Exhibit 10.1


    Exhibit
      10.1

    


     

    

       

      


       

      


       

      ARIAD
        PHARMACEUTICALS, INC.

       

      2005
        EXECUTIVE COMPENSATION PLAN

       

      Effective
        October 1, 2005

       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       

      


       


      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      ARIAD
        PHARMACEUTICALS, INC.

       

      2005
        EXECUTIVE COMPENSATION PLAN

       

      TABLE
        OF CONTENTS

      

        
          	
                  ARTICLE
                    I - PURPOSE

                   

                	
                  1

                   

                
	
                  ARTICLE
                    II - DEFINITIONS

                   

                	
                  1

                   

                
	
                  ARTICLE
                    III - PARTICIPATION

                   

                	
                  3

                   

                
	
                  ARTICLE
                    IV - DEFERRALS

                   

                	
                  4

                   

                
	
                  ARTICLE
                    V - AWARDS

                   

                	
                  5

                   

                
	
                  ARTICLE
                    VI - ACCOUNTS AND ACCOUNTING

                   

                	
                  6

                   

                
	
                  ARTICLE
                    VII - PAYMENT OF ACCOUNTS

                   

                	
                  7

                   

                
	
                  ARTICLE
                    VIII - DEATH BENEFITS

                   

                	
                  10

                   

                
	
                  ARTICLE
                    IX - PLAN ADMINISTRATION

                   

                	
                  11

                   

                
	
                  ARTICLE
                    X - PARTICIPANTS’ RIGHTS

                   

                	
                  13

                   

                
	
                  ARTICLE
                    XI - MISCELLANEOUS

                   

                	
                  13

                   

                
	
                  EXHIBIT
                    A - INITIAL PARTICIPANTS

                   

                	
                  17

                   

                


        

      

       

       


      
        
          
             

          

          
          

        

        
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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).

       

      

        
          
            
               

            

            
            

          

          
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      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.

       

      
        
          
            
               

            

            
            

          

          
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      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.

       

      

        
          
            
               

            

            
            

          

          
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      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.

       

      
        

          
            
              
                 

              

              
              

            

            
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      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 Company to make actual investments of deferred
        amounts in any particular investment vehicle, including the Investment
        Funds.

       

      6.4 Accounting.
        As of
        each Valuation Date, each Account:

       

      
        

          
            
              
                 

              

              
              

            

            
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      (a) will
        be
        increased or decreased to reflect the investment experience of the Investment
        Funds selected by the Committee for the period since the immediately preceding
        Valuation Date;

       

      (b) will
        be
        credited with the amount of any Deferral or Award made on a Participant’s behalf
        since the immediately preceding Valuation Date;

       

      (c) will
        be
        reduced by the amount of any payment from the Account made since the immediately
        preceding Valuation Date, including any tax withholding payments made under
        Section 10.4; and 

       

      (d) will
        be
        reduced by the amount of any forfeitures since the immediately preceding
        Valuation Date.

       

      ARTICLE
        VII

       

      PAYMENT
        OF ACCOUNTS

       

      7.1 Payment
        Elections.
        A
        Participant shall file a “Payment Election Form” designating the time and form
        of payment of his or her Account with the Committee. Designations may be
        made
        separately with respect to each Award and Deferral except as otherwise provided
        by the Committee. To be valid, a Payment Election Form must be filed as
        follows:

       

      (a) Initial
        Award: no later than 90 days after the Effective Date.

       

      (b) Performance-based
        Award: not later than the end of the sixth month after the beginning of the
        performance period for that Annual Award.

       

      (c) Ad
        hoc
        Award: not later than thirty days after the grant date.

       

      (d) Deferral:
        at the same time as the applicable Deferral Election under Article IV of
        the
        Plan.

       

      A
        Payment
        Election Form shall be irrevocable except that it can be changed prior to
        the
        applicable deadlines noted above or as allowed under Section 7.5 below. A
        Participant’s failure to properly and timely file a Payment Election Form shall
        result in payment being made in a lump sum not later than two and one-half
        months after the calendar year in which such Deferral or Award first becomes
        vested..

