FORM OF INDEMNITY AGREEMENT
Exhibit
10.5
ATTORNEY-CLIENT
PRIVILEGED
HIGHLY
CONFIDENTIAL
FORM
OF INDEMNITY
AGREEMENT
This
Indemnity Agreement (“Agreement”) is made as of ________, ____ by and
between ARIAD Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and
______________ (“Indemnitee”).
RECITALS
WHEREAS, highly
competent persons have become more reluctant to serve publicly-held corporations
as directors or in other capacities unless they are provided with adequate
protection through insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their service to and
activities on behalf of the corporation.
WHEREAS, the
Board
of Directors of the Company (the “Board”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt to maintain
on an ongoing basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities. Although
the
furnishing of such insurance has been a customary and widespread practice among
United States-based corporations and other business enterprises, the Company
believes that, given current market conditions and trends, such insurance may
be
available to it in the future only at higher premiums and with more exclusions.
At the same time, directors, officers and other persons in service to
corporations or business enterprises are being increasingly subjected to
expensive and time-consuming litigation relating to, among other things, matters
that traditionally would have been brought only against the Company or business
enterprise itself. The Certificate of Incorporation (the “Charter”) and the
Bylaws of the Company require indemnification of the officers and directors
of
the Company. Indemnitee may also be entitled to indemnification pursuant to
applicable provisions of the Delaware General Corporation Law (“DGCL”). The
Charter, the Bylaws and the DGCL expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of the board
of
directors, officers and other persons with respect to indemnification, hold
harmless, exoneration, advancement and reimbursement rights.
WHEREAS, the
uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons.
WHEREAS, the
Board
has determined that the increased difficulty in attracting and retaining such
persons is detrimental to the best interests of the Company’s stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future.
WHEREAS, it
is
reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, hold harmless, exonerate and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that
they
will serve or continue to serve the Company free from undue concern that they
will not be so protected against liabilities.
WHEREAS, this
Agreement is a supplement to and in furtherance of the Charter, the Bylaws
of
the Company and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder.
WHEREAS, Indemnitee
does not regard the protection available under the Company’s Charter, Bylaws and
insurance as adequate in the present circumstances, and may not be willing
to
serve as an officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. Indemnitee is willing to serve,
continue to serve and to take on additional service for or on behalf of the
Company on the condition that he be so indemnified.
NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:
1.
Services
To The Company.
Indemnitee will serve or continue to serve as an officer, director or key
employee of the Company for so long as Indemnitee is duly elected or appointed
or until Indemnitee tenders his resignation.
2.
Definitions.
As used
in this Agreement:
(a)
References
to “agent” shall mean any person who is or was a director, officer, or employee
of the Company or a subsidiary of the Company or other person authorized by
the
Company to act for the Company, to include such person serving in such capacity
as a director, officer, employee, fiduciary or other official of another
corporation, partnership, limited liability company, joint venture, trust or
other enterprise at the request of, for the convenience of, or to represent
the
interests of the Company or a subsidiary of the Company.
(b)
The
terms
“Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth
in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect
on the date hereof.
(c)
A
“Change
in Control” shall be deemed to occur upon the earliest to occur after the date
of this Agreement of any of the following events:
(i) Acquisition
of Stock by Third Party.
Any
Person (as defined below) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing fifteen percent (15%)
or
more of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors, unless (1) the change
in the relative Beneficial Ownership of the Company’s securities by any Person
results solely from a reduction in the aggregate number of outstanding shares
of
securities entitled to vote generally in the election of directors, or (2)
such
acquisition was approved in advance by the Continuing Directors (as defined
below) and such acquisition would not constitute a Change in Control under
part
(iii) of this definition;
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(ii) Change
in Board of Directors.
Individuals who, as of the date hereof, constitute the Board, and any new
director whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two thirds of the directors
then
still in office who were directors on the date hereof or whose election for
nomination for election was previously so approved (collectively, the
“Continuing Directors”), cease for any reason to constitute at least a majority
of the members of the Board;
(iii) Corporate
Transactions.
