seek injunctive relief, as well as any other relevant damages. 18. GOVERNING LAW; ENTIRE AGREEMENT; AMENDMENT. This agreement shall be governed by the laws of the State of New York applicable to agreements made and to be performed within such State, represents the entire understanding of the parties with regard to the matters covered by this Agreement, supersedes all prior agreements between the parties, EXCEPT Sections 8 (Confidentiality), 9 (Inventions Discovered by the Employee While Performing Services Hereunder), 10 (Non-Competition and Non-Solicitation), and 11 (Indemnification) of the Employment Agreement between the Consultant and the Company dated as of January 3, 1992 and amended as of March 2, 1994, and may only be amended in writing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written below. ARIAD PHARMACEUTICALS, INC. /s/ Harvey J. Berger - ----------------------------------------- Harvey J. Berger, M.D. Chairman and Chief Executive Officer CONSULTANT /s/ Joan S. Brugge, Ph.D. - ----------------------------------------- Joan S. Brugge, Ph.D. July 1, 1997 Date 11 EX-10.35 8 1997 EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 10.35 ARIAD PHARMACEUTICALS, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN The following constitute the provisions of the 1997 Employee Stock Purchase Plan (the "Plan") of ARIAD Pharmaceuticals, Inc. (the "Company"). 1. PURPOSE. The purpose of the Plan is to provide Employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 2. DEFINITIONS. (a) "BOARD" shall mean the Board of Directors of the Company, or a committee of the Board of Directors named by the Board to administer the Plan. (b) "CODE" shall mean the Internal Revenue Code of 1986, as amended. (c) "COMMON STOCK" shall mean the Common Stock, $0.001 par value, of the Company. (d) "COMPANY" shall mean ARIAD Pharmaceuticals, Inc., a Delaware corporation. (e) "COMPENSATION" shall mean all compensation that is taxable income for federal income tax purposes, including, payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, commissions and other compensation. (f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company, provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute. 2 (g) "CONTRIBUTIONS" shall mean all amounts credited to the account of a participant pursuant to the Plan. (h) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan. (i) "EMPLOYEE" shall mean any person, including an officer, who is customarily employed for at least 20 hours per week and more than five months in a calendar year by the Company or one of its Designated Subsidiaries. (j) "EXERCISE DATE" shall mean the last day of each Offering Period of the Plan. (k) "OFFERING DATE" shall mean the first business day of each Offering Period of the Plan, except that in the case of an individual who becomes an eligible Employee after the first business day of an Offering Period but on or prior to the first business day of the last calendar quarter of such Offering Period, the term "Offering Date" shall mean the first business day of the calendar quarter coinciding with or next succeeding the day on which that individual becomes an eligible Employee. Options granted after the first business day of an Offering Period will be subject to the same terms as the options granted on the first business day of such Offering Period except that they will have a different grant date (thus, potentially, a different exercise price) and, because they expire at the same time as the options granted on the first business day of such Offering Period, a shorter term. (l) "OFFERING PERIOD" shall mean a period of three months. (m) "PLAN" shall mean this ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan. (n) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. 3. ELIGIBILITY. 3 (a) Any person who has been continuously employed as an Employee for three (3) months as of the Offering Date of a given Offering Period shall be eligible to participate in such Offering Period under the Plan, provided that such person was not eligible to participate in such 4 Offering Period as of any prior Offering Date, and further, subject to the requirements of paragraph 5(a) and the limitations imposed by Section 423(b) of the Code. (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company, or (ii) which permits his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. Any option granted under the Plan shall be deemed to be modified to the extent necessary to satisfy this paragraph (b). 4. OFFERING PERIODS. The Plan shall be implemented by a series of Offering Periods, with a new Offering Period commencing on July 1, October 1, January 1 and April 1 of each year (or at such other time or times as may be determined by the Board of Directors). The initial Offering Period shall commence at a time to be determined by the Board. The Plan shall continue until terminated in accordance with paragraph 19 hereof. The Board of Directors of the Company shall have the power to change the duration and/or the frequency of Offering Periods with respect to future offerings without stockholder approval if such change is announced at least 15 days prior to the scheduled beginning of the first Offering Period to be affected. In addition, Employees shall not be entitled to enroll in the Plan or exercise any options granted under the Plan during any period in which the Company has restricted the purchase or sale of its securities by its Employees. 5. PARTICIPATION. (a) An eligible Employee may become a participant in the Plan by completing an Enrollment Form provided by the Company and filing it with the Company prior to the applicable Offering Date, unless a later time for filing the Enrollment Form is set by the Board for all eligible Employees with respect to a given Offering Period. The Enrollment Form shall set forth the percentage of the participant's Compensation (which shall be not less than 1% and not more than 10%) to be paid as Contributions pursuant to the Plan. 5 (b) Payroll deductions shall commence on the first payroll following the Offering Date and shall end on the last payroll paid on or prior to the Exercise Date of the Offering Periods to which the Enrollment Form is applicable, unless sooner terminated by the participant as provided in paragraph 10. 