       

      7.2 Time
        of Payment.
        A
        Participant is eligible to receive payment in connection with:

       

      (a) a
        specified date, which may include vesting of an Award,

       

      (b) the
        first
        anniversary of the Participant’s Separation from Service, or

       

      (c) the
        earlier of (a) or (b) (each, a “Benefit Eligibility Date”).

       

      
        
          

            
              
                
                   

                

                
                

              

              
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      Payment
        of a Participant’s Account shall commence on the Payment Date that immediately
        follows the Benefit Eligibility Date elected by the Participant; provided,
        however, that a Participant may modify his or her Payment Election Form to
        change the time of payment under Section 7.5. The Committee shall establish
        rules from time to time setting forth which dates may be specified by a
        Participant in a Payment Election Form consistent with the requirements of
        Section 409A of the Code. Notwithstanding
        the elected time of payment, the Committee may elect to accelerate payment
        of a
        Participant’s Account under either Section 7.6 (regarding small payments) and
        Section 7.8 (regarding a Change of Control).

       

      7.3 Forms
        of Payment.
        To the
        extent provided by the Committee, Participant may elect in his or her Payment
        Election Form one of the following forms of payment with respect to any Award
        or
        Deferral (including any applicable earnings): (a) substantially equal annual
        installment payments for a period not to exceed 20 years, or (b) a single-sum
        payment. A Participant may modify his or her Payment Election Form to change
        the
        form of payment under Section 7.5. Notwithstanding the elected form of payment,
        the Committee may elect to pay a Participant’s Account in a single lump sum
        under Section 7.6 (regarding small payments) and Section 7.8 (regarding a
        Change
        of Control).

       

      7.4 Amount
        of Participant’s Account Available for Payment.
        The
        amount of a Participant’s Account available for payment shall be determined as
        follows:

       

      (a) Lump
        Sum Payment.
        The
        amount of any lump sum payment shall equal the Participant’s vested Account
        balance as of the Valuation Date that immediately precedes the applicable
        Payment Date.

       

      (b) Installment
        Payment.
        The
        amount of any installment payment shall equal the Participant’s vested Account
        balance as of the Valuation Date that immediately precedes the applicable
        Payment Date, multiplied by a fraction (i) the numerator of which is one,
        and
        (ii) the denominator of which is the number of annual installments then
        remaining to be paid under the Participant’s Payment Election Form. The
        Participant’s Account shall be adjusted under Article VI during the Installment
        Period.

       

      7.5 Changes
        to Payment Election Form.
        A
        Participant shall be entitled to modify his or her Payment Election Form
        to
        change the time of payment, form of payment or both under the Plan by providing
        an amended Payment Election Form provided that the modification:

       

      (a) will
        be
        effective no earlier than twelve months following the date on which it is
        received and accepted by the Committee;

       

      (b) shall
        be
        received and accepted not less than 12 months prior to the date on which
        distributions are otherwise scheduled to commence;

       

      (c) shall
        designate a new Benefit Eligibility Date that is not less than five years
        after
        the Benefit Eligibility Date then in effect;

       

      (d) will
        not
        result in an acceleration of payments except to the extent allowed under
        Section
        409A; and

       

      (e) complies
        with all rules and regulations established by the Committee for changes to
        payment elections.

       

       

      
        
          
          

        

        
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      7.6 Small
        Payment.
        If the
        value of a Participant’s Account balance is $10,000 or less as of the Valuation
        Date immediately following a Participant’s Benefit Eligibility Date, then
        notwithstanding any provision of this Article to the contrary, the Committee
        may
        distribute the value of that Account as a single-sum payment as of the Payment
        Date that coincides with or immediately follows his or her Benefit Eligibility
        Date, and no additional benefit shall be payable hereunder.