The
effective date of a reorganization, merger or consolidation of the Company
(a
“Business Combination”), in each case, unless, following such Business
Combination: (1) all or substantially all of the individuals and entities who
were the Beneficial Owners of securities entitled to vote generally in the
election of directors immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 51% of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more Subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination,
of the securities entitled to vote generally in the election of directors;
(2)
no Person (excluding any corporation resulting from such Business Combination)
is the Beneficial Owner, directly or indirectly, of 15% or more of the combined
voting power of the then outstanding securities entitled to vote generally
in
the election of directors of such corporation except to the extent that such
ownership existed prior to the Business Combination; and (3) at least a majority
of the Board of Directors of the corporation resulting from such Business
Combination were Continuing Directors at the time of the execution of the
initial agreement, or of the action of the Board of Directors, providing for
such Business Combination;
(iv) Liquidation.
The
approval by the stockholders of the Company of a complete liquidation of the
Company or an agreement or series of agreements for the sale or disposition
by
the Company of all or substantially all of the Company’s assets, other than
factoring the Company’s current receivables or escrows due (or, if such approval
is not required, the decision by the Board to proceed with such a liquidation,
sale, or disposition in one transaction or a series of related transactions);
or
(v) Other
Events.
There
occurs any other event of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the Exchange
Act
(as defined below), whether or not the Company is then subject to such reporting
requirement.
(d)
“Corporate
Status” describes the status of a person who is or was a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent of
the
Company or of any other Enterprise (as defined below) which such person is
or
was serving at the request of the Company.
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(f)
“Disinterested
Director” shall mean a director of the Company who is not and was not a party to
the Proceeding (as defined below) in respect of which indemnification is sought
by Indemnitee.
(g)
“Enterprise”
shall mean the Company and any other corporation, constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger to which the Company (or any of its wholly owned subsidiaries) is a
party, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent.
(h)
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.
(i)
“Expenses”
shall include attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding (as defined
below). Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding (as defined below), including without
limitation the premium, security for, and other costs relating to any cost
bond,
supersedeas bond, or other appeal bond or its equivalent. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(j)
“Independent
Counsel” shall mean a law firm or a member of a law firm that is experienced in
matters of corporation law and neither presently is, nor in the past five years
has been, retained to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
the
Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements); or (ii) any other party to the Proceeding (as
defined below) giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee’s rights under this
Agreement.
(k)
References
to “fines” shall include any excise tax assessed on Indemnitee with respect to
any employee benefit plan; references to “serving at the request of the Company”
shall include any service as a director, officer, employee, agent or fiduciary
of the Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or beneficiaries; and if Indemnitee acted in good faith and
in
a manner Indemnitee reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall
be
deemed to have acted in a manner “not opposed to the best interests of the
Company” as referred to in this Agreement.
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(l)
The
term
“Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the
Exchange Act as in effect on the date hereof; provided,
however,
that
“Person” shall exclude: (i) the Company; (ii) any Subsidiaries (as defined
below) of the Company; (iii) any employment benefit plan of the Company or
of a
Subsidiary (as defined below) of the Company or of any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially
the
same proportions as their ownership of stock of the Company; and (iv) any
trustee or other fiduciary holding securities under an employee benefit plan
of
the Company or of a Subsidiary (as defined below) of the Company or of a
corporation owned directly or indirectly by the stockholders of the Company
in
substantially the same proportions as their ownership of stock of the
Company.
(m)
A
“Potential Change in Control” shall be deemed to have occurred if: (i) the
Company enters into an agreement or arrangement, the consummation of which
would
result in the occurrence of a Change in Control; (ii) any Person or the Company
publicly announces an intention to take or consider taking actions which if
consummated would constitute a Change in Control; (iii) any Person who becomes
the Beneficial Owner, directly or indirectly, of securities of the Company
representing 5% or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors
increases his Beneficial Ownership of such securities by 5% or more over the
percentage so owned by such Person on the date hereof; or (iv) the Board adopts
a resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(n)
The
term
“Proceeding” shall include any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding,
whether brought in the right of the Company or otherwise and whether of a civil
(including intentional or unintentional tort claims), criminal, administrative
or investigative nature, in which Indemnitee was, is or will be involved as
a
party or otherwise by reason of the fact that Indemnitee is or was a director
or
officer of the Company, by reason of any action (or failure to act) taken by
him
or of any action (or failure to act) on his part while acting as a director
or
officer of the Company, or by reason of the fact that he is or was serving
at
the request of the Company as a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of any other Enterprise, in each
case whether or not serving in such capacity at the time any liability or
expense is incurred for which indemnification, reimbursement, or advancement
of
expenses can be provided under this Agreement.
