Exhibit
10.1
ARIAD PHARMACEUTICALS,
INC.
2005 EXECUTIVE COMPENSATION
PLAN
Effective October 1, 2005
ARIAD PHARMACEUTICALS,
INC.
2005 EXECUTIVE COMPENSATION
PLAN
TABLE OF
CONTENTS
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ARTICLE III -
PARTICIPATION
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ARTICLE VI -
ACCOUNTS AND ACCOUNTING
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ARTICLE VII -
PAYMENT OF ACCOUNTS
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ARTICLE VIII -
DEATH BENEFITS
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ARTICLE IX -
PLAN ADMINISTRATION
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ARTICLE X -
PARTICIPANTS’ RIGHTS
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ARTICLE XI -
MISCELLANEOUS
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EXHIBIT A -
INITIAL PARTICIPANTS
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ARIAD PHARMACEUTICALS,
INC.
2005 EXECUTIVE COMPENSATION
PLAN
ARIAD Pharmaceuticals, Inc. (the
“Company”) hereby adopts the 2005 ARIAD
Pharmaceuticals, Inc. Executive Compensation Plan, to be effective
as of October 1, 2005 (the “Effective Date”), as more
fully set forth herein (the “Plan”).
ARTICLE I
PURPOSE
1.1 Purpose . The purpose of the Plan is to assist the
Company and any Affiliate (as defined below) to recruit, motivate
and retain executive officers, key employees and key advisors who
will contribute to the Company’s long range success by
providing incentives in a form that will reward superior
performance and provide tax-advantaged savings
opportunities.
1.2 Intent . The Plan is intended to be an unfunded
deferred compensation arrangement for the benefit of a select group
of management and highly compensated employees of the Company and
its Affiliates, within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). As
such, the Plan is intended to be a “top hat” plan
exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
Any obligation of the Company or its Affiliates to pay benefits
hereunder shall be deemed to be an unsecured promise, and any right
of a Participant (as defined below) or Beneficiary (as defined
below) to enforce such obligation shall be solely as a general
creditor of the Company.
ARTICLE II
DEFINITIONS
2.1 “Account” means one or more bookkeeping entries maintained
by the Committee with respect to each Participant.
2.2 “Affiliate” means any corporation or other form of entity of
which the Company owns, directly or indirectly, fifty percent or
more of the total combined voting power of all classes of stock or
other equity interests, provided that such entity is designated by
the Committee as a participating entity hereunder.
2.3 “Award” means a credit made to a Participant’s
Account in accordance with the provisions of Article V hereof, as
the case may be. An Award may either be an Annual Award under
Section 5.1 or an Initial Award under Section 5.2.
2.4 “Beneficiary”
means the person, persons, entity or
entities designated by a Participant in accordance with Article
VIII of the Plan. If no Beneficiary is designated with respect to
the Plan, a Participant’s designation made under the Prior
Plan shall control; if there is no such designation or such
designation cannot be administered, a Participant’s
designation under the ARIAD Retirement Savings Plan (or the default
provisions thereof) shall control.
2.5 “Board” or “Board of Directors”
means the Board of Directors of the Company.
2.6 “Bonus” means remuneration that is
“performance-based compensation,” as defined by Section
409A(a)(4)(B)(iii) of the Code, that is designated as a Bonus by
the Committee and which relates to services performed by a
Participant during a performance period of at least twelve months.
A Bonus shall not include an Award granted under Article V of the
Plan.
2.7 “Change of Control”
means the occurrence of any of the
following events:
(a)
Any corporation, person or other
entity makes a tender or exchange offer for shares of the Company's
common stock pursuant to which such corporation, person or other
entity acquires more than 50% of the issued and outstanding shares
of the Company's Common Stock;
(b)
The stockholders of the Company
approve a definitive agreement to merge or consolidate the Company
with or into another corporation or to sell or otherwise dispose of
all or substantially all of the Company's assets; or
(c)
Any person within the meaning of
Section 3(a)(9) or Section 13(d) of the Securities Exchange Act of
1934 acquires more than 50% of the combined voting power of
Company's issued and outstanding voting securities entitled to vote
in the election of the Board.
The Committee
shall determine whether a Change of Control has
occurred.
2.8 “Code” means the Internal Revenue Code of 1986, as
amended, related regulations and, in the absence of regulations,
revenue rulings, revenue procedures, notices or transition guidance
from the IRS.
2.9 “Committee” means the Compensation Committee of the Board,
which shall act as the administrator of the Plan.
2.10 “Company” means ARIAD Pharmaceuticals, Inc. or its
successor.
2.11 “Compensation”
means the Participant’s Salary
and Bonus.
2.12 “Deferrals” means the portion of Compensation that a
Participant elects to defer under the Plan in accordance with
Section 4.1.
2.13 “Deferral Election”
means the separate written
agreement, submitted to the Committee, by which a Participant
agrees to participate in the Plan and make Deferrals.