       

      7.7 Hardship
        Withdrawals.
        If a
        Participant experiences an Unforeseeable Emergency, such Participant shall
        be
        permitted to withdraw all or a portion of his or her vested Accounts in the
        form
        of an immediate single-sum payment, subject to the following
        limitations:

       

      (a) A
        request
        for withdrawal shall be made, in writing, and shall set forth the circumstances
        surrounding the Unforeseeable Emergency. As a condition of and part of such
        request, the Participant shall provide to the Committee his or her written
        representation that:

       

      (i) the
        hardship cannot be relieved by insurance or other reimbursement reasonably
        available to the Participant,

       

      (ii) the
        hardship cannot be relieved by the cessation of Deferrals under the Plan,
        and

       

      (iii) the
        hardship can only be relieved by liquidation of the Participant’s assets and any
        such liquidation would itself result in severe damage or injury to the
        Participant.

       

      The
        Committee shall be entitled to request such additional information as may
        be
        reasonably required to determine whether an Unforeseeable Emergency exists
        and
        the amount of the hardship and to establish additional conditions precedent
        to
        the review or granting of a request for a withdrawal on account of an
        Unforeseeable Emergency.

       

      (b) If
        the
        Committee determines that an Unforeseeable Emergency exists, the Committee
        shall
        authorize the immediate distribution of an amount required to meet the financial
        need created by such hardship, including any taxes payable on account of
        such
        withdrawal.

       

      7.8 Change
        of Control.
        The
        Committee may elect to pay all Accounts in a single lump sum to
        Participants and Beneficiaries on or up to one (1) year after a Change of
        Control to the extent allowed under Section 409A of the Code. The Committee
        shall establish the Valuation Date and Payment Date for any lump sum payment
        to
        be made under this Section 7.8, provided that the Payment Date in no event
        shall
        be later than the first anniversary of the Change of Control.

       

      7.9 Forfeiture.
        Notwithstanding any other provision of the Plan, all Accounts, whether vested
        or
        not, shall be forfeited upon the occurrence of any of the following
        events:

       

       

      
        
          
          

        

        
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      (a) Termination
        of Participant’s service relationship for “cause” as defined in the
        Participant’s employment, consulting or other service related agreement with the
        Company or its Affiliates;

       

      (b) Violation
        of the non-compete or non-solicitation provision of the Participant’s
        employment, consulting or other service related agreement with the Company
        or
        its Affiliates; or 

       

      (c) Failure
        to comply with the conflicts of interest provisions of the Participant’s
        employment, consulting or other service related agreement with the Company
        or
        its Affiliates.

       

      In
        addition, the Company shall have a right of action against the Participant
        with
        respect to any amounts distributed from the Plan before discovering the
        Participant’s conduct described in (a), (b) or (c) above. The Committee, in its
        sole discretion and with the consent of the Board, may reinstate any amounts
        which would otherwise be forfeited under this Section 7.9.

       

      ARTICLE
        VIII

       

      DEATH
        BENEFITS

       

      8.1 Beneficiary
        Designation.
        A
        Participant shall be entitled to designate one or more Beneficiaries and
        the
        manner of payment to each Beneficiary on forms provided by the Committee.
        A
        Participant may modify a beneficiary designation by delivering a new designation
        to the Committee. Any designation or modification shall be effective upon
        its
        receipt and acceptance by the Committee.

       

      8.2 Participant’s
        Death Before Scheduled Time for Payment.
        A
        Participant’s Beneficiary shall be paid a lump sum death benefit if a
        Participant dies before his or her Benefit Eligibility Date, as modified
        under
        Section 7.5. The amount of the lump sum payment shall be equal the vested
        portion of the Participant’s Account as of the Valuation Date immediately
        following the Participant’s death. Payment shall be made as of the Payment Date
        that coincides with or immediately follows the Participant’s death.

      


      8.3 Participant’s
        Death During Installment Period.
        The
        Company shall continue to pay any installments that commenced during the
        Participant’s lifetime and that remain to be paid after a Participant’s death to
        the Participant’s Beneficiary. Payments shall be made at such times and in such
        amounts as provided in the deceased Participant’s Payment Election
        Form.