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(o)
The
term
“Subsidiary,” with respect to any Person, shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by that
Person.
3.
Indemnity
In Third-Party Proceedings.
The
Company shall indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 3 if Indemnitee was, is, or is threatened to be
made,
a party to or a participant (as a witness or otherwise) in any Proceeding,
other
than a Proceeding by or in the right of the Company to procure a judgment in
its
favor. Pursuant to this Section 3, Indemnitee shall be indemnified against
all
Expenses, judgments, liabilities, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably incurred
by
Indemnitee or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a manner
he
reasonably believed to be in or not opposed to the best interests of the Company
and, in the case of a criminal Proceeding, had no reasonable cause to believe
that his conduct was unlawful.
4.
Indemnity
In Proceedings By Or In The Right Of The Company.
The
Company shall indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 4 if Indemnitee was, is, or is threatened to be
made,
a party to or a participant (as a witness or otherwise) in any Proceeding by
or
in the right of the Company to procure a judgment in its favor. Pursuant to
this
Section 4, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
or any claim, issue or matter therein, if Indemnitee acted in good faith and
in
a manner he reasonably believed to be in or not opposed to the best interests
of
the Company. No indemnification, hold harmless or exoneration for Expenses
shall
be made under this Section 4 in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged by a court to be liable to
the
Company, unless and only to the extent that any court in which the Proceeding
was brought or the Delaware Court shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification., to be held
harmless or to exoneration.
5.
Indemnification
For Expenses Of A Party Who Is Wholly Or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the extent that
Indemnitee is a party to (or a participant in) and is successful, on the merits
or otherwise, in any Proceeding or in defense of any claim, issue or matter
therein, in whole or in part, the Company shall indemnify and hold harmless
Indemnitee against all Expenses actually and reasonably incurred by him in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
and hold harmless Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. If the Indemnitee is not wholly successful in such
Proceeding, the Company also shall indemnify and hold harmless Indemnitee
against all Expenses reasonably incurred in connection with a claim, issue
or
matter related to any claim, issue, or matter on which the Indemnitee was
successful. For purposes of this Section and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue
or
matter.
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6.
Indemnification
For Expenses Of A Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding
to
which Indemnitee is not a party, he shall be indemnified and held harmless
against all Expenses actually and reasonably incurred by him or on his behalf
in
connection therewith.
7.
Additional
Indemnification, Hold Harmless and Exoneration Rights.
(a)
Notwithstanding
any limitation in Sections 3, 4, or 5, the Company shall indemnify and hold
harmless Indemnitee if Indemnitee is a party to or threatened to be made a
party
to any Proceeding (including a Proceeding by or in the right of the Company
to
procure a judgment in its favor) against all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties and amounts paid in settlement) actually
and reasonably incurred by Indemnitee in connection with the Proceeding. No
indemnification, hold harmless or exoneration rights shall be made under this
Section 7(a) on account of Indemnitee’s conduct which constitutes a breach of
Indemnitee’s duty of loyalty to the Company or its stockholders or is an act or
omission not in good faith or which involves intentional misconduct or a knowing
violation of the law.
(b)
Notwithstanding
any limitation in Sections 3, 4, 5 or 7(a), the Company shall indemnify and
hold
harmless Indemnitee if Indemnitee is a party to or threatened to be made a
party
to any Proceeding (including a Proceeding by or in the right of the Company
to
procure a judgment in its favor) against all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties and amounts paid in settlement) actually
and reasonably incurred by Indemnitee in connection with the
Proceeding.
8.
Contribution
In The Event Of Joint Liability.
(a)
To
the
fullest extent permissible under applicable law, if the indemnification and
hold
harmless rights provided for in this Agreement are unavailable to Indemnitee
in
whole or in part for any reason whatsoever, the Company, in lieu of indemnifying
and holding harmless Indemnitee, shall pay, in the first instance, the entire
amount incurred by Indemnitee, whether for judgments, liabilities, fines,
penalties, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any Proceeding without requiring Indemnitee to contribute to
such payment, and the Company hereby waives and relinquishes any right of
contribution it may have at any time against Indemnitee.