6. METHOD OF PAYMENT OF CONTRIBUTIONS. (a) The participant shall elect to have payroll deductions made on each payday during the Offering Period in an amount not less than 1% and not more than 10% of such participant's Compensation on each such payday; provided that the aggregate of such payroll deductions during the Offering Period shall not exceed 10% of the participant's aggregate Compensation during said Offering Period. All payroll deductions made by a participant shall be credited to his or her account under the Plan. A participant may not make any additional payments into such account. (b) A participant may discontinue his or her participation in the Plan as provided in paragraph 10, or, on one occasion only during the Offering Period, may decrease, but may not increase, the rate of his or her Contributions during the Offering Period by completing and filing with the Company a new Enrollment Form within the ten-day period immediately preceding the second calendar quarter during the Offering Period. The change in rate shall be effective as of the beginning of the calendar quarter following the date of the filing of the new subscription agreement. (c) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and paragraph 3(b) herein, a participant's payroll deductions may be decreased to 0% at such time during any Offering Period which is scheduled to end during the current calendar year that the aggregate of all payroll deductions accumulated with respect to such Offering Period and any other Offering Period ending within the same calendar year equals $21,250. Payroll deductions shall recommence at the rate provided in such participant's Enrollment Form at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in paragraph 10. 6 7. GRANT OF OPTION. (a) On the Offering Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period a number of shares of the Common Stock determined by dividing such Employee's Contributions accumulated prior to such Exercise Date and retained in the participant's account as of the Exercise Date by the lower of (i) 85% of the fair market value of a share of Common Stock on the Offering Date, or (ii) 85% of the fair market value of a share of the Common Stock on the Exercise Date; provided however, that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof. The fair market value of a share of the Common Stock shall be determined as provided in Section 7(b) herein. (b) The option price per share of the shares offered in a given Offering Period shall be the lower of (i) 85% of the fair market value of a share of the Common Stock on the Offering Date, or (ii) 85% of the fair market value of a share of the Common Stock on the Exercise Date. The fair market value of the Common Stock on a given date shall be determined by the Board based on the closing sale price of the Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported by the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System or, if such price is not reported, the mean of the bid and asked prices per share of the Common Stock as reported by NASDAQ or, in the event the Common Stock is listed on a stock exchange, the fair market value per share shall be the closing sale price on such exchange on such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported in The Wall Street Journal. 8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as provided in paragraph 10, his or her option for the purchase of shares will be exercised automatically on the Exercise Date of the Offering Period, and the maximum number of full shares subject to option will be purchased for him or her at the applicable option price with the accumulated Contributions in his or her account. If a fractional number of shares results, then such number shall be rounded down to the next whole number and any unapplied cash shall be carried forward to the next Exercise Date, unless the participant requests a cash payment. The shares purchased upon exercise of an option hereunder 7 shall be deemed to be transferred to the participant on the Exercise Date. During a participant's lifetime, a participant's option to purchase shares hereunder is exercisable only by him or her. 9. DELIVERY. Upon the written request of a participant, certificates representing the shares purchased upon exercise of an option will be issued as promptly as practicable after the Exercise Date of each Offering Period to participants who wish to hold their shares in certificate form. Any cash remaining to the credit of a participant's account under the Plan after a purchase by him or her of shares at the termination of each Offering Period shall be carried forward to the next Exercise Date unless the participant requests a cash payment. 10. WITHDRAWAL; TERMINATION OF EMPLOYMENT. (a) A participant may withdraw all but not less than all the Contributions credited to his or her account under the Plan at any time prior to the Exercise Date of the Offering Period by giving written notice to the Company. All of the participant's Contributions credited to his or her account will be paid to him or her promptly after receipt of his or her notice of withdrawal and his or her option for the current period will be automatically terminated, and no further Contributions for the purchase of shares will be made during the Offering Period. (b) Upon termination of the participant's Continuous Status as an Employee prior to the Exercise Date of the Offering Period for any reason, including retirement or death, the Contributions credited to his or her account will be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto under paragraph 14, and his or her option will be automatically terminated. (c) In the event an Employee fails to remain in Continuous Status as an Employee of the Company for at least 20 hours per week during the Offering Period in which the Employee is a participant, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to his or her account will be returned to him or her and his or her option terminated. (d) A participant's withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in a succeeding offering or in any similar plan which may hereafter be adopted by the Company. 