Exhibit 10.1
 
 
[Millennium logo]
 
Millennium Pharmaceuticals, Inc.
40 Landsdowne Street
Cambridge, Massachusetts 02139
www.millennium.com
 
June 21, 2005
 
By Federal Express
 
Deborah Dunsire, M.D.
15 Meadow Brook Road
Randolph, NJ  07869
 
Dear Deborah,
 
On behalf of the Board of Directors of Millennium Pharmaceuticals, Inc. (the
"Company"), we are pleased to offer you the position of President and Chief
Executive Officer, reporting to the Board of Directors (the "Board"). Effective
upon your acceptance of this offer you will also be elected to serve as a member
of the Board.
 
1.   EFFECTIVE DATE: The effective date ("Effective Date") of your full-time
     employment with the Company will commence on or before August 1, 2005.
 
2.   SALARY: Your base salary will initially be $800,000 per annum. Your salary
     will be paid periodically in accordance with the Company's payroll
     procedures. In addition, in accordance with the Company's compensation
     practices, you will receive, approximately annually, a salary review which
     will be based on your performance, the Company's performance and such other
     factors as may be determined by the Board.
 
3.   SUCCESS SHARING: You will be eligible to participate in the 2005 Millennium
     Success Sharing cash bonus program and in future year's programs, which
     includes a fixed percentage of salary target for each position.
     Bonus payments will be made to eligible and active employees in March of
     2006 for the 2005 Success Sharing Plan. The funding of the overall plan is
     based on the Company meeting overall goals established at the beginning of
     each calendar year. In the event of Company performance below or above
     target, your actual bonus payment may vary. Your individual bonus payment
     will also vary based on your individual performance. The target for your
     position as President and Chief Executive Officer will be 80% of your
     annual salary, prorated based on service during the calendar year. The
     Board will work with you to establish your individual goals.
 
4.   BENEFITS: You and your dependents will be eligible for the Company's
     standard medical, dental, life insurance, disability benefits and
     Section 125 cafeteria plan. You will also be eligible to participate in the
     Company's 401(k) and Employee Stock Purchase plans. The Company's standard
     vacation policy provides for vacation accrual at the rate of 1.66 days per
     month of full-time employment; the Board recognizes that based on your
     position, you will take vacation commensurate with your schedule and your
     family's needs. Standard paid holidays will be observed. Subsidized parking
     or public transportation benefits are also available. The Company, however,
     reserves the right to modify its employee benefit programs from
     time-to-time. The Board agrees to consider, in good faith, the adoption of
     an executive deferred compensation plan that is compliant with section 409A
     of the Internal Revenue Code ("Section 409A").
 
5.   EQUITY COMPENSATION: (a) You will be granted stock options under the
     Company's 2000 Stock Incentive Plan (the "Stock Plan") exercisable for
     450,000 shares of the Company's Common Stock. One third (1/3) of the total
     number of stock options will be granted on the Effective Date, and one
     third (1/3) will be granted on each of the last days of August and
     September, 2005. The exercise price of these stock options will be equal to
     the fair market value of the Company's Common Stock on the date of each
     grant. All options will vest as to one fourth (1/4) of the shares on the
     first anniversary of your commencement of full-time employment with the
     Company and as to one forty-eighth (1/48) of the shares monthly thereafter
     until all shares are vested (i.e., 100% vesting after the fourth
     anniversary of your employment commencement), provided that you
     remain employed by the Company. In the event of your death while employed
     by the Company, all options and other equity awards will vest immediately
     as to all shares, and the options will remain exercisable until the earlier
     of three years following your termination of employment, or ten years after
     the date of grant. In the event of termination of your employment for any
     reason (except as set forth in the preceding sentence and in Paragraph 15
     below), vesting as to all shares shall cease; provided that if you are
     terminated by the Company other than for Justifiable Cause
     (as defined below) or voluntarily terminate your employment with Good
     Reason (as defined below), all options and other equity awards that would
     have vested within the one-year period following your termination will
     accelerate and immediately become fully vested. In such event, the period
     during which you may exercise all vested options (including any accelerated
     options) shall be extended until one year after the expiration of the
     Severance Period (as defined below), or until ten years after the date of
     grant, whichever is earlier. Provided that you remain employed by the
     Company, these stock options will be exercisable (as to the vested portion)
     for 10 years from the date of each grant. A complete description of the
     terms and conditions of these stock options are contained in the Company's
     2000 Stock Incentive Plan (the "Stock Plan") or will be contained in your
     stock option grant forms. In the event of any inconsistency between this
     Agreement and the terms of such stock option grant forms, the terms of this
     Agreement shall prevail.
 
