Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of September
10, 2003 between ARIAD Pharmaceuticals, Inc. (the "Company") a Delaware
corporation, and Xxxx X. Xxxxxx (the "Employee").
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs the Employee, for
the Term (as hereinafter defined), to render full-time services to the Company,
and to perform such duties as he shall reasonably be directed by the Chief
Executive Officer of the Company to perform. The Employee's title shall be
designated by the Chief Executive Officer and initially shall be President and
Chief Business Officer.
1.2 The Employee hereby accepts such employment
and agrees to render the services described above.
1.3 The principal place of employment of the
Employee hereunder shall be in the greater Boston, Massachusetts area, or other
locations reasonably acceptable to the Employee. The Employee acknowledges that
for limited periods of time he may be required to provide services to the
Company outside of the Boston, Massachusetts area.
1.4 Notwithstanding anything to the contrary
herein, although the Employee shall provide services as a full-time employee, it
is understood that the Employee may (a) have an academic appointment and (b)
participate in professional activities (collectively, "Permitted Activities');
provided, however, that such Permitted Activities do not interfere with the
Employee's duties to the Company.
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2. Term of Employment.
The term of the Employee's employment under this
Agreement (the "Term") shall commence on October 1, 2003 (the "Effective Date"),
or such other date mutually agreed upon by the parties, and shall end on
December 31, 2006, unless sooner terminated pursuant to Section 4 or 5 of this
Agreement; provided that this Agreement shall automatically be renewed for
successive one-year terms (the Term and, if the period of employment is so
renewed, such additional period(s) of employment are collectively referred to
herein as the "Term") unless terminated by written notice given by either party
to the other at least 90 days prior to the end of the applicable Term.
3. Compensation.
3.1 As full compensation for all services to be
rendered pursuant to this Agreement, the Company agrees to pay the Employee,
during the Term, a salary at the fixed rate of $250,000 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 biweekly installments, less such deductions or
amounts to be withheld as shall be required by applicable law and regulations.
3.2 Each year, Employee shall be eligible to
receive a discretionary bonus of up to 30% of base salary, which bonus shall be
determined annually in the sole discretion of the Board. The bonus, if any, may
be paid in the form of stock options, stock awards, deferred compensation or
cash, as determined by the Board.
3.3 The Company shall pay or reimburse the
Employee for all reasonable expenses actually incurred or paid by him
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during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as it may require.
3.4 The Employee shall be eligible under any
incentive plan, stock award plan, bonus, deferred or extra compensation plan,
pension, group health, disability and life insurance or other so-called "fringe"
benefits which the Company provides for its executives at the comparable level.
All stock options and stock awards granted to the Employee shall be subject to a
vesting schedule which shall be determined by the Compensation Committee of the
Board. The stock options and stock awards, if any, to be granted to the Employee
in the future shall also be subject to the terms of a stock option plan and
certificate and stock award plan and certificate, respectively. Any unvested
options shall be forfeited to the Company in the event (a) this Agreement is
terminated by the Company for Cause pursuant to Section 4 herein, or (b) either
party elects not to renew this Agreement pursuant to Section 2 herein.
3.5 The Company shall grant the Employee an
option to purchase 135,000 shares of the Company's Common Stock at the fair
market value on the date of the Board's approval of the grant. The Employee
agrees that all such options shall be subject to a four-year vesting schedule,
vesting in equal increments of 25% on each anniversary of their issuance and
shall be subject to the terms and conditions of a stock option agreement between
the Employee and the Company. Any unvested options shall be forfeited to the
Company in the event (a) this Agreement is terminated by the Company for Cause
pursuant to Section 4 herein, or (b) either party elects not to renew this
Agreement pursuant to Section 2 herein.
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4. Termination by the Company.
The Company may terminate this Agreement, if any one
or more of the following shall occur:
(a) The Employee shall die during the
Term; provided, however, the Employee's legal representatives shall be entitled
to receive the compensation provided for hereunder to the last day of the month
in which his death occurs.
(b) The Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of 180
consecutive days, or (ii) for shorter periods aggregating 180 days during any 12
month period.