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(b)
The
Company shall not enter into any settlement of any Proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
Proceeding) unless such settlement provides for a full and final release of
all
claims asserted against Indemnitee.
(c)
The
Company hereby agrees to fully indemnify and hold harmless Indemnitee from
any
claims for contribution which may be brought by officers, directors or employees
of the Company other than Indemnitee who may be jointly liable with
Indemnitee.
9.
Exclusions.
Notwithstanding
any provision in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnification, hold harmless or exoneration payments
in
connection with any claim made against Indemnitee:
(a)
for
which
payment has actually been received by or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess
beyond the amount actually received under any insurance policy, contract,
agreement, other indemnity provision or otherwise;
(b)
for
an
accounting of profits made from the purchase and sale (or sale and purchase)
by
Indemnitee of securities of the Company within the meaning of Section 16(b)
of
the Exchange Act or similar provisions of state statutory law or common law;
or
(c)
except
as
otherwise provided in Sections 14(e)-(f) hereof, prior to a Change in Control,
in connection with any Proceeding (or any part of any Proceeding) initiated
by
Indemnitee, including any Proceeding (or any part of any Proceeding) initiated
by Indemnitee against the Company or its directors, officers, employees or
other
indemnitees, unless (i) the Board authorized the Proceeding (or any part of
any
Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, hold harmless or exoneration payment, in its sole discretion,
pursuant to the powers vested in the Company under applicable law.
10.
Advances
Of Expenses; Defense Of Claim.
(a)
Notwithstanding
any provision of this Agreement to the contrary, and to the fullest extent
permitted by applicable law, the Company shall advance the Expenses incurred
by
Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee
within three months) in connection with any Proceeding within ten (10) days
after the receipt by the Company of a statement or statements requesting such
advances from time to time, whether prior to or after final disposition of
any
Proceeding. Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay the Expenses and without
regard to Indemnitee’s ultimate entitlement to be indemnified, held harmless or
exonerated under the other provisions of this Agreement. Advances shall include
any and all reasonable Expenses incurred pursuing a Proceeding to enforce this
right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. The Indemnitee shall
qualify for advances, to the fullest extent permitted by applicable law, solely
upon the execution and delivery to the Company of an undertaking providing
that
the Indemnitee undertakes to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by
the
Company under the provisions of this Agreement, the Charter, the Bylaws of
the
Company, applicable law or otherwise. This Section 10(a) shall not apply to
any
claim made by Indemnitee for which an indemnification, hold harmless or
exoneration payment is excluded pursuant to Section 9.
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(b)
The
Company will be entitled to participate in the Proceeding at its own
expense.
(c)
The
Company shall not settle any action, claim or Proceeding (in whole or in part)
which would impose any Expense, judgment, fine, penalty or limitation on the
Indemnitee without the Indemnitee’s prior written consent.
11.
Procedure
For Notification And Application For Indemnification.
(a)
Indemnitee
agrees to notify promptly the Company in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to
indemnification, hold harmless or exoneration rights, or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall
not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement, or otherwise.
(b)
Indemnitee
may deliver to the Company a written application to indemnify and hold harmless
Indemnitee in accordance with this Agreement. Such application(s) may be
delivered from time to time and at such time(s) as Indemnitee deems appropriate
in his or her sole discretion. Following such a written application for
indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 12(a) of this Agreement.
12.
Procedure
Upon Application For Indemnification.
(a)
A
determination, if required by applicable law, with respect to Indemnitee’s
entitlement to indemnification shall be made in the specific case by one of
the
following methods, which shall be at the election of Indemnitee: (i) by a
majority vote of the Disinterested Directors, even though less than a quorum
of
the Board or (ii) by Independent Counsel in a written opinion to the Board,
a
copy of which shall be delivered to Indemnitee. The Company promptly will advise
Indemnitee in writing with respect to any determination that Indemnitee is
or is
not entitled to indemnification, including a description of any reason or basis
for which indemnification has been denied. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall reasonably
cooperate with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to
such
determination. Any costs or Expenses (including attorneys’ fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective
of the determination as to Indemnitee’s entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
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(b)
In
the
event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel
shall be selected as provided in this Section 12(b). The Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee shall give written notice
to the Company advising it of the identity of the Independent Counsel so
selected and certifying that the Independent Counsel so selected meets the
requirements of “Independent Counsel” as defined in Section 2 of this Agreement.