     (b) In addition to the stock options described above, 200,000 shares of
     restricted stock in the Company will be issued to you under the Stock Plan
     as part of your new hire grant, which shares will vest as follows, provided
     you remain employed by the Company:
 
         o 20% will vest on the second anniversary of your commencement of
           employment with the Company;
         o 30 % will vest on the third anniversary of the commencement of your
           employment;
         o 50% will vest on the fourth anniversary of the commencement of your
           employment.
 
 
     (c) For 2006 and future years, you will be eligible to participate in
     long-term incentive opportunities on a basis consistent with your status as
     the Company's highest ranking executive, your performance as President and
     Chief Executive Officer and the Company's performance.
 
6.   BUY-OUT OF NOVARTIS STOCK: The Company agrees to pay you approximately
     $2,500,000 related to the unvested value of your Novartis stock options and
     restricted stock shares. Of this, $1,000,000 (taxable) will be paid to you
     in cash within two weeks of the start of your employment at the Company.
     The remaining value will be paid to you upon the Effective Date in the form
     of 200,000 shares of restricted stock in the Company. These shares will be
     issued to you under the Stock Plan and will vest as follows, provided you
     remain employed by the Company.
 
         o 20% will vest on the second anniversary of your commencement of
           employment with the Company;
         o 30 % will vest on the third anniversary of the commencement of your
           employment;
         o 50% will vest on the fourth anniversary of the commencement of your
           employment.
 
     In the event of your death or disability while employed by the Company, or
     if you are terminated by the Company other than for Justifiable Cause or
     voluntarily terminate your employment with Good Reason, all unvested
     restricted stock granted pursuant to this Paragraph 6 will immediately
     become fully vested. Except as set forth in the preceding sentence and in
     Paragraphs 5(a) above and 15 below, in the event of termination of your
     employment for any reason, all unvested restricted stock shall be
     forfeited.
 
7.   RETIREMENT BENEFITS: On the Effective Date, the Company will credit
     $500,000 to a tax-deferred bookkeeping account (the "Account") maintained
     by the Company on your behalf. You will be entitled to direct the
     investment of such Account in a manner consistent with the investment
     opportunities provided under the Company's 401(k) program, as amended from
     time to time. The Account will be adjusted, on a daily basis, by the
     income, gain or loss (realized and unrealized) resulting from such
     investment. You will become 40% vested in the Account on the fourth
     anniversary of the Effective Date and will become vested in an additional
     10% of the Account on each anniversary thereafter (i.e., 100% vesting after
     ten years), assuming in each case that you have remained employed with the
     Company. Six months following your termination of employment with the
     Company for any reason, you (or, in the event of your death, your
     designated beneficiary) will commence receiving ten annual installment
     payments equal to the vested portion of the Account (1/10, 1/9, 1/8, etc.),
     as adjusted to reflect the investment returns during such deferral period.
     You acknowledge that your rights to the Account will be no greater than
     those of a general unsecured creditor of the Company.
 