2.14 “Installment Period”
means the period for paying
installments as elected by the Participant under a Payment Election
Form that complies with Section 7.3(a).
2.15 “ Investment Funds” means
the investment funds designated by the Committee from time to time
for the purpose of determining the investment return to be credited
to each Participant’s Account. Participants shall not have
the right to designate Investment Funds.
2.16 “ Participant ” means an
executive officer, key employee or key advisor of the Company or
its Affiliates for whom an Account is maintained
hereunder.
2.17 “ Payment Date ” means the
last day of the first calendar month that is at least sixty (60)
days after the date or event triggering payment under the Plan, or
as soon as practicable thereafter.
2.18 “Payment Election Form”
means a form required to be used by
Participants to elect the time and form of benefit payments under
Section 7.1 of the Plan.
2.19 “ Plan ” means this 2005
ARIAD Pharmaceuticals, Inc. Executive Compensation Plan, as the
same may be amended or restated from time to time.
2.20 “ Plan Year ” means the
12-month period beginning each January 1st and ending each December
31st; provided, however, that the first Plan Year means the period
from October 1, 2005 to December 31, 2005.
2.21 “ Prior Plan ” means the
ARIAD Pharmaceuticals, Inc. Executive Compensation Plan, which was
first approved on September 16, 1997.
2.22 “Salary” means a Participant’s base salary rate or
rates in effect at the time of a Participant’s Deferral
Election.
2.23 “Separation from
Service” means
cessation of service with the Company and its Affiliates within the
meaning of Section 409A of the Code.
2.24 “ Unforeseeable Emergency
” means the occurrence of a severe financial hardship. Such
hardship shall be attributable to a sudden and unexpected illness
or accident of the Participant or his or her spouse or dependents,
the loss of property due to casualty or similar extraordinary and
unforeseeable circumstances beyond the control of a
Participant.
2.25 “ Valuation Date ” means
(a) the last day of each calendar quarter for purposes of
periodically adjusting Account balances under Article VI, (b) the
last day of the calendar month for purposes of paying Account
balances under Articles VII, VIII and XI, and (c) any other date or
dates as may be designated in good faith by the
Committee.
ARTICLE III
PARTICIPATION
3.1 Eligibility . Executive officers, key employees and key
advisors of the Company or an Affiliate shall participate in the
Plan when and as designated by the Committee in its sole
discretion, which designation may be made individually or by groups
or categories, in the discretion of the Committee. The Committee
shall notify each individual who becomes eligible to participate in
the Plan. Without the necessity of further action, Participants
hereunder shall include those individuals listed on Schedule A
hereto, which shall be deemed a part of the Plan by this
reference.
3.2 Loss of Eligible Status . If the Committee determines that a Participant
shall no longer be eligible to participate in the Plan, such
Participant shall no longer be entitled to receive an Award or make
Deferrals thereafter. However, amounts credited to the Account of
such Participant shall continue to be held pursuant to the terms of
the Plan and shall be distributed as provided in Article VII or
Article VIII.
ARTICLE IV
DEFERRALS
4.1 Right to Defer Compensation
. The Committee may from time to
time in its sole discretion allow Participants to defer payment of
part of their Compensation under the Plan on a pre-tax basis under
this Article IV. If a Participant is allowed to defer Compensation
for a Plan Year, the Committee shall credit to the Account of a
Participant an amount equal to the amount designated in the
Participant’s Deferral Election for that Plan Year. Amounts
shall not be made available to such Participant, except as provided
in Article VII, and shall reduce such Participant’s
Compensation in accordance with the provisions of the applicable
Deferral Election.
4.2 Timing for Deferral Elections
. A Deferral Election shall be void
with respect to Salary unless submitted before the beginning of the
calendar year during which the amount to be deferred will be
earned. A Deferral Election shall be void with respect to any Bonus
unless submitted at least six months prior to the end of the twelve
month period over which the services for such Bonus are performed.
Notwithstanding the foregoing, in the year in which the Plan is
first adopted or an individual is first eligible to participate,
such Deferral Election may be filed within thirty (30) days of the
date on which the Plan is adopted or the date on which such
individual is first eligible to participate, respectively, with
respect to Compensation earned during the remainder of the calendar
year after the filing and acceptance of such Deferral Election. A
Deferral Election must be delivered to the Committee before any
Deferrals can become effective.
4.3 Matters for Deferral Election
. A Participant’s Deferral
Election shall, subject to the limitation set forth in Section 4.4
hereof, designate the amount of Compensation to be deferred on the
Participant’s behalf as a fixed dollar amount, the
Beneficiary to receive any Death Benefits and such other items as
may be prescribed by the Committee. A Participant shall file a
Payment Election Form (as defined in Section 7.1 below) with the
Committee at the same time as a Deferral Election. A Deferral
Election filed by a Participant for a Plan Year shall be
irrevocable after the beginning of such Plan Year except as
permitted by the Committee and allowed consistent with the
requirements of Section 409A of the Code.
