THIS INDEMNITY
AGREEMENT (this “Agreement”) is made as of
September 11, 2008, by and between ARIAD Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), and
Laurie A. Allen (“Indemnitee”).
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 U.S.-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
Restated Certificate of Incorporation (the “Charter”)
and Amended and Restated Bylaws (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 in order to
protect such persons against claims and expenses arising from their
services on behalf of the Company.
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
and 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
Charter, Bylaws and liability 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.
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 agree to serve or to continue to serve as an
officer or director of the Company for so long as Indemnitee is
duly elected or appointed or until Indemnitee tenders his
resignation. Nothing contained in this Agreement shall be construed
as giving Indemnitee any right to be retained in the employ of the
Company or any of its subsidiaries or affiliated
entities.
2.
DEFINITIONS . As used in
this Agreement:
(a) References
to “agent” shall mean any individual who is or was a
director, officer, or employee of the Company or a Subsidiary of
the Company or other individual authorized by the Company to act
for the Company, to include such individual 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
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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;
(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 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, immediately following
such Business Combination: (1) all or substantially all of the
Persons 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 such 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 (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
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(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,
whether or not the Company is then subject to such reporting
requirement.
(d) “Corporate
Status” describes the status of an individual who is or was a
director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of the Company or of any other
Enterprise that such individual is or was serving at the request of
the Company.
(e) “Delaware
Court” shall mean the Court of Chancery of the State of
Delaware.
(f) “Disinterested
Director” shall mean a director of the Company who is not and
was not a party to the Proceeding 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 all direct and indirect costs, fees and expenses of
any type or nature whatsoever, including, without limitation, all
attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, fees of
private investigators and professional advisors, duplicating costs,
printing and binding costs, telephone charges, postage, delivery
service fees, fax transmission charges, secretarial services and
all other disbursements, obligations or expenses in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, settlement or
appeal of, or otherwise participating in, a Proceeding, including,
without limitation, reasonable compensation for time spent by the
Indemnitee for which he or she is not otherwise compensated by the
Company or any third party. Expenses also shall include Expenses
incurred in connection with any appeal resulting from any
Proceeding, including without limitation the principal, 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 with
significant experience 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
4
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.
(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 Subsidiary of the Company;
(iii) any employment benefit plan of the Company or of a
Subsidiary 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 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 is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
five percent (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 five percent (5%) or more over the
percentage so owned by such Person on the date hereof unless such
acquisition was approved in advance by the Board; 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, mediation, alternate dispute
resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed
proceeding,
5
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, will or might be involved as a party or otherwise by reason of
the fact that Indemnitee is or was a director, officer, employee or
agent 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, officer, employee or agent of the Company, or
by reason of the fact that Indemnitee 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.
(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.
(p) In
connection with any merger or consolidation, references to the
“Company” shall include not only the resulting or
surviving company, but also any constituent company or constituent
of a constituent company, which, if its separate existence had
continued, would have had power and authority to indemnify its
directors, officers, employees or agents. The intent of this
provision is that a person who is or was a director of such
constituent company after the date hereof or is or was serving at
the request of such constituent company as a director, officer,
employee, trustee or agent of another company, partnership, joint
venture, trust, employee benefit plan or other Enterprise after the
date hereof, shall stand in the same position under this Agreement
with respect to the resulting or surviving company as the person
would have under this Agreement with respect to such constituent
company if its separate existence had continued.
3. INDEMNITY
IN THIRD-PARTY PROCEEDINGS . The Company shall indemnify, hold harmless and
exonerate 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, held harmless and
exonerated against all Expenses, judgments, liabilities, fines,
penalties and amounts paid in settlement (including, without
limitation, 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
Indemnitee 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, hold
harmless and exonerate Indemnitee in accordance with the provisions
of this Section 4 if Indemnitee was, is, or is threatened
to
6
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, held harmless and exonerated 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 or
she 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, hold harmless and exonerate 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, hold harmless and
exonerate 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, hold harmless and exonerate 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.
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 or she shall be indemnified, held harmless and
exonerated against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
7.
ADDITIONAL INDEMNIFICATION, AND EXONERATION RIGHTS
.
(a) Notwithstanding
any limitation in Sections 3, 4, or 5, the Company shall
indemnify, hold harmless and exonerate 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,
7
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 available 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, hold harmless and exonerate 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, hold harmless and/or exoneration 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, holding harmless or exonerating 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.
(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, hold harmless and
exonerate 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 payment:
(a) in
connection with any claim made against Indemnitee 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
8
received under
any insurance policy, contract, agreement, other indemnity
provision or otherwise;
(b) in
connection with any claim made against Indemnitee 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
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