8.   SIGNING BONUS: The Company will provide you with a one-time sign-on
     bonus in the amount of $300,000 (taxable) within two weeks of your start
     date. In the event of your voluntary resignation other than for Good Reason
     or termination for Justifiable Cause from the Company at any time prior to
     the first anniversary of such payment, you will be obligated to pay to the
     Company within sixty (60) days after such termination $200,000 of such
     sign-on bonus amount. In the event of your voluntary resignation other than
     for Good Reason or termination for Justifiable Cause from the Company at
     any time after the first anniversary but prior to the second anniversary of
     such payment, then you will be obligated to pay to the Company within sixty
    (60) days after such termination $100,000 of such sign-on bonus amount.
 
9.   RELOCATION EXPENSES: Upon your acceptance of this offer, you are eligible
     for reimbursement of the following expenses associated with your
     relocation. Specific relocation information will follow from MSI, the
     Company's relocation company.
 
     - Reimbursement for expenses associated with direct-route transportation to
       Cambridge.
     - The cost of packing, moving, 120 days' temporary storage, and unloading
       of your household goods and effects using a certified carrier of the
       Company's choice.
     - Two house-hunting trips for the purpose of locating suitable housing.
     - The reasonable cost of temporary housing for up to 120 days upon your
       arrival in the Boston area or $10,000 (grossed up) lump sum if housing is
       not used.
     - Destination services provided by Corporate Real Estate Services, a
       division of Hunneman Coldwell Banker.
     - Closing costs (excluding points) on the purchase of a new home, up to 3%
       of the purchase price, if purchased within 12 months of your date of
       hire.
     - The Company will reimburse you for reasonable and customary closing
       costs, including real estate commission not to exceed 6%, legal and
       recording fees, title charges, transfer taxes, documentary stamps,
       etc., on the sale of your existing home.
     - The Company will provide a lump sum allowance of $10,000 (grossed up)
       to cover additional relocation related expenses. This sum will be paid
       to you by MSI once you submit a request for payment.
     - A dollar-based mortgage subsidy in the aggregate amount of $82,500
       (taxable) to be paid over a period of four-years, to compensate you for
       mortgage and/or cost of living expense in the Boston area.
 
     Should you voluntarily resign other than for Good Reason or be terminated
     for Justifiable Cause from the Company within one year of relocating, upon
     request by the Company, you agree to return a prorata portion of all of the
     above relocation amounts received by you or paid on your behalf.
 
10.  FINANCIAL COUNSELING/TAX PREPARATION/OUTPLACEMENT. You shall be entitled to
     receive up to $15,000 (grossed-up) in 2005 for financial counseling and tax
     preparation services. In addition, the Company will assist your spouse in
     obtaining suitable employment in the Boston area, including providing
     reasonable outplacement services, if necessary, for up to six months.
 
11.  EMPLOYMENT ELIGIBILITY VERIFICATION: Please note that all persons employed
     in the United States are required to complete an Employment Eligibility
     Verification Form on the first day of employment and submit an original
     document or documents that establish identity and employment eligibility
     within three business days of employment. For your convenience, we are
     enclosing Form I-9 for your review. You will need to complete Section 1 and
     present original document(s) of your choice as listed on the reverse side
     of the form once you begin work. PLEASE NOTE: THE I-9 FORM AND VALID
     IDENTIFICATION ARE LEGAL REQUIREMENTS AND MUST BE SUBMITTED WITHIN 3 DAYS
     OF YOUR START DATE. IF YOU DO NOT SUBMIT THE REQUIRED DOCUMENTATION WITHIN
     THE 3-DAY TIME FRAME, BY LAW WE CANNOT ALLOW YOU TO CONTINUE TO WORK.
 
12.  PROPRIETARY INFORMATION, NO CONFLICTS: As a condition of your employment,
     you agree to execute the enclosed Invention, Non-Disclosure and
     Non-Competition Agreement and to be bound by all of the provisions thereof.
     You hereby represent that you are not presently bound by any employment
     agreement, confidential or proprietary information agreement or similar
     agreement with any current or previous employer that would impose any
     restriction on your acceptance of this offer or that would interfere with
     your ability to fulfill the responsibilities of your position with the
     Company.
 