8 11. INTEREST. No interest shall accrue on the Contributions of a participant in the Plan. 12. STOCK. (a) The maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be 500,000 shares, subject to adjustment upon changes in capitalization of the Company as provided in paragraph 18. If the total number of shares which would otherwise be subject to options granted pursuant to Section 7(a) hereof on the Offering Date of an Offering Period exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Company shall make a pro rata allocation of the shares remaining available for option grant in as uniform a manner as shall be practicable and as it shall determine to be equitable. Any amounts remaining in an Employee's account not applied to the purchase of stock pursuant to this Section 12 shall be refunded on or promptly after the Exercise Date. In such event, the Company shall give written notice of such reduction of the number of shares subject to the option to each Employee affected thereby and shall similarly reduce the rate of Contributions, if necessary. (b) The participant will have no interest or voting right in shares covered by his or her option until such option has been exercised. 13. ADMINISTRATION. The Board shall supervise and administer the Plan and shall have full power to adopt, amend and rescind any rules deemed desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to construe and interpret the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. 9 14. DESIGNATION OF BENEFICIARY. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to the end of the Offering Period but prior to delivery to him or her of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to the Exercise Date of the Offering Period. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. (b) Such designation of beneficiary may be changed by the participant (and his or her spouse, if any) at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 15. TRANSFERABILITY. Neither Contributions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in paragraph 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with paragraph 10. 16. USE OF FUNDS. All Contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such Contributions. 17. REPORTS. Individual accounts will be maintained for each participant in the Plan. Statements of account will be given to participating 10 Employees promptly following the Exercise Date, which statements will set forth the amounts of Contributions, the per share purchase price, the number of shares purchased and the remaining cash balance, if any. 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but have not yet been placed under option (collectively, the "Reserves"), as well as the price per share of Common Stock covered by each option under the Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in progress by setting a new Exercise Date (the "New Exercise Date"). If the Board shortens the Offering Period then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Board shall notify each participant in writing, at least ten days prior to the New Exercise Date, that the Exercise Date for his or her option has been changed to the New Exercise Date and that his or her option 11 will be exercised automatically on the New Exercise Date, unless prior to such date he or she has withdrawn from the Offering Period as provided in paragraph 10. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to purchase, for each share of option stock subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock and the sale of assets or merger. The Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, and in the event of the Company being consolidated with or merged into any other corporation. 19. AMENDMENT OR TERMINATION. The Board of Directors of the Company may at any time terminate or amend the Plan. Except as provided in paragraph 18, no such termination may affect options previously granted, nor may an amendment make any change in any option theretofore granted which adversely affects the rights of any participant. In addition, to the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as so required. 20. NOTICES. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the 12 Company at the location, or by the person, designated by the Company for the receipt thereof. 21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law. 22. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any Employee or other optionee the right to continue in the employment of the Company or any Subsidiary, or affect any right which the Company or any Subsidiary may have to terminate the employment of such Employee or other optionee. 23. RIGHTS AS A STOCKHOLDER. Neither the granting of an option nor a deduction from payroll shall constitute an Employee the owner of Shares covered by an option. No optionee shall have any right as a stockholder unless and until an option has been exercised, and the Shares underlying the option have been registered in the Company's share register. 24. TERM OF PLAN. The Plan became effective upon its adoption by the Board of Directors on March 11, 1997 and shall continue in effect for a term of 20 years unless sooner terminated under paragraph 19. 