If the Independent Counsel is selected by the Board, the Company shall give
written notice to Indemnitee advising him of the identity of the Independent
Counsel so selected and certifying that the Independent Counsel so selected
meets the requirements of “Independent Counsel” as defined in Section 2 of this
Agreement. In either event, Indemnitee or the Company, as the case may be,
may,
within ten (10) days after such written notice of selection shall have been
received, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection; provided,
however,
that
such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of “Independent Counsel” as defined
in Section 2 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If such
written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection
is
withdrawn or a court of competent jurisdiction has determined that such
objection is without merit. If, within twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to
Section 11(a) hereof, no Independent Counsel shall have been selected and
not objected to, either the Company or Indemnitee may petition the Delaware
Court for resolution of any objection which shall have been made by the Company
or Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Delaware Court,
and the person with respect to whom all objections are so resolved or the person
so appointed shall act as Independent Counsel under Section 12(a) hereof.
Upon the due commencement of any judicial proceeding or arbitration pursuant
to
Section 14(a) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
(c)
The
Company agrees to pay the reasonable fees and expenses of Independent Counsel
and to fully indemnify and hold harmless such Independent Counsel against any
and all Expenses, claims, liabilities and damages arising out of or relating
to
this Agreement or its engagement pursuant hereto.
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13.
Presumptions
and Effect Of Certain Proceedings.
(a)
In
making
a determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has
submitted a request for indemnification in accordance with Section 11(b) of
this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity
of
any determination contrary to that presumption. Neither the failure of the
Company (including by its directors or Independent Counsel) to have made a
determination prior to the commencement of any action pursuant to this Agreement
that indemnification is proper in the circumstances because Indemnitee has
met
the applicable standard of conduct, nor an actual determination by the Company
(including by its directors or Independent Counsel) that Indemnitee has not
met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that Indemnitee has not met the applicable standard of
conduct.
(b)
If
the
person, persons or entity empowered or selected under Section 12 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement
to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of
a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a final judicial determination that any or all such
indemnification is expressly prohibited under applicable law; provided,
however,
that
such 30-day period may be extended for a reasonable time, not to exceed an
additional fifteen (15) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto.
(c)
The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its
equivalent, shall not (except as otherwise expressly provided in this Agreement)
of itself adversely affect the right of Indemnitee to indemnification or create
a presumption that Indemnitee did not act in good faith and in a manner which
he
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal Proceeding, that Indemnitee had reasonable
cause to believe that his conduct was unlawful.
(d)
For
purposes of any determination of good faith, Indemnitee shall be deemed to
have
acted in good faith if Indemnitee’s action is based on the records or books of
account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected by the Enterprise.
The provisions of this Section 13(d) shall not be deemed to be exclusive or
to
limit in any way the other circumstances in which the Indemnitee may be deemed
or found to have met the applicable standard of conduct set forth in this
Agreement.
11
(e)
The
knowledge and/or actions, or failure to act, of any other director, officer,
trustee, partner, managing member, fiduciary, agent or employee of the
Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
14.
Remedies
Of Indemnitee.
(a)
In
the
event that (i) a determination is made pursuant to Section 12 of this Agreement
that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses, to the fullest extent permitted by applicable law,
is
not timely made pursuant to Section 10 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant
to
Section 12(a) of this Agreement within thirty (30) days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification
is
not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(a)
of this Agreement within ten (10) days after receipt by the Company of a written
request therefor, (v) a contribution payment is not made in a timely manner
pursuant to Section 8 of this Agreement, (vi) payment of indemnification
pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification, or (vii) payments to Indemnitee pursuant to any hold harmless
or exoneration rights under this Agreement or otherwise is not made within
ten
(10) days after receipt by the Company of a written request therefor, Indemnitee
shall be entitled to an adjudication by the Delaware Court to such
indemnification, hold harmless, exoneration, contribution or advancement rights.