      


      8.4 Death
        of Beneficiary.
        Any
        death benefit that remains to be paid from the Plan following a Beneficiary’s
        death shall be paid to one or more persons designated in writing by the
        Beneficiary in such form and in such manner as required by the Committee.
        If a
        Beneficiary fails to make a designation or the Committee rejects a designation,
        any remaining death benefit shall be paid to the estate of such
        Beneficiary.

      


      8.5 Small
        Payments.
        If the
        value of an Account balance is $10,000 or less as of the Valuation Date
        immediately preceding the scheduled payment of a death benefit, then
        notwithstanding any provision of this Article to the contrary, the Committee
        may
        distribute the value of that Account to the affected Beneficiary or
        Beneficiaries as a single-sum payment as of the Payment Date that coincides
        with
        or immediately follows the date of the Participant’s death, and no additional
        benefit shall be payable under the Plan.

       

       

      
        
          
          

        

        
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      ARTICLE
        IX

      


      PLAN
        ADMINISTRATION

       

      9.1 Powers.
        The
        Committee shall administer the Plan. The Committee shall have discretionary
        authority to take any and all actions it deems necessary, appropriate to
        administer the Plan, including the following:

      


      (a) interpret
        Plan provisions, including, without limitation, correcting any defect, supplying
        any omission or reconciling any inconsistency in the Plan,

      


      (b) determine
        all questions arising under the Plan including, without limitation, all
        questions concerning administration, eligibility, benefit amounts, timing
        of
        payments and the interpretation of any form or other document related to
        the
        Plan,

      


      (c) reject
        or
        modify any Deferral Election, Payment Election Form, Beneficiary Designation
        or
        other form filed by a Participant or Beneficiary with the
        Committee,

      


      (d) modify
        Awards, including, without limitation, changing the vesting terms applicable
        to
        an Award,

      


      (e) prescribe,
        amend and rescind rules and administrative procedures relating to the operation
        of the Plan, 

      


      (f) select
        special Valuation Dates, and 

      


      (g) engage
        the services of independent professionals and administrative personnel as
        it
        deems necessary to administer the Plan.

      


      Any
        Committee determination or interpretation shall be binding on all parties
        and
        need not be uniform as to all interested parties.

      


      9.2 Payments.
        The
        Committee shall have the discretionary authority to finally determine the
        time
        and amount of any payment under the Plan, subject to the provisions of the
        Plan
        and any properly filed Payment Election Form.

      


      9.3 Delegation
        of Administrative Authority.
        The
        Committee may delegate to appropriate officers of the Company or its Affiliates
        all or any portion of the power and authority granted to it under the Plan,
        subject to any limitations imposed under applicable law. Notwithstanding
        the
        foregoing, the Committee shall in no event delegate its authority in a manner
        that allows a Participant to grant an Award to himself or herself or to
        determine whether he or she has met performance criteria for a performance
        based
        Award under Section 5.1(a). The Committee’s delegation authority is
        discretionary and may be exercised orally or in writing. An officer acting
        under
        delegated authority shall be deemed to possess the power and authority granted
        to the Committee. Without requirement of further action, the Committee shall
        be
        deemed to have delegated to its appropriate officers:

       

       

      
        
          
          

        

        
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      (a) the
        authority to review and administer all payments under the Plan; and

      


      (b) the
        authority to make such ministerial amendments to the Plan or any ancillary
        form
        or document related to the Plan to the extent reasonably necessary to facilitate
        its administration or to avoid Federal income taxation on Accounts prior
        to
        payment or to maintain the Plan’s status as an unfunded “top hat” plan under
        ERISA.