25. APPLICABLE LAW. This Plan shall be governed in accordance with the laws of Delaware. EX-10.36 9 AMENDMENT TO 1991 STOCK OPTION PLAN 1 EXHIBIT 10.36 AMENDMENT TO THE ARIAD PHARMACEUTICALS, INC. 1991 STOCK OPTION PLAN FOR EMPLOYEES AND CONSULTANTS (the "Plan") Section 3 of the Plan is hereby amended to read as follows: 3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the adjustment provisions of Paragraph 13 below, a maximum of 5,685,714 shares of Common Stock (reduced by the number of shares of Common Stock then subject to, or issued with respect to, options granted under the ARIAD Pharmaceuticals, Inc. 1991 Stock Option Plan For Directors) may be made subject to options granted under the Plan. If, and to the extent that, options granted under the Plan shall terminate, expire or be canceled for any reason without having been exercised, new options may be granted in respect of the shares covered by such terminated, expired or canceled options. The granting and terms of such new options shall comply in all respects with the provisions of the Plan. Shares sold upon the exercise of any option granted under the Plan may be shares of authorized and unissued Common Stock, shares of issued Common Stock held in the Company's treasury, or both. There shall be reserved at all times for sale under the Plan a number of shares, of either authorized and unissued shares of Common Stock, shares of Common Stock held in the Company's treasury, or both, equal to the maximum number of shares which may be purchased pursuant to options granted or that may be granted under the Plan. EX-10.37 10 AMENDMENT TO 1994 STOCK OPTION PLAN NON-EMPLOYEE 1 EXHIBIT 10.37 AMENDMENT TO THE ARIAD PHARMACEUTICALS, INC. 1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (the "Plan") Section 3 of the Plan is hereby amended to read as follows 3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the adjustment provisions of Paragraph 13 below, a maximum of 600,000 shares of Common Stock may be made subject to options granted under the Plan. If, and to the extent that, options granted under the Plan shall terminate, expire or be canceled for any reason without having been exercised, new options may be granted in respect of the shares covered by such terminated, expired or canceled options. The granting and terms of such new options shall comply in all respects with the provisions of the Plan. Shares sold upon the exercise of any option granted under the Plan may be shares of authorized and unissued Common Stock, shares of issued Common Stock held in the Company's treasury or both. There shall be reserved at all times for sale under the Plan a number of shares, of either authorized and unissued shares of Common Stock, shares of Common Stock held in the Company's treasury, or both, equal to the maximum number of shares which may be purchased pursuant to options granted or that may be granted under the Plan. EX-10.38 11 FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT 1 EXHIBIT 10.38 FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ----------------------------------------------- THIS AMENDMENT is made as of June 27, 1997 by and between ARIAD PHARMACEUTICALS, INC., a Delaware corporation (the "Borrower"); ARIAD CORPORATION, a Delaware corporation and the wholly owned subsidiary of the Borrower (the "Lessee Subsidiary"); ARIAD GENE THERAPEUTICS, INC., a Delaware corporation which is controlled by the Borrower ("AGT" and, together with the Lessee Subsidiary, the "Subsidiaries", the Borrower and the Subsidiaries being referred to collectively herein as the "Companies"),; and BANKBOSTON, N.A., as successor in interest to BAYBANK, N.A. (the "Bank"). RECITALS -------- A. The Borrower, the Lessee Subsidiary and the Bank are parties to a Loan and Security Agreement dated as of September 23, 1992, as amended by the First Amendment to Loan and Security Agreement dated as of October 19, 1992, the Second Amendment to Loan and Security Agreement dated as of June 10, 1994 and the Third Amendment to Loan and Security Agreement dated as of March 7, 1996 (as so amended and as hereafter amended, replaced, restated, supplemented, renewed or otherwise modified from time to time, the "Loan Agreement"). Capitalized terms used herein without definition have the meanings assigned to them in the Loan Agreement. B. The Advances made under SECTION 3.1 of the Loan Agreement in the aggregate principal amount of $6,000,000, converted to a term loan as of November 30, 1992. The last installment of principal due thereon, in the amount of $100,000, is due and payable on July 1, 1997. C. The Borrower and the Subsidiaries have requested that the Bank provide additional term financing in the principal amount of $6,000,000, maturing on July 1, 2002 but otherwise advanced on substantially the same terms and conditions as the original Term Loan. C. Subject to certain terms and conditions, including without limitation the addition of AGT as a co-maker on the Note and as a party to the Loan Agreement, the Bank is willing to provide such financing, as hereinafter set forth. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: I. AMENDMENTS TO LOAN AGREEMENT. ---------------------------- The Loan Agreement is hereby amended as follows: 2 A. AGT ADDED AS A PARTY TO THE LOAN AGREEMENT. AGT, by its execution of this Amendment on the date hereof, shall become, and hereby is, a party to the Loan Agreement, in its capacity as a co-maker of the Note and a Subsidiary of the Borrower. Ninety-Seven percent (97%) of the issued and outstanding capital stock of AGT is owned by the Borrower, which controls AGT. The remaining shares are owned by Leland Stanford, Jr. University and Harvard College. For all purposes of the Loan Agreement and the other Loan Documents, AGT shall be bound by all of the obligations heretofore applicable to ARIAD Corporation (hereinafter referred to by amendment as the Lessee Subsidiary), except as to those which relate specifically to the Lessee Subsidiary's activities as lessee of the Leased Premises. Accordingly, all references to ARIAD Corporation in the Loan Documents shall, except where the context requires otherwise, be deemed to mean both the Lessee Subsidiary and AGT. B. DEFINITIONS. The definitions of "Advance and Advances", "Note" and "Termination Date" in Sections 1.23, 1.24 and 1.33, respectively, of the Loan Agreement are amended to read, and new definitions of "AGT", "Bank", "Companies", "Investment Properties", "Lessee Subsidiary", "Subsidiary" and "Subsidiaries" and "New Term Loan" are added which read, as follows: 1.3. "Advance" and "Advances" shall each mean, from and after June 30, 1997, the New Term Loan. 1.3A. "AGT" shall mean ARIAD Gene Therapeutics, Inc. ,a Delaware corporation of which the Borrower owns ninety-seven percent (97%) of the issued and outstanding shares of capital stock and which is controlled by the Borrower. 