Alternatively, Indemnitee, at his option, may seek an award in arbitration
to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules
of
the American Arbitration Association. Except as set forth herein, the provisions
of Delaware law (without regard to its conflict of laws rules) shall apply
to
any such arbitration. The Company shall not oppose Indemnitee’s right to seek
any such adjudication or award in arbitration.
(b)
In
the
event that a determination shall have been made pursuant to Section 12(a) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 14 shall be
conducted in all respects as a de novo
trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason
of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 14, Indemnitee shall be presumed to be entitled to
be
indemnified, held harmless, exonerated and to receive advances of Expenses
under
this Agreement and the Company shall have the burden of proving Indemnitee
is
not entitled to be indemnified, held harmless, exonerated or receive advances
of
Expenses as the case may be, and the Company may not refer to or introduce
into
evidence any determination pursuant to Section 12(a) of this Agreement adverse
to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding
or
arbitration pursuant to this Section 14, Indemnitee shall not be required to
reimburse the Company for any advances pursuant to Section 10 until a final
determination is made with respect to Indemnitee’s entitlement to
indemnification (as to which all rights of appeal have been exhausted or
lapsed).
12
(c)
If
a
determination shall have been made pursuant to Section 12(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall
be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law.
(d)
The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 14 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company
is
bound by all the provisions of this Agreement.
(e)
The
Company shall indemnify and hold harmless Indemnitee to the fullest extent
permitted by law against all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after the Company’s receipt of such written request)
advance to Indemnitee, to the fullest extent permitted by applicable law, such
Expenses which are incurred by Indemnitee in connection with any judicial
proceeding or arbitration brought by Indemnitee (i) to enforce his rights under,
or to recover damages for breach of, this Agreement or any other
indemnification, hold harmless, exoneration, advancement or contribution
agreement or provision of the Charter, or the Company’s Bylaws now or hereafter
in effect; or (ii) for recovery or advances under any insurance policy
maintained by any person for the benefit of Indemnitee, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance, contribution or insurance recovery, as the case may be.
(f)
Interest
shall be paid by the Company to Indemnitee at the legal rate under Delaware
law
for amounts which the Company indemnifies, holds harmless or exonerates or
is
obliged to indemnify, hold harmless or exonerate for the period commencing
with
the date on which Indemnitee requests indemnification, to be held harmless,
exonerated, contribution, reimbursement or advancement of any Expenses and
ending with the date on which such payment is made to Indemnitee by the
Company.
15.
Establishment
Of Trust.
In the
event of a Potential Change in Control, the Company shall, upon written request
by Indemnitee, create a “Trust” for the benefit of Indemnitee and from time to
time upon written request of Indemnitee shall fund such Trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time
of
each such request to be incurred in connection with investigating, preparing
for, participating in or defending any Proceedings, and any and all judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines penalties and amounts paid in settlement) in connection
with any and all Proceedings from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The trustee of the Trust (the
“Trustee”) shall be a bank or trust company or other individual or entity chosen
by the Indemnitee and reasonably acceptable to the Company. Nothing in this
Section 15 shall relieve the Company of any of its obligations under this
Agreement. The amount or amounts to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by mutual agreement of the
Indemnitee and the Company or, if the Company and the Indemnitee are unable
to
reach such an agreement, by Independent Counsel selected in accordance with
Section 12(b) of this Agreement. The terms of the Trust shall provide that,
except upon the consent of both the Indemnitee and the Company, upon a Change
in
Control: (a) the Trust shall not be revoked or the principal thereof invaded,
without the written consent of the Indemnitee; (b) the Trustee shall advance,
to
the fullest extent permitted by applicable law, within two (2) business days
of
a request by the Indemnitee and upon the execution and delivery to the Company
of an undertaking providing that the Indemnitee undertakes to repay the advance
to the extent that it is ultimately determined that Indemnitee is not entitled
to be indemnified, held harmless or exonerated by the Company; (c) the Trust
shall continue to be funded by the Company in accordance with the funding
obligations set forth above; (d) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification, or to be held harmless or exonerated pursuant to this Agreement
or otherwise; and (e) all unexpended funds in such Trust shall revert to the
Company upon mutual agreement by the Indemnitee and the Company or, if the
Indemnitee and the Company are unable to reach such an agreement, by Independent
Counsel selected in accordance with Section 12(b) of this Agreement, that the
Indemnitee has been fully indemnified, held harmless and exonerated under the
terms of this Agreement. The Trust shall be governed by Delaware law (without
regard to its conflicts of laws rules) and the Trustee shall consent to the
exclusive jurisdiction of the Delaware Court in accordance with Section 23
of
this Agreement.