      


      9.4 Claims.
        If a
        person claiming status as a Participant or Beneficiary (each, a “Claimant”)
        believes a benefit is payable to him or her under the Plan, the Claimant
        may
        request payment in writing, on forms acceptable to the Committee. If a payment
        request is disputed or denied by the Committee, the following action shall
        be
        taken:

       

      (a) First,
        the Claimant shall be notified, in writing, of the dispute or denial as soon
        as
        reasonably possible (but no later than ninety days) after receipt of the
        payment
        request. The notice shall set forth the specific reasons for the denial,
        including any relevant provisions of the Plan, and shall explain the review
        procedures of the Plan.

      


      (b) Second,
        the Claimant shall be entitled to a full review of his or her payment request.
        A
        Claimant desiring a review of the dispute or denial must request review,
        in
        writing, not later than sixty days after the notification of the dispute
        or
        denial is received. 

      


      The
        Committee shall render a final decision within sixty days after receiving
        a
        Claimant’s review request. If special circumstances require an extension of
        time, the Committee shall notify the Claimant, in writing, and the decision
        shall be rendered no later than one hundred and twenty days after the receipt
        of
        the request. The Committee’s final decision shall be in writing and shall
        include specific reasons for the action taken and specific references to
        the
        Plan provisions on which the decision is based.

      


      Nothing
        in this Section 9.4 shall modify, amend or otherwise detract from the validity
        and enforcement of the forfeiture provisions in Section 7.8.

      


      9.5 Fees
        and Expenses.
        The
        Company shall bear all costs, fees and expenses associated with the
        establishment, administration, and maintenance of the Plan.

      


      9.6 Facility
        of Payment.
        If the
        Committee determines that any person to whom a benefit is payable hereunder
        is
        or may be unable to care for his or her affairs on account of an illness
        or
        accident, or is a minor, then any benefit due such person may be paid to
        such
        person’s spouse, a child, a relative, an institution maintaining or having
        custody of such person, or any other person deemed by the Committee to be
        a
        proper recipient on behalf of such person. Any such payment shall be deemed
        to
        discharge, in full, the liability of the Plan and the Company
        therefore.

       

       

      
        
          
          

        

        
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      ARTICLE
        X

      


      PARTICIPANTS’
        RIGHTS

      


      10.1 Spendthrift
        Provision.
        No
        Participant or Beneficiary shall have any right to commute, sell, assign,
        transfer, pledge, anticipate, mortgage or otherwise encumber any amount payable
        under the Plan. No amount payable under the Plan shall, prior to actual payment,
        be subject to seizure or sequestration for the payment of any debt, judgment,
        alimony or separate maintenance owed by a Participant or Beneficiary. No
        amount
        payable under the Plan shall be transferable by operation of law if a
        Participant or Beneficiary becomes bankrupt or insolvent.

      


      10.2 No
        Continued Employment.
        No
        Participant shall have any right to continue in the employ or other service
        of
        the Company or an Affiliate for any period of time or any right to continue
        his
        or her present or any other rate of compensation on account of participation
        in
        the Plan.

      


      10.3 Obligation
        for Benefit Payments.
        Notwithstanding any provision of the Plan to the contrary, the payment of
        Plan
        benefits shall remain the obligation of the Company or the Affiliate that
        employed the Participant. If the Participant’s employer designates an affiliated
        third-party to pay that Participant’s benefits and the third-party’s assets are
        insufficient to pay all Plan benefits, the Participant’s employer shall be
        responsible to pay any deficiency.

      


      10.4 Taxes.
        The
        Company or an Affiliate shall withhold as a condition of payment, or as a
        condition of the crediting of a Deferral or an Award, the amount of any income,
        employment or other taxes required to be withheld under applicable Federal
        or
        state law. Any taxes may be withheld from Accounts at any time or from any
        amount otherwise payable from the Company or an Affiliate to a Participant
        or
        Beneficiary.