1.4A. "Bank" shall, collectively, mean BankBoston, N.A., together with its successors and assigns under SECTION 10.4. 1.5A "Company" and "Companies" shall mean the Borrower and the Subsidiaries or, as the case may be, any one of them. 1.17A "Investment Property" shall mean securities and other property included within the definition of "investment property" in the UCC. 1.21. "License Subsidiary" shall mean ARIAD Corporation, a Delaware corporation of which the Borrower owns all of the issued and outstanding shares of capital stock. 1.23A. "New Term Loan" shall mean the single term loan made by the Bank on or about June 30, 1997 pursuant to Section 3.1A of this Agreement. 1.24. "Note" shall mean, collectively, the promissory note in the principal amount of Six Million Dollars ($6,000,000) dated as of June 30, 1997, jointly and severally executed by the Borrower and the Subsidiaries and delivered to the Bank 2 3 pursuant to Section 3.1A of this Agreement, as hereafter amended, restated, supplemented, renewed or otherwise modified from time to time, together with any and all replacements and substitutions therefor (whether in connection with assignments by the Bank or otherwise). 1.32A. "Subsidiary" and "Subsidiaries" shall mean the wholly owned or majority controlled subsidiaries of the Borrower from to time or, as the case may be, any one of them. 1.33. "Termination Date" shall mean July 1, 2002. C. NEW SECURITY FROM AGT. 1. ARTICLE 2 of the Loan Agreement is hereby amended by adding after the word "Instruments" where it appears therein a comma and the words "Investment Property", which defined term has been added to ARTICLE 1 by this Amendment. 2. Under ARTICLE 2 of the Loan Agreement the Borrower and the Lessee Subsidiary have previously granted to the Bank a continuing security interest in the Collateral described and defined therein. By operation of this Amendment the references to ARIAD Corporation set forth therein now refer as well to AGT. In order to give full effect to such amendment, each of the Borrower, the Lessee Subsidiary and AGT hereby grants (or re-grants, as the case may be) to the Bank a continuing security interest in all of such Company's now owned or hereafter acquired properties, assets and rights of every name and nature, including without limitation all now owned or hereafter acquired Collateral described in paragraphs (a) through (o) of ARTICLE 2, as amended by this Amendment and after giving effect to any amendments to the Patent Mortgage made as required hereunder. D. NEW TERM LOAN; CONDITIONS. 1. A new SECTION 3.1A is added after SECTION 3.1 of the Loan Agreement, reading as follows: 3.1A. New Term Loan. ------------- Subject to the terms and conditions set forth herein and in reliance on the representations, warranties and covenants contained herein, the Bank agrees to make an additional term loan (the "New Term Loan") to the Borrower on June 30, 1997. The New Term Loan shall be in the principal amount of $6,000,000, (a) shall be used to make leasehold improvements at the Leased Premises and for working capital and other general corporate purposes (including without limitation the payment of the last $100,000 installment owed under the Advances made under Section 3.1, which is due and payable on July 1, 1997), (b) shall be payable jointly and severally by the Borrower and the Subsidiaries as provided in Section 3.4, (c) shall be 4 evidenced by the Note referred to in Section 3.5, (d) shall bear interest at the rate provided in Section 3.8 and (e) shall otherwise be governed by all of the terms and conditions and covenants of this Agreement applicable to Advances. 2. A new SECTION 3.2A is added after SECTION 3.2 of the Loan Agreement, reading as follows: 3.2A. Conditions to the New Term Loan. ------------------------------- Prior to the New Term Loan, and as a condition of the Borrower's right to receive any proceeds thereof, there shall have been furnished to the Bank: (a) A title certification satisfactory to the Bank with respect to the Leased Premises, updating the certification provided by Perkins, Smith & Cohen as of October 19, 1992 and showing that the Leasehold Mortgage, as amended by the First Amendment to Mortgage recorded in connection with the New Term Loan, is prior to all mortgages and other encumbrances other than those previously approved by the Bank in connection with the original recording of the Leasehold Mortgage, together with any and all related documents and other materials requested by the Bank. (b) New insurance certificates showing the coverage referred to in SECTION 7.8(b), including evidence of a "lenders' loss payable" endorsement obtained by the Borrower with respect to all policies. E. AMORTIZATION OF TERM LOAN; INTEREST. 1. SECTION 3.4 of the Loan Agreement is amended to read in its entirety as follows: 3.4. TERM LOAN REPAYMENT. The Advance shall be repaid, without set-off, deduction or counterclaim, in sixty (60) monthly installments of $100,000, beginning August 1, 1997 and ending July 1, 2002, on which date the outstanding principal balance under the Note, together with all accrued and unpaid interest and other charges under the Note and this Agreement, shall be due and payable in full. 2. SECTION 3.7 of the Loan Agreement is amended to read as follows; 3.7. [Intentionally Deleted.] 2. SECTION 3.8 is amended by adding at the end thereof the following; Interest on the Note shall be calculated, for each alternative rate, based upon a 360-day year and actual day months. 4 5 F. OTHER AMENDMENTS. 