(c) The Employee acts, or fails to act,
in a manner that provides Cause for termination. For purposes of this Agreement,
the term "Cause" means (i) the failure by the Employee to perform any of his
material duties hereunder, (ii) the conviction of the Employee of any felony
involving moral turpitude, (iii) any acts of fraud or embezzlement by the
Employee involving the Company or any of its Affiliates, (iv) violation of any
federal, state or local law, or administrative regulation related to the
business of the Company, (v) breach of fiduciary duty, including, but not
limited to, conflict of interest, (vi) conduct that could result in publicity
reflecting unfavorably on the Company in a material way, (vii) failure to comply
with any written policies of the Company, or (viii) a breach of the terms of
this Agreement by the Employee. If the conduct constituting Cause hereunder is
susceptible to cure, the Company shall provide the Employee written notice of
termination pursuant to this Section 4, and Employee shall have 30 days to
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cure or remedy such failure or breach, in which case this Agreement shall not be
terminated. If the conduct is not susceptible to cure, this Agreement shall
terminate upon written notice by the Company.
5. Termination by the Employee.
5.1 The Employee may terminate this Agreement,
if any one or more of the following shall occur:
(a) a material breach of the terms of
this Agreement by the Company and such breach continues for 30 days after the
Employee gives the Company written notice of such breach;
(b) the Company shall make a general
assignment for benefit of creditors; or any proceeding shall be instituted by
the Company seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking entry of an order
for relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property or the Company shall take any
corporate action to authorize any of the actions set forth above in this
subsection 5(b);
(c) an involuntary petition shall be
filed or an action or proceeding otherwise commenced against the Company seeking
reorganization, arrangement or readjustment of the Company's debts or for any
other relief under the Federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter existing
and remain undismissed or unstayed for a period of 30 days; or
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(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.
(e) a Change in Control as defined in
Section 14.
6. Severance.
6.1 If (i) the Company terminates this Agreement
without Cause or (ii) the Employee terminates this Agreement pursuant to Section
5.1(a), then: (1) except in the case of death or disability, the Company shall
continue to pay Employee his then-current salary for the remaining period of the
applicable Term; (2) all stock options granted pursuant to this Agreement that
would have vested during the Term shall vest immediately prior to such
termination; and (3) the Company shall continue to provide all benefits subject
to COBRA at its expense for up to one year.
6.2 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; (ii)
the Relocation Advance provided pursuant to Section 7 (f) shall no longer be
subject to any repayment provisions; and (iii) the Company shall continue to pay
the Employee his then-current salary for the shorter of (a) six months, or (b)
the remaining period of the applicable Term.
7. Other Benefits.
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In addition to all other benefits contained herein,
the Employee shall be entitled to:
(a) Relocation expenses for the Employee, consisting of
(i) all reasonable direct out-of-pocket costs of transporting the Employee and
the Employee's household items from the Employee's current residence in New
York, New York to a new residence in the greater Boston, Massachusetts area;
(ii) reasonable travel and lodging to visit the greater Boston, Massachusetts
area to search for a new residence; (iii) reasonable costs of rent and primary
services associated with temporary housing at an approved location in the
greater Boston, Massachusetts area for a maximum period of 60 days from the
Employee's start date or until he finds a suitable residence, if earlier, and
(iv) except as described in the next succeeding sentence and subject to prior
approval, the reasonable closing costs associated with the Employee's purchase
of a new residence in the greater Boston, Massachusetts area within six months
of the Employee's date of employment. The following closing (settlement) costs
will not be paid by the Company: (1) real estate and other taxes, (2) insurance
premiums other than title insurance, and (3) commitment fees and prepaid
interest (i.e., "points") in excess of 2%. If any relocation payments made to or
in respect of the Employee pursuant to Section 7 herein become subject to any
tax (taking into account relevant deductions), the Company shall make a special
payment to him sufficient, on an after-tax basis (taking into account federal,
state, and local taxes), to put him in the same position as would have been the
case had no such taxes been applicable to any payments of benefits provided in
this subsection. This special payment will be made to the Employee at the time
such taxes actually are paid by the Employee.
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(b) Vacation time of four weeks per year taken
in accordance with the vacation policy of the Company. (c) After six years of
employment, one three-month period of fully paid leave of absence in accordance
with Company policies in place at that time; it being understood that such
policies may restrict the Employee from taking such leave of absence until a
time that is acceptable to the Company and may include other such limitations.
(d) Group health, disability and life insurance.
(e) The Company shall provide the Employee with
an automobile allowance of $750 per month and standard tax preparation and
planning services.
(f) To facilitate the Employee's relocation, the
Company will provide the Employee with a one-time relocation advance (the
"Relocation Advance") in the amount of $75,000 to be used towards the purchase
of the Employee's new principal residence (the "Residence"), payable by the
Company at the time of closing on such residence (the "Closing"). The Employee
shall be obligated to repay the Relocation Advance within thirty days of the
occurrence of any of the following events: (a) the Employee terminates this
Agreement prior to December 31, 2006, except as provided pursuant to Section 5.1
herein, or (b) the Company terminates this Agreement for Cause pursuant to
Section 4 herein. As of December 31, 2006, the Relocation Advance shall no
longer be subject to repayment by the Employee.