4.4 Minimum and Maximum Deferral
. The minimum amount that may be
deferred hereunder each Plan Year is ten thousand dollars
($10,000). The maximum amount that may be deferred hereunder each
Plan Year is fifty percent (50%) of the Participant’s Salary
and one hundred percent (100%) of the Participant’s
Bonus.
4.5 Vesting . A Participant shall have a fully vested right
to the portion of his or her Account attributable to Deferrals and
any earnings or losses on the deemed investment of the Deferrals at
all times.
ARTICLE V
AWARDS
5.1 Annual Awards . The Committee reserves the right annually to
award credits (each, an “Annual Award”) to Accounts in
its sole discretion. The Committee may grant Annual Awards in such
amounts and in such manner as it considers appropriate or
desirable.
(a)
Performance-based
Awards .
Performance-based Awards shall be based on a Participant attaining
pre-established organizational or individual performance criteria
over a performance period of at least twelve months or other
circumstances as described below. Performance criteria may be
objective or subjective in nature, provided that the criteria
relate to the performance of the Participant, a group of service
providers that includes the Participant, the Company, or any
business unit (including an Affiliate) to which the Participant
provides services. The Committee shall establish performance
criteria not later than ninety days after the beginning of the
performance period, provided that the outcome is not substantially
certain at the time the criteria are established. The Committee
shall independently determine to what extent performance criteria
have been satisfied for an Award. The Committee shall grant and
administer performance-based Awards so to qualify as
“performance-based compensation” as defined under
Section 409A(a)(4)(B)(iii) of the Code.
(b)
Ad Hoc Awards
. The Committee may grant an Annual
Award in a form other than a performance based Award under Section
5.1(a) above, provided that the grant must be subject to a bona
fide vesting condition requiring continued services by the
Participant over a period of at least twelve months
A Participant
who receives an Annual Award with respect to all or part of a Plan
Year shall not have the right to receive an Annual Award in a
subsequent Plan Year. Any power that may be exercised by the
Committee under this Section 5.1 may be delegated to an officer of
the Company as provided under Section 9.3 below.
5.2 Initial Award . An individual providing services to the
Company or an Affiliate who became a Participant on the Effective
Date and who participated in the Prior Plan shall receive an
Initial Award under this Section 5.2 equal to the “Rollover
Amount” (as defined under Section 3.10 of the Prior Plan) and
any additional amount that may be determined by the Committee in
its sole discretion. Except as provided to the contrary in Section
5.4 below, the Initial Award shall be subject to the same terms and
conditions as any other Award granted under the Plan.
5.3 Vesting of Annual Awards . A Participant shall have a vested right to the
portion of his or her Account attributable to a specific Annual
Award and any earnings or losses on the deemed investment of such
Annual Awards according to such vesting schedule as the Committee
shall determine at the time an Annual Award is made.
5.4 Vesting of Initial Award . A Participant shall have a vested right to the
portion of his or her Account attributable to his or her Rollover
Amount and any earnings or losses on the investment of his or her
Rollover Amount according to the vesting schedule as in effect
under Section 3.4 of the Prior Plan. Any additional amount that may
be determined by the Committee as part of the Initial Award shall
vest (a) fifty percent upon the first anniversary of the grant date
and (b) one hundred percent upon the second anniversary of the
grant date; provided that the Participant is then employed or
otherwise providing services to the Company and/or its Affiliates
on such date.
5.5 Change of Control . Notwithstanding anything to the contrary in
Sections 5.3 and 5.4, the Committee may elect to accelerate the
vesting of some or all amounts credited to a Participant’s
Account upon a Change of Control.
5.6 Amounts Not Vested . Any amounts credited to a Participant’s
Account with respect to an Award granted under Article V and any
earnings or losses on the investment of such Awards that are not
vested at the time of the Participant’s Separation from
Service shall be forfeited.
ARTICLE VI
ACCOUNTS AND ACCOUNTING
6.1 Establishment of Accounts
. The Committee shall establish and
maintain an Account with respect to each Participant. The Committee
shall establish and maintain sub-accounts as it determines are
necessary, appropriate or desirable to track vested amounts and to
administer Payment Elections under the Plan.
6.2 Status of Accounts . Accounts are bookkeeping entries only. Assets
that may be set aside by the Company or an Affiliate to pay for
Plan benefits shall not create a trust or other form of fiduciary
relationship between the Company, its Affiliates and any persons
entitled to a benefit under the Plan. No Participant or Beneficiary
shall have rights or interests in any specific asset of the Company
or of any Affiliate under the Plan.
6.3 Investment Funds . The Committee shall credit a
“hypothetical rate of return” to the Accounts on each
Valuation Date. The rate shall equal the actual investment
performance of one or more Investment Funds selected by the
Committee. The Committee shall have the right to add and delete
investment funds, on a prospective basis. Each Participant’s
Account will be credited monthly with a “hypothetical rate of
return” under Section 6.4 until the amount in each
Participant’s Account is completely distributed to the
Participant. Nothing contained in this Article VI shall in any way
require the Co