13
16.
Security.
Notwithstanding anything herein to the contrary, to the extent requested by
the
Indemnitee and approved by the Board, the Company may at any time and from
time
to time provide security to the Indemnitee for the Company’s obligations
hereunder through an irrevocable bank line of credit, funded trust or other
collateral. Any such security, once provided to the Indemnitee, may not be
revoked or released without the prior written consent of the
Indemnitee.
17.
Non-Exclusivity;
Survival Of Rights; Insurance; Subrogation.
(a)
The
rights
of Indemnitee as provided by this Agreement shall not be deemed exclusive of
any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Charter, the Company’s Bylaws, any agreement, a vote of stockholders or
a resolution of directors, or otherwise. No amendment, alteration or repeal
of
this Agreement or of any provision hereof shall limit or restrict any right
of
Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration
or
repeal. To the extent that a change in applicable law, whether by statute or
judicial decision, permits greater indemnification, hold harmless or exoneration
rights or advancement of Expenses than would be afforded currently under the
Charter, the Company’s Bylaws or this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to
be
exclusive of any other right or remedy, and every other right and remedy shall
be cumulative and in addition to every other right and remedy given hereunder
or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the
concurrent assertion or employment of any other right or remedy.
14
(b)
The
DGCL,
the Charter and the Company’s Bylaws permit the Company to purchase and maintain
insurance or furnish similar protection or make other arrangements including,
but not limited to, providing a trust fund, letter of credit, or surety bond
(“Indemnification Arrangements”) on behalf of Indemnitee against any liability
asserted against him or incurred by or on behalf of him or in such capacity
as a
director, officer, employee or agent of the Company, or arising out of his
status as such, whether or not the Company would have the power to indemnify
him
against such liability under the provisions of this Agreement or under the
DGCL,
as it may then be in effect. The purchase, establishment, and maintenance of
any
such Indemnification Arrangement shall not in any way limit or affect the rights
and obligations of the Company or of the Indemnitee under this Agreement except
as expressly provided herein, and the execution and delivery of this Agreement
by the Company and the Indemnitee shall not in any way limit or affect the
rights and obligations of the Company or the other party or parties thereto
under any such Indemnification Arrangement.
(c)
To
the
extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, trustees, partners, managing
members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, trustee, partner, managing member, fiduciary, employee or agent under
such policy or policies. If, at the time the Company receives notice from any
source of a Proceeding as to which Indemnitee is a party or a participant (as
a
witness or otherwise), the Company has director and officer liability insurance
in effect, the Company shall give prompt notice of such Proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such Proceeding in accordance with the terms of such
policies.
(d)
In
the
event of any payment under this Agreement, the Company shall be subrogated
to
the extent of such payment to all of the rights of recovery of Indemnitee,
who
shall execute all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to enable the
Company to bring suit to enforce such rights.
15
(e)
The
Company’s obligation to indemnify, hold harmless, exonerate or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company
as a
director, officer, trustee, partner, managing member, fiduciary, employee or
agent of any other Enterprise shall be reduced by any amount Indemnitee has
actually received as indemnification, hold harmless or exoneration payments
or
advancement of expenses from such Enterprise.
18.
Duration
Of Agreement.
All
agreements and obligations of the Company contained herein shall continue during
the period Indemnitee serves as a director or officer of the Company or as
a
director, officer, trustee, partner, managing member, fiduciary, employee or
agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other Enterprise which Indemnitee serves at the request of
the
Company and shall continue thereafter so long as Indemnitee shall be subject
to
any possible Proceeding (including any rights of appeal thereto and any
Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement)
by
reason of his Corporate Status, whether or not he is acting in any such capacity
at the time any liability or expense is incurred for which indemnification
can
be provided under this Agreement.
19.
Severability.