1. SECTION 7.13 of the Loan Agreement is amended by adding a new paragraph (iv) at the end of subsection (c) thereof reading in its entirety as follows: (iv) the Borrower's investments in Hoechst-ARIAD Genomics Center, LLC, a Delaware limited liability company, made in accordance with the provisions of Article III of the Operating Agreement of such limited liability company, as originally executed as of March 18, 1997, provided, however, that, as of the date of any such investment, and immediately after giving effect thereto, there shall exist no Event of Default (as defined in Article 8) or any event or condition that, but for the requirement that time elapse or notice be given, or both, would constitute an Event of Default; 2. SECTION 7.21(e) of the Loan Agreement is amended by deleting from subparagraph (ii) thereof the word "operating" where it appears after the word "projected". The parties hereby confirm that the references in both subparagraphs (i) and (ii) of such SECTION 7.21(e) to "projected cash requirements" of the Borrower include any and all cash amounts needed from time to time to fund investments in Hoechst-ARIAD Genomics Center, LLC. 3. ARTICLE 8 of the Loan Agreement is amended by adding after paragraph (o) thereof, before the period, a semicolon, followed by the word "and" and the following new paragraph (p): (p) Hoechst-ARIAD Genomics Center, LLC (the "LLC") shall breach its payment obligations under Section 3 of each of the Administrative Services Agreement and the Scientific Research Services Agreement, each dated as of March 18, 1997 and among the LLC, the Borrower and Hoechst Marion Russel, Inc., in an amount which, together with any other prior breaches under such Section, shall exceed $1,000,000 in the aggregate. 3. SECTION 10. 4 of the Loan Agreement is amended to read in its entirety as follows: 10.4. Successors and Assigns. ---------------------- (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Subsidiaries and the Bank and their respective successors and assigns, and all subsequent holders of the Note, the Advances or any portion thereof. (b) The Bank may assign its rights and interests under this Agreement, the Note and the other Loan Documents and/or delegate its obligations hereunder and thereunder, in whole or in part, and sell participations in the Note and the Security Documents as security therefor, provided that: 5 6 (i) Any such assignment and/or delegation made hereunder shall be pursuant to an instrument of assignment and acceptance in form and substance satisfactory to BankBoston, N.A. (which shall include, among other matters, the payment of customary processing fees and restrictions on reassignments and participations satisfactory to BankBoston, N.A.) executed and delivered by the parties thereto. Upon such execution and delivery, from and after the effective date specified in such assignment and acceptance, (A) the assignee thereunder shall become a party hereto and, to the extent provided in such assignment and acceptance, have the rights and obligations of the Bank hereunder and (B) the assignor thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement as to that portion of its obligation being so assigned and delegated. Each such assignment and acceptance shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of the assignee as a Bank. (ii) Within ten (10) Business days after receipt of notice of any such assignment, the Borrower and the Subsidiaries shall execute and deliver to each of the assignor and assignee, in exchange for each such surrendered promissory note a new promissory note and included within the meaning of the term "Note", payable to the order of such assignor and such assignee , respectively, in the amount necessary to reflect such party's portion of the Advances, after giving effect to such assignment. Such new Notes shall be dated the effective date of such assignment and acceptance and shall otherwise be in substantially the form provided in this Agreement. Canceled notes shall be returned to the Borrower upon the execution and delivery of such new notes. (iii) Neither the Borrower nor any Subsidiary may assign any of its rights or delegate any of its duties or obligations hereunder or under the Note or any other Loan Document. 4. EXHIBIT A to the Loan Agreement is deleted and the attached EXHIBIT A substituted therefor. G. SCHEDULES. In order to update the representations and warranties of the Companies as set forth in ARTICLE 6 of the Loan Agreement, SCHEDULES 6.1, 6.2, 6.3(c), 6.4, 7.19 and 9.10 of the Loan Agreement are deleted and the attached new SCHEDULES 6.1, 6.2, 6.3(c), 6.4, 7.19 and 9.10 are substituted therefor. III. WAIVER. The Lenders hereby waive the Event of Default arising under paragraph (c) of ARTICLE 8 of the Loan Agreement from the fact that the Borrower made its initial investments in Hoechst-ARIAD Genomics Center, LLC without the Bank's written consent, in technical violation of the provisions of 6 7 SECTION 7.13 of the Loan Agreement, The foregoing waiver is limited to its express terms and shall not be deemed to extend to any other matters or obligations under the Loan Documents. This Agreement shall constitute the entire agreement between the Lenders, the Agent and the Borrower regarding such waivers, and shall supersede any prior agreement or understanding, written or oral, between the Borrower, the Agent and the Lenders related thereto. IV. CONFIRMATION OF SECURITY. Each of the Borrower and the Lessee Subsidiary hereby confirms that (1) the terms "Liability" and "Liabilities", as defined in the Loan Agreement and the Pledge Agreement and the term "Obligations", as defined in the Patent Mortgage, include the obligations of the Companies under (a) the New Note referred to in SECTION V below and referred to as the "Note" in the Loan Agreement, as amended hereby, and (b) the Master Equipment Leasing Agreement dated as of December 21, 1995 and any other equipment leasing or other agreements entered into from time to time between the Companies or any of them and the Bank and (2) the term "Note", as used in each of the Loan Documents, including the Leasehold Mortgage and the Patent Mortgage, includes such New Note. III. NO FURTHER AMENDMENTS. Except as specifically amended hereby, the Loan Agreement, the Pledge Agreement, the Patent Mortgage and the Leasehold Mortgage shall remain unmodified and in full force and effect and are hereby ratified and affirmed in all respects, and the indebtedness of the Companies to the Bank evidenced thereby and by the New Note is hereby reaffirmed in all respects. IV. CERTAIN REPRESENTATIONS. As a material inducement to the Bank to enter into this Amendment, each of the Borrower, the Lessee Subsidiary and AGT hereby represents and warrants to the Bank (which representations and warranties shall survive the delivery of this Amendment), after giving effect to this Amendment, as follows: A. The execution and delivery of this Amendment, the Mortgage Amendment (as defined below) and the New Note (as defined below) have been duly authorized by all requisite corporate action on the part of each of the Companies. B. The representations and warranties contained in Article 6 of the Loan Agreement and in the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment as though made at and as of such date. No material adverse change has occurred in the assets, liabilities, financial condition, business or prospects of any Company from that disclosed in the financial statements most recently furnished to the Bank. No Event of Default has occurred and is continuing. 