8. Confidentiality.
8.1 The Employee acknowledges that, during the
course of performing his services hereunder, the Company shall be disclosing
information to the Employee related to the Company's Field of
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Interest, Inventions, projects and business plans, as well as other information
(collectively, "Confidential Information"). The Employee acknowledges that the
Company's business is extremely competitive, dependent in part upon the
maintenance of secrecy, and that any disclosure of the Confidential Information
would result in serious harm to the Company.
8.2 The Employee agrees that the Confidential
Information only shall be used by the Employee in connection with his activities
hereunder as an employee of the Company, and shall not be used in any way that
is detrimental to the Company.
8.3 The Employee agrees not to disclose,
directly or indirectly, the Confidential Information to any third person or
entity, other than representatives or agents of the Company. The Employee shall
treat all such information as confidential and proprietary property of the
Company.
8.4 The term "Confidential Information" does not
include information that (a) is or becomes generally available to the public
other than by disclosure in violation of this Agreement, (b) was within the
Employee's possession prior to being furnished to such Employee, (c) becomes
available to the Employee on a nonconfidential basis or (d) was independently
developed by the Employee without reference to the information provided by the
Company.
8.5 The Employee may disclose any Confidential
Information that is required to be disclosed by law, government regulation or
court order. If disclosure is required, the Employee shall give the Company
advance notice so that the Company may seek a
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protective order or take other action reasonable in light of the circumstances.
8.6 Upon termination of this Agreement, the
Employee shall promptly return to the Company all materials containing
Confidential Information, as well as data, records, reports and other property,
furnished by the Company to the Employee or produced by the Employee in
connection with services rendered hereunder. Notwithstanding such return or any
of the provisions of this Agreement, the Employee shall continue to be bound by
the terms of the confidentiality provisions contained in this Section 8 for a
period of three years after the termination of this Agreement.
8.7 In connection with his employment by the
Company, the Employee hereby acknowledges that he may enter into more than one
agreement with regard to (a) the confidentiality of certain books, records,
documents and business, (b) rights to certain inventions, proprietary
information, and writings, (c) publication of certain materials, and (d) other
related matters (the "Confidential Matters") of the Company (the
"Confidentiality Agreements"). In order to clarify any potential conflicts
between certain respective provisions of such Confidentiality Agreements, the
Employee and the Company hereby agree that, as among such Confidentiality
Agreements, the provision (or part thereof) in any such Confidentiality
Agreement which affords the greatest protection to the Company with respect to
the Confidential Matters shall control.
9. Inventions Discovered by the Employee While
Performing Services Hereunder.
During the Term, the Employee shall promptly disclose
to the Company any invention, improvement, discovery, process,
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formula, or method or other intellectual property, whether or not patentable,
whether or not copyrightable (collectively, "Inventions") made, conceived or
first reduced to practice by the Employee, either alone or jointly with others,
while performing service hereunder. The Employee hereby assigns to the Company
all of his right, title and interest in and to any such Inventions. During and
after the Term, the Employee shall execute any documents necessary to perfect
the assignment of such Inventions to the Company and to enable the Company to
apply for, obtain, and enforce patents and copyrights in any and all countries
on such Inventions. The Employee hereby irrevocably designates the Chief Patent
Counsel to the Company as his agent and attorney-in-fact to execute and file any
such document and to do all lawful acts necessary to apply for and obtain
patents and copyrights and to enforce the Company's rights under this paragraph.
This Section 9 shall survive the termination of this Agreement.
10. Non-Competition and Non-Solicitation.
During the Term and for a period of one year
following the date of termination or nonrenewal for any reason (other than
termination pursuant to Section 5.1(a): (a) the Employee shall not in the United
States or in any country in which the Company shall then be doing business,
directly or indirectly, enter the employ of, or render any services to, any
person, firm or corporation engaged in any business competitive with the
business of the Company or of any of its subsidiaries or affiliates of which the
Employee may become an employee or officer during the Term; he shall not engage
in such business on his own account; and he shall not become interested in any
such business, directly or indirectly, as an individual, partner, shareholder,
director, officer,
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principal, agent, employee, trustee, consultant, or any other relationship or
capacity; provided, however, that nothing contained in this Section 10 shall be
deemed to prohibit the Employee from acquiring, solely as an investment, shares
of capital stock of any public corporation; (b) neither the Employee nor any
Affiliate of the Employee shall solicit or utilize, or assist any person in any
way to solicit or utilize, the services, directly or indirectly, of any of the
Company's directors, consultants, members of the Board of Scientific and Medical
Advisors, officers or employees (collectively, "Associates of the Company").