If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without
limitation, each portion of any Section, paragraph or sentence of this Agreement
containing any such provision held to be invalid, illegal or unenforceable,
that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent
permitted by law; (b) such provision or provisions shall be deemed reformed
to
the extent necessary to conform to applicable law and to give the maximum effect
to the intent of the parties hereto; and (c) to the fullest extent possible,
the
provisions of this Agreement (including, without limitation, each portion of
any
Section, paragraph or sentence of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested thereby.
20.
Enforcement
And Binding Effect.
(a)
The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director, officer or key employee of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving as a
director, officer or key employee of the Company.
(b)
Without
limiting any of the rights of Indemnitee under the Charter or Bylaws of the
Company as they may be amended from time to time, this Agreement constitutes
the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral, written
and
implied, between the parties hereto with respect to the subject matter
hereof.
16
(c)
The
indemnification, hold harmless, exoneration and advancement of expenses rights
provided by or granted pursuant to this Agreement shall be binding upon and
be
enforceable by the parties hereto and their respective successors and assigns
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent of the Company or of any other Enterprise at the
Company’s request, and shall inure to the benefit of Indemnitee and his or her
spouse, assigns, heirs, devisees, executors and administrators and other legal
representatives.
(d)
The
Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all, substantially all or
a
substantial part, of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to the Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession
had
taken place.
(e)
The
Company and Indemnitee agree herein that a monetary remedy for breach of this
Agreement, at some later date, may be inadequate, impracticable and difficult
of
proof, and further agree that such breach may cause Indemnitee irreparable
harm.
Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement
by seeking injunctive relief and/or specific performance hereof, without any
necessity of showing actual damage or irreparable harm and that by seeking
injunctive relief and/or specific performance, Indemnitee shall not be precluded
from seeking or obtaining any other relief to which he may be entitled. The
Company and Indemnitee further agree that Indemnitee shall be entitled to such
specific performance and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, without the necessity
of posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be
required of Indemnitee by the Court, and the Company hereby waives any such
requirement of such a bond or undertaking.
21.
Modification
And Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by the parties hereto. No waiver of any of the provisions
of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing
waiver.
22.
Notices. All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given (i) if delivered
by
hand and receipted for by the party to whom said notice or other communication
shall have been directed, or (ii) mailed by certified or registered mail with
postage prepaid, on the third (3rd) business day after the date on which it
is
so mailed:
(a)
If
to
Indemnitee, at the address indicated on the signature page of this Agreement,
or
such other address as Indemnitee shall provide in writing to the
Company.
17
(b)
If
to the
Company, to:
ARIAD
Pharmaceuticals, Inc.
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Chief Legal Officer
or
to any
other address as may have been furnished to Indemnitee in writing by the
Company.
23.
Applicable
Law And Consent To Jurisdiction.
This
Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement,
the Company and Indemnitee hereby irrevocably and unconditionally: (a) agree
that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Delaware Court and not in any other
state
or federal court in the United States of America or any court in any other
country; (b) consent to submit to the exclusive jurisdiction of the Delaware
Court for purposes of any action or proceeding arising out of or in connection
with this Agreement; (c) appoint irrevocably, to the extent such party is not
a
resident of the State of Delaware, RL&F Service Corp., One Xxxxxx Square,
10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent
in
the State of Delaware as such party’s agent for acceptance of legal process in
connection with any such action or proceeding against such party with the same
legal force and validity as if served upon such party personally within the
State of Delaware; (d) waive any objection to the laying of venue of any such
action or proceeding in the Delaware Court; and (e) waive, and agree not to
plead or to make, any claim that any such action or proceeding brought in the
Delaware Court has been brought in an improper or inconvenient forum, or is
subject (in whole or in part) to a jury trial.
24.
Identical
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
for
all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by
the
party against whom enforceability is sought needs to be produced to evidence
the
existence of this Agreement.
25.
Miscellaneous.
Use of
the masculine pronoun shall be deemed to include usage of the feminine pronoun
where appropriate. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
18
IN
WITNESS
WHEREOF, the parties have caused this Agreement to be signed as of the day
and
year first above written.
|
ARIAD
PHARMACEUTICALS, INC.
|
INDEMNITEE
|
|
|
By:
|
||
|
Xxxxxx
X. Xxxxxx, M.D.
|
Name:
|
|
|
Chairman
and Chief Executive Officer
|
Address:
|
19