      


      ARTICLE
        XI

      


      MISCELLANEOUS

      


      11.1 Termination
        of Plan.

       

      (a) The
        Board
        of Directors shall have the right to terminate the Plan at any time. Plan
        termination shall not reduce the amount payable to Participants and
        Beneficiaries. Upon plan termination:

       

      (1) no
        additional Deferrals or Awards shall be credited to Accounts,

       

      (2) amounts
        then credited to Accounts shall continue to be credited with investment
        experience under Article VI, and 

       

      (3) Plan
        Accounts shall be paid in accordance with outstanding Payment Election Forms
        and
        Article VII.

       

       

      
        
          
          

        

        
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      (b) Notwithstanding
        Section 11(a) above, the Company may elect to make a lump sum payment to
        all
        persons entitled to Plan benefits following plan termination. The amount
        to be
        paid shall equal the payee’s Account balance as of the Valuation Date
        immediately following the plan termination. Payment of Plan benefits can
        be
        accelerated under this Section 11(b) only if all of the conditions are
        satisfied:

       

      (i) all
        arrangements of the same type (as determined under Section 409A) as the Plan
        are
        also terminated with respect to all employees who participate in the
        Plan,

       

      (ii) no
        payments other than those otherwise payable under the terms of the Plan absent
        a
        termination of the Plan are made within twelve months of the Board vote to
        terminate the Plan,

       

      (iii) all
        payments on account of plan termination under this Section 11(b) are made
        within
        twenty-four months of the Board vote to terminate the Plan, and

       

      (iv) the
        Company does not adopt a new arrangement that would be aggregated with the
        Plan
        under Section 409A at any time during the five years following the Board
        vote to
        terminate the Plan.

       

      11.2 Section
        409A.

       

      (a) The
        Plan
        is intended to comply and shall be interpreted and construed in a manner
        consistent with the provisions of Section 409A of the Code. Any Plan provision
        that would cause amounts allocated to an Account to be subject to Federal
        income
        tax prior to payment shall be void as of the Effective Date without the
        necessity of further action by the Board or the Committee.

       

      (b) There
        shall be no acceleration of the time or schedule of any payment under the
        Plan
        except as permitted under Section 409A. Distributions shall not be made to
        an
        employee while employed by the Company except as provided under a timely
        and
        properly filed Payment Election Form (under Section 7.1 above), an Unforeseeable
        Emergency (but only to the extent permitted under Section 7.7), a Change
        of
        Control (but only to the extent allowed under Section 7.8), the Plan’s
        termination (but only to the extent permitted under Section 11.1(b) above)
        or a
        requirement to pay employment related taxes.

       

      (c) There
        shall be no subsequent deferral of the time or schedule of any payment under
        the
        Plan except as allowed under Section 7.5.

       

      (d) All
        references to Section 409A in the Plan shall also refer to Notice 2005-1
        (as
        applicable to periods prior to January 1, 2007) and Treasury regulations
        (as
        applicable to periods after December 31, 2006).

       

      (e) The
        provisions of the Plan shall not apply to the Prior Plan or constitute a
        material modification of the Prior Plan.

       

       

      
        
          
          

        

        
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      11.3 Delay
        in Payment of Plan Benefits.
        

       

      (a) There
        shall be a delay of any payment otherwise required under the Plan if it would
        (i) violate securities laws, or (ii) violate a loan covenant or other
        contractual term to which the Company is a party, and that violation would
        result in material harm to the Company. The delay shall last until the first
        calendar year in which the Company reasonably anticipates that the payment
        would
        not violate these restrictions.

       

      (b) There
        shall be a delay of any payment otherwise required under the Plan if the
        deduction for the payment will be limited or eliminated by Section 162(m)
        of the
        Code. The delay shall last until the first calendar year in which the Company
        reasonably anticipates that the deduction of the payment will not be limited
        or
        eliminated under Section 162(m) or, if earlier, the calendar year in which
        the
        Participant separates from service.

       

      (c) The
        Company shall be entitled to add to the list of events that will result in
        a
        delay of payments under this Section 11.3 to the extent allowed under guidance
        issued by the Treasury or Internal Revenue Service under Section
        409A.