13.  MEDICAL SURVEILLANCE: As part of the Company's medical surveillance
     program, employees are required to have an initial physical, provided by an
     on-site registered Nurse Practitioner. You may refuse an exam if you sign a
     release, in which case you should so advise the nurse practitioner. Your
     initial examination will be scheduled to take place during the first week
     of your employment.
 
14.  SEVERANCE:
 
     (a) In the event that your employment is terminated (1) by the Company
     other than for Justifiable Cause or as a result of your disability (which
     for purposes of this Agreement shall mean that you qualify for long-term
     disability insurance under the Company's long-term disability coverage) or
     (2) by you for Good Reason, you shall be entitled to each of the following
     but only if you execute and allow to become binding a release of claims
     prepared by the Company:
 
         (i)   A lump sum amount, payable within ten days following termination,
               equal to 0.5 times your base salary at your rate of pay in effect
               on the date of termination;
 
         (ii)  a severance payment (the "Severance Payment") to be paid in
               periodic installments, consistent with the Company's payroll
               procedures as then in effect, beginning six months after your
               termination date and continuing for eighteen months thereafter,
               equal to the sum of the following: (A) a pro rata share of your
               target Success Sharing bonus for the period of your employment
               during the year in which termination occurred; and (B) the sum of
               1.5 times your base salary at your rate of pay in effect on the
               date of termination, plus 2 times your then current target bonus;
 
         (iii) as provided in Paragraph 5 above, all options (or other equity
               awards) that would have vested within the one-year period
               following your termination will accelerate and immediately become
               fully vested and all vested options (including such accelerated
               options) shall remain exercisable for one year after the
               conclusion of the Severance Period;
 
         (iv) continued participation under COBRA for 18 months in all medical
              and health plans at the same benefit level provided to you and
              funded by the Company on the date of termination of employment;
 
         (v)  any accrued but unpaid amounts or benefits due under the Company's
              benefits plans then in effect, or to which you are entitled under
              applicable law;
 
         (vi) as used in this Agreement, "Severance Period" shall mean the
              period beginning on the day following your termination of
              employment and ending twenty-four months thereafter.
 
     (b) In the event your employment is terminated by the Company for
     Justifiable Cause or your disability or voluntarily by you without Good
     Reason, you shall be entitled only to any accrued but unpaid amounts or
     benefits due under the Company's benefits plans, or to which you are
     entitled under applicable law; and you shall not be eligible to receive any
     other severance pay or benefits.
 
         "Justifiable Cause" shall mean the occurrence of any of the following
     events: (i) your conviction of, or plea of NOLO CONTENDERE with respect to
     a felony or crime involving moral turpitude, (ii) your commission of an act
     of personal dishonesty or breach of fiduciary duty involving personal
     profit in connection with the Company, (iii) your commission of an act, or
     failure to act, which the Board shall reasonably have found to have
     involved willful misconduct or gross negligence on your part, in the
     conduct of your duties as an employee of the Company, (iv) habitual
     absenteeism, alcoholism or drug dependence on your part which interferes
     with the performance of your duties as an employee of the Company, (v) your
     willful and material failure or refusal to perform your services as an
     employee of the Company, (vi) any material breach by you to fulfill the
     terms and conditions under which you are employed by the Company, or (vii)
     your willful and material failure or refusal to carry out a direct, lawful
     written request of the Board. In the event that the Company terminates your
     employment for Justifiable Cause, the Company will provide you with a
     written statement of the basis for such termination and an opportunity to
     cure such acts (or failure to acts) if curable, and an opportunity to
     respond thereto at a special meeting of the Board held for such purpose.
     This provision and definition, as well as the definition of "Good Reason"
     below shall supersede any provision for or definition of "cause" or "good
     reason" in any option, stock, employment, confidentiality, non-competition
     or other document relating to your employment at the Company.
 