7 8 C. None of the Companies is required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any governmental instrumentality or other agency or any other person or entity other than the Confirmation Agreement executed as of the date hereof by Forest City Cambridge, Inc. in connection with or as a condition to the execution, delivery or performance of this Amendment, the Mortgage Amendment or the New Note or regarding the New Term Loan contemplated thereby. D. Each of this Amendment, the Mortgage Amendment and the New Note constitutes the legal, valid and binding obligation of the Companies, enforceable against each of them in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the rights and remedies of creditors generally or the application of principles of equity, whether in any action at law or proceeding in equity, and subject to the availability of the remedy of specific performance or of any other equitable remedy or relief to enforce any right thereunder. V. CONDITIONS. The willingness of the Bank to agree to the foregoing is subject to the satisfaction of the following conditions precedent and subsequent: A. On or before the date of this Amendment, the Companies shall have executed and delivered to the Bank (or shall have caused to be executed and delivered to the Bank by the appropriate persons) the following: 1. This Amendment; 2. The joint and several $6,000,000 Term Note of the Companies in the form attached as EXHIBIT A hereto (as hereafter amended, restated, supplemented, renewed or otherwise modified from time to time, together with any and all replacements and substitutions therefor (whether in connection with assignments by the Bank or otherwise, the "New Note"). 3. The First Amendment to Leasehold Mortgage of even date herewith, together with the title certification and opinion required by SECTION 3.2A. 4. The letter executed as of the date hereof by Forest City Cambridge, Inc. with respect to the lessor's consent signed in connection with the Mortgage. 5. True and complete copies of any required stockholders' and directors' consents and/or resolutions, authorizing the execution and delivery of such documents, certified by the Secretary of the appropriate company; 8 9 6. Certified copies of articles of incorporation and bylaws, certificates of legal existence and good standing and such other supporting documents and certificates as the Bank or its counsel may reasonably request. B. On or before the date of this Amendment, the Borrower shall have delivered to the Bank the opinion of its counsel, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo with respect to this Agreement and the other documents executed in connection herewith, satisfactory in form and substance to the Bank. C. On or before the date of this Amendment, the Borrower shall have paid the Bank a non-refundable amendment fee in the amount of $60,000. D. On or before July 14, 1997, the Companies shall have executed and delivered to the Bank (or shall have caused to be executed and delivered to the Bank by the appropriate persons) the following: 1. A Collateral Assignment of Leases and Rents with respect to the Leased Premises. 2. A First Amendment to Lessor's Consent and Waiver, executed by Forest City Cambridge, Inc. 3. UCC financing statements in proper form for filing with respect to AGT. 4. Such other supporting documents and certificates with respect to AGT or otherwise as the Bank or its counsel may reasonably request. VI. MISCELLANEOUS. A. As provided in SECTION 10.8 of the Loan Agreement, the Borrower and the Subsidiaries agree to reimburse the Bank upon demand for all reasonable fees and disbursements of counsel to the Bank incurred in connection with the preparation of this Amendment and the Note Amendment. B. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. C. This Amendment may be executed by the parties hereto in several counterparts hereof and by the different parties hereto on separate counterparts hereof, all of which counterparts shall together constitute one and the same agreement. 9 10 D. The obligations of the Borrower and the Subsidiaries under this Amendment and the Note (as such term is used in the Loan Agreement, as amended hereby), shall be joint and several in nature. 10 11 IN WITNESS WHEREOF, the Bank, the Borrower and the Subsidiaries have caused this Amendment to be duly executed as a sealed instrument by their duly authorized representatives, all as of the day and year first above written. ARIAD PHARMACEUTICALS, INC. By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Executive Vice President ARIAD CORPORATION By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Senior Vice President - Finance ARIAD GENE THERAPEUTICS, INC. By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Vice President BANKBOSTON, N.A. By: /s/ Karen M. Kinsella, ----------------------------------------- Karen M. Kinsella, Vice President 11 12 EXHIBIT A TO EXHIBIT 10.38 SECURED TERM NOTE ----------------- Boston, Massachusetts $6,000,000 June 27, 1997 FOR VALUE RECEIVED, the undersigned, ARIAD PHARMACEUTICALS, INC., a Delaware corporation (the "Pharmaceuticals"), ARIAD CORPORATION, a Delaware corporation (the "Lessee Subsidiary") and ARIAD GENE THERAPEUTICS, INC., a Delaware