       

      11.4 Inurement.
        The
        Plan shall be binding upon and shall inure to the benefit of the Company,
        each
        Participant and Beneficiary and their respective heirs, executors,
        administrators, successors and assigns.

       

      11.5 No
        Effect on Other Benefits.
        Any
        compensation paid or benefits provided to a Participant shall be in addition
        to,
        and not in lieu of, the benefits provided under the Plan. Nothing in the
        Plan
        shall be construed as limiting, varying or reducing the provision of any
        benefit
        available to a Participant, a Participant’s estate or Beneficiary under any
        employment agreement, retirement plan, including any qualified pension or
        profit-sharing plan, health, disability or life insurance plan or any other
        form
        of agreement or arrangement between the Company, an Affiliate or both, and
        a
        Participant.

       

      11.6 Amendment
        and Modification.

       

      (a) The
        Board
        may amend the Plan in its sole discretion.

       

      (b) The
        Committee may amend the Plan, any Payment Election Form or any ancillary
        form or
        document related to the Plan to facilitate its administration or to comply
        or
        make the Plan consistent with applicable law, including ERISA and the
        Code.

       

      (c) Any
        amendment that reduces the amount credited to an Account shall be effective
        only
        with the affected Participant’s or Beneficiary’s written consent.
        Notwithstanding the foregoing, consent shall not be required if the Board
        or the
        Committee, as the case may be, reasonably determines that an amendment is
        necessary to avoid Federal income taxation on Accounts prior to payment or
        to
        maintain the Plan’s status as an unfunded “top hat” plan under
        ERISA.

       

      (d) No
        amendment shall provide for the payment or notional investment of an Award
        in
        the form of units or shares of common stock issued by the Company or in a
        manner
        otherwise constituting a security or derivative security within the meaning
        of
        Section 16 of the Securities Exchange Act of 1934, as amended.

       

       

      
        
          
          

        

        
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      11.7 Governing
        Law.
        The
        Plan is governed by the internal laws of the Commonwealth of Massachusetts,
        in
        all respects, including matters of construction, validity and
        performance.

       

      11.8 Merger
        or Consolidation.
        The
        obligations and responsibilities of the Company under the Plan shall be assumed
        by any successor or acquirer, and all of the rights, privileges and benefits
        of
        the Participants and Beneficiaries shall continue. This Section 11.8 shall
        apply
        to any merger or a consolidation by the Company with another corporation
        or
        entity, or the acquisition of substantially all of the assets or outstanding
        stock of the Company by another corporation or entity, whether or not it
        qualifies as a Change of Control.

       

      11.9 Entire
        Plan.
        The
        Plan, any written amendments hereto, Payment Election Forms, and each
        designation of a Beneficiary hereunder shall be deemed to contain all the
        terms
        and provisions of the Plan and shall constitute the entire Plan.

       

      The
        Plan
        was approved by the Board of Directors on September 27, 2005, to be effective
        as
        of the date first set forth above.

       

       

       

       

      
        	 	ARIAD
                PHARMACEUTICALS, INC.
	 	 
	 	 
	 	/s/ Harvey J. Berger, M.D
	 	 
	 	By: Harvey
                J. Berger, M.D.
	 	Its: Chairman
                and Chief Executive Officer


      

       

       

       

       


      
        
          
             

          

          
          

        

        
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      EXHIBIT
        A

       

      INITIAL
        PARTICIPANTS

       

      Set
        forth
        below are the individuals who shall be deemed Participants in the Plan as
        of the
        Effective Date:

       

       

      Laurie
        Allen

       

      Camille
        Bedrosian 

       

      David
        Berstein 

       

      Joseph
        Bratica

       

      Timothy
        Clackson 

       

      David
        Dalgarno 

       

      Edward
        Fitzgerald 

       

      John
        Iuliucci

       

      Maryann
        Krane 

       

      Jay
        LaMarche 

       

      Thomas
        Pearson 

       

      Tomi
        Sawyer

       

      
 

      
        
          
          

        

        
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