         "Good Reason" shall mean any action by the Company without your prior
     written consent which results in (i) any requirement by the Company that
     you perform your principal duties outside a radius of 50 miles from the
     Company's Cambridge location; (ii) any material diminution in your title,
     position, duties, responsibilities or authority, including your ceasing to
     serve as the Company's President and Chief Executive Officer or to serve as
     a member of the Board; (iii) any breach by the Company of any material
     provision contained herein not cured within thirty (30) days' of written
     notice thereof; (iv) a reduction in your base salary (unless such reduction
     is effected in connection with a general and proportionate reduction of
     salaries for all members of the management team) or any reduction of your
     target bonus amount to less than 80% of your annual salary; or (v) any
     acquisition, merger or Change of Control (as defined in the Stock Plan)
     involving the Company which results in your ceasing to serve as the Chief
     Executive Officer for the surviving entity and for all direct and indirect
     parent organizations thereof.
 
15.  CHANGE OF CONTROL. In the event of a Change of Control (as defined in the
     Stock Plan), and if within one month prior to or twelve months following
     such Change of Control, your employment with the Company or its successor
     is terminated other than for Justifiable Cause or terminated by you for
     Good Reason, then pursuant to the Stock Plan, all of your outstanding
     unvested stock options, restricted stock, restricted stock units and other
     equity awards will immediately vest in full. Upon any such termination, the
     severance benefits described in the preceding paragraph shall also apply.
     In addition, in the event it shall be determined that any payment, benefit
     or distribution (or combination thereof) by the Company, any of its
     affiliates (including any successor or acquiring entity), or one or more
     trusts established by the Company for the benefit of its employees, to you
     or for your benefit (whether paid or payable or distributed or
     distributable pursuant to the terms of this Agreement, or otherwise) (a
     "Payment") is subject to the excise tax imposed by Section 4999 of the
     Internal Revenue Code or any interest or penalties are incurred by you with
     respect to such excise tax (such excise tax, together with any such
     interest and penalties, hereinafter collectively referred to as the "EXCISE
     TAX"), you will be entitled to receive an additional payment (a "GROSS-UP
     PAYMENT") in an amount such that after payment by you of all taxes
     (including any interest or penalties imposed with respect to such taxes),
     including, without limitation, any income taxes (and any interest and
     penalties imposed with respect thereto) and the Excise Tax imposed upon the
     Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the
     Excise Tax imposed upon the Payments. Notwithstanding the foregoing
     provisions of this Section 15, if it shall be determined that you are
     entitled to a Gross-Up Payment, but that the Payment does not exceed 110%
     of the greatest amount that could be paid to you without giving rise to any
     Excise Tax (the "SAFE HARBOR AMOUNT"), then no Gross-Up Payment shall be
     made to you and the amounts payable under this Agreement shall be reduced
     so that the Payment, in the aggregate, is reduced to the Safe Harbor
     Amount. Any such reduction shall be applied first to the payments that you
     designate for that purpose.
 
Please indicate your acceptance of the foregoing by signing the enclosed copy of
this letter and returning it by confidential fax and mail or courier to Linda
Pine, 40 Landsdowne Street, Cambridge, MA 02139, Fax No. 617-621-0264 (please
call 617-679-7226 before faxing) no later than the close of business on June 23,
2005. After that date, the offer will lapse.
 
Deborah, we are very enthusiastic about the prospect of you leading the Company
to its next level of success and are highly confident that you will be an
outstanding Chief Executive Officer.
 
 
Very truly yours,
MILLENNIUM PHARMACEUTICALS, INC.
 
/s/ MARK LEVIN
 
Mark Levin
Chairman of the Board
 
 
I agree to and accept the terms of this letter as of the date written above:
 
 
/s/ DEBORAH DUNSIRE                                 6-23-05
Deborah Dunsire                                     Date
 
cc:  Grant Heidrich