corporation ("AGT" and, collectively with Pharmaceuticals and the Lessee Subsidiary, the "Makers"), hereby jointly and severally promise to pay to the order of BANKBOSTON, N.A., having an address at 100 Federal Street, Boston, Massachusetts 02110 (the "Bank"), the principal sum of Six Million Dollars ($6,000,000) or, if less, the aggregate unpaid principal amount of Advances made hereunder by the Bank to Pharmaceuticals or any other Maker pursuant to that certain Loan and Security Agreement dated as of September 23, 1992, as amended by the First Amendment to Loan and Security Agreement dated as of October 19, 1992, the Second Amendment to Loan and Security Agreement dated as of June 10, 1994, the Third Amendment to Loan and Security Agreement dated as of March 7, 1996 and the Fourth Amendment to Loan and Security Agreement of even date herewith (as so amended and as hereafter amended, replaced, restated, supplemented, renewed or otherwise modified from time to time, the "Loan Agreement") between the Makers and the Bank, together with interest on any and all principal remaining unpaid hereunder from the date hereof until payment in full, payable on the dates and at the interest rate or rates specified in the Loan Agreement. Capitalized terms used in this Note without definition have the meanings assigned to them in the Loan Agreement. The aggregate principal amount outstanding hereunder shall be payable as provided in the Loan Agreement. This Note may be prepaid in accordance with the terms and provisions of the Loan Agreement without penalty or premium (other than certain makewhole payments under SECTION 3.6 of the Loan Agreement). All principal and interest hereunder are payable in lawful money of the United States of America to the Bank at its address specified above in immediately available funds as provided in the Loan Agreement on the date on which such payment shall become due. Payments of principal and interest hereunder which are not made by such date may be made by debiting any deposit account(s), if any, in the name of the Makers, or any of them, with the Bank. The Makers hereby irrevocably authorize the Bank to so debit such deposit account(s). The Makers, for themselves and their legal representatives, successors and assigns, to the extent they may lawfully do so, hereby expressly waive presentment, 13 demand, protest, notice of protest, presentment for the purpose of accelerating maturity, diligence in collection, and the benefit of any exemption or insolvency laws, and consent that the Bank may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note, and may extend the time for payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced hereby to the extent provided in the Loan Agreement without in any way affecting the liability of the Makers; provided that such modifications do not increase the obligations hereunder. This Note is the "Note" referred to in and is entitled to the benefits of the Loan Agreement (including Schedules thereto) and all other instruments and agreements evidencing and/or securing the indebtedness hereunder, which Loan Agreement and other instruments and agreements are hereby made part of this Note and are deemed incorporated herein in full. The occurrence or existence of an Event of Default shall constitute a default under this Note and shall, subject to the provisions of the Loan Agreement, entitle the Bank to accelerate the entire indebtedness hereunder and to take such other action as may be provided for in the Loan Agreement or any other instrument or agreement evidencing and/or securing this Note, all in accordance with the terms of the Loan Agreement. All agreements between or among the Makers and the Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness or otherwise, shall the amount paid or agreed to be paid for the use or forbearance of the indebtedness evidenced hereby exceed the maximum amount which the Bank is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement, at the time performance of such provision shall be due, shall involve exceeding such amount, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity and if, from any circumstances, the Bank should ever receive as interest an amount which would exceed such maximum amount, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between or among the Makers, or any of them, and the Bank. This Note and all transactions hereunder and/or evidenced herein shall be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts. 2 14 If this Note shall not be paid when due and shall be placed by the holder hereof in the hands of any attorney for collection, through legal proceedings or otherwise, the Makers will pay reasonable attorneys' fees to the holder hereof together with reasonable costs and expenses of collection, including, without limitation, any such attorneys' fees, costs and expenses relating to any proceedings with respect to the bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation of any of the Makers or any party (other than the Bank) to any instrument or agreement securing this Note. This Note shall be binding, jointly and severally, upon the Makers and upon their heirs, successors, assigns and legal representatives and shall inure to the benefit of the Bank and its successors, endorsees and assigns. IN WITNESS WHEREOF, the Makers have caused this Note to be executed under seal by their duly authorized representative as of the date first above written. ARIAD PHARMACEUTICALS, INC. By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Executive Vice President ARIAD CORPORATION By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Senior Vice President - Finance ARIAD GENE THERAPEUTICS, INC. By: /s/ Jay R. LaMarche ----------------------------------------- Jay R. LaMarche Vice President 3 EX-27 12 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1996 JUN-30-1996 1 19,457,445 20,322,694 0 0 0 40,418,942 14,832,497 5,540,932 53,328,951 9,826,104 6,069,832 0 25,263 19,282 35,977,355 53,328,951 0 5,280,472 0 0 10,014,110 0 111,513 (4,845,151) 0 0 0 0 0 (4,845,151) (.25) (.25)
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