This nonsolicitation and nonutilization provision shall not apply to Associates
of the Company who have previously terminated their relationship with the
Company.
10.1 If the Employee commits a breach, or
threatens to commit a breach, of any of the provisions of this Section 10, the
Company shall have the following rights and remedies:
10.1.1 The right and remedy to have the
provisions of this Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach shall cause irreparable injury to the Company and that money
damages shall not provide an adequate remedy to the Company; and
10.1.2 The right and remedy to require the
Employee to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits (collectively "Benefits") derived
or received by the Employee as the result of any transactions constituting a
breach of any of the provisions of the preceding paragraph, and the Employee
hereby agrees to account for and pay over such Benefits to the Company.
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Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
10.2 If any of the covenants contained in Section
8, 9 or 10, or any part thereof, is hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect without regard to the invalid
portions.
10.3 If any of the covenants contained in Section
8, 9 or 10, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision and, in its reduced form, such provision shall
then be enforceable.
10.4 The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in Sections 8, 9 and 10
upon the courts of any state within the geographical scope of such covenants. In
the event that the courts of any one or more of such states shall hold any such
covenant wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other states within the geographical scope of such covenants, as
to breaches of such covenants in such other respective jurisdictions, the above
covenants as they relate to each state being, for this purpose, severable into
diverse and independent covenants.
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11. Indemnification.
The Company shall indemnify the Employee, to the
maximum extent permitted by applicable law, against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company. The Company shall provide, subject to its availability upon reasonable
terms (which determination shall be made by the Board) at its expense, directors
and officers insurance for the Employee in reasonable amounts. Determination
with respect to (a) the availability of insurance upon reasonable terms and (b)
the amount of such insurance coverage shall be made by the Board in its sole
discretion.
12. Notices.
All notices, requests, consents and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if sent by prepaid telegram
(confirmed delivery by the telegram service), private overnight mail service
(delivery confirmed by such service), registered or certified mail (return
receipt requested), or delivered personally, as follows (or to such other
address as either party shall designate by notice in writing to the other in
accordance herewith):
If to the Company:
ARIAD Pharmaceuticals, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
If to the Employee:
Xx. Xxxx Xxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 (mobile); (000) 000-0000
13. General.
13.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts applicable to agreements made and to be performed entirely in
Massachusetts.
13.2 The Section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
13.4 This Agreement and the Employee's rights and
obligations hereunder may not be assigned by the Employee or the
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Company; provided, however, the Company may assign this Agreement to an
Affiliate or a successor-in interest.
13.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by the parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by a
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
14. Definitions. As used herein the following terms have
the following meaning:
(a) "Affiliate" means and includes any
corporation or other business entity controlling, controlled by or under common
control with the corporation in question.
(b) The "Company's Field of Interest" is the
discovery, development and commercialization of pharmaceutical products based on
(a) intervention in cell signaling and (b) gene and cell therapy. The Company's
Field of Interest may be changed at any time at the sole discretion of the
Company and upon written notice to Employee.
(c) "Person" means any natural person,
corporation, partnership, firm, joint venture, association, joint stock company,
trust, unincorporated organization, governmental body or other entity.
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(d) "Subsidiary" means any corporation or other
business entity directly or indirectly controlled by the corporation in
question.
(e) "Change in Control" means the occurrence of
any of the following events (without the consent of the Employee):
(i) Any corporation, person or other
entity makes a tender or exchange offer for shares of the Company's Common Stock
pursuant to which such corporation, person or other entity acquires more than
50% of the issued and outstanding shares of the Company's Common Stock;
(ii) The stockholders of the Company
approve a definitive agreement to merge or consolidate the Company with or into
another corporation or to sell or otherwise dispose of all or substantially all
of the Company's assets; or
(iii) Any person within the meaning of
Section 3 (a) (9) or Section 13 (d) of the Securities Exchange Act of 1934
acquires more than 50% of the combined voting power of Company's issued and
outstanding voting securities entitled to vote in the election of the Board.
THIS SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ARIAD PHARMACEUTICALS, INC.
By /s/ Xxxxxx X. Xxxxxx, M.D.
------------------------------------
Xxxxxx X. Xxxxxx, M.D.
Chairman and Chief Executive Officer
EMPLOYEE
/s/ Xxxx X. Xxxxxx
--------------------------------------
____________ Xxxx X. Xxxxxx
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