EXHIBIT 10.1

Inspire Pharmaceuticals, Inc.

Executive Change in Control

Severance Benefit Plan

Effective March 29, 2008

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Preamble

Inspire Pharmaceuticals, Inc. (the “Company”) established the Inspire
Pharmaceuticals, Inc. Executive Change in Control Severance Benefit Plan (this
“Plan”) for the purpose of providing severance benefits to certain Executives
whose employment terminates following a Change in Control of the Company as
provided herein. This Plan constitutes a formal employee welfare benefit plan
under the Executive Retirement Income Security Act of 1974, as amended
(“ERISA”).

This Plan, as set forth herein, is intended to help retain qualified executives,
maintain a stable work environment, and alleviate in part or in full financial
hardships that may be experienced by certain of those Executives of the Company
and its U.S. affiliated companies, whose employment is terminated for certain
reasons. In essence, benefits under this Plan are intended to be supplemental
unemployment benefits. This Plan is not intended to be included in the
definitions of “employee pension benefit plan” and “pension plan” set forth
under Section 3(2) of ERISA as a “severance pay arrangement” within the meaning
of Section 3(2)(b)(i) of ERISA. Rather, this Plan is intended to meet the
descriptive requirements of a plan constituting a “severance pay plan” within
the meaning of regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations, Section 2510.3-2(b).

This Plan shall continue until such time as it is amended or terminated in
accordance with Article VI.

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TABLE OF CONTENTS

 

          Page ARTICLE I DEFINITIONS    1 ARTICLE II PARTICIPATION AND
ELIGIBILITY FOR BENEFITS    4

Section 2.01

  

Eligibility.

   4

Section 2.02

  

Termination of Eligibility for Benefits

   5

Section 2.03

  

General Release

   5

Section 2.04

  

Noncompete, Nonsolicit, and Confidentiality

   5 ARTICLE III BENEFITS    5

Section 3.01

  

Amount of Severance Pay

   5

Section 3.02

  

Health and Welfare Benefits

   6

Section 3.03

  

Acceleration of Vesting

   6

Section 3.04

  

Outplacement Services

   6

Section 3.05

  

Legal Fees and Expenses

   6

Section 3.06

  

Reduction for Other Payments; Offsets

   6

Section 3.07

  

Excess Parachute Payments

   7 ARTICLE IV METHOD OF SEVERANCE PAYMENTS    7

Section 4.01

  

Method of Payment

   7 ARTICLE V THE ADMINISTRATIVE COMMITTEE    8

Section 5.01

  

Authority and Duties

   8

Section 5.02

  

Payment

   8 ARTICLE VI AMENDMENT AND TERMINATION    8 ARTICLE VII CLAIMS PROCEDURES   
8

Section 7.01

  

Claim

   8

Section 7.02

  

Appeals of Denied Claims for Benefits

   9 ARTICLE VIII MISCELLANEOUS    9

Section 8.01

  

Nonalienation of Benefits

   9

Section 8.02

  

No Contract of Employment

   10

Section 8.03

  

Severability of Provisions

   10

Section 8.04

  

Heirs, Assigns, and Personal Representatives

   10

Section 8.05

  

Headings and Captions

   10

Section 8.06

  

Number

   10

Section 8.07

  

Unfunded Plan

   10

Section 8.08

  

Payments to Incompetent Persons, Etc.

   10

Section 8.09

  

Lost Payees

   10

Section 8.10

  

Controlling Law

   10

 

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ARTICLE I

DEFINITIONS

When used herein, the following terms shall have the meanings set forth below.

Section 1.01 “Administrative Committee” means the Compensation Committee of the
Board of Directors of the Company or its designee.

Section 1.02 “Annual Base Rate of Pay” means the Executive’s highest annual base
rate of pay for the calendar year.

Section 1.03 “Benefits” means the cash and in kind benefits that a Participant
is eligible to receive pursuant to Article III of this Plan.

Section 1.04 “Board” means the Board of Directors of Inspire.

Section 1.05 “Cause” means (i) the deliberate and continued failure by the
Executive to devote substantially all the Executive’s business time and best
efforts to the performance of the Executive’s duties after a demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Executive has not substantially
performed such duties; (ii) the deliberate engaging by the Executive in gross
misconduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise, including but not limited to fraud or embezzlement by
the Executive; or (iii) the Executive’s conviction (or entering into a plea
bargain admitting guilt) of any felony. For the purposes of this Plan, no act,
or failure to act, on the part of the Executive shall be considered “deliberate”
unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that such action or omission was in the best interests
of the Company. In the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect
unless the Company establishes to the Administrative Committee by clear and
convincing evidence that Cause exists.

Section 1.06 “Change in Control” means the determination (which may be made
effective as of a particular date specified by the Board) by the Board, made by
a majority vote that a change in control has occurred, or is about to occur.
Such a change shall not include, however, a restructuring, reorganization,
merger or other change in capitalization in which the Persons who own an
interest in Inspire on the date hereof (the “Current Owners”) (or any individual
or entity which receives from a Current Owner an interest in the Company through
will or the laws of descent and distribution) maintain more than a fifty percent
(50%) interest in the resultant entity. Regardless of the vote of the Board or
whether or not the Board votes, a Change in Control will be deemed to have
occurred as of the first day any one (1) or more of the following subsections
shall have been satisfied:

(a) Any Person becomes the beneficial owner, directly or indirectly, of
securities of Inspire representing more than thirty-five percent (35%) of the
combined voting power of Inspire’s then outstanding securities; or

(b) The stockholders of Inspire approve:

(i) A plan of complete liquidation of Inspire;

 

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(ii) An agreement for the sale or disposition of all or substantially all of
Inspire’s assets; or

(iii) A merger, consolidation or reorganization of Inspire with or involving any
other entity, other than a merger, consolidation or reorganization that would
result in the voting securities of Inspire outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the combined voting power of the voting securities of Inspire (or such surviving
entity) outstanding immediately after such merger, consolidation or
reorganization.

However, in no event shall a Change in Control be deemed to have occurred, with
respect to the Executive, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall be deemed
“part of the purchasing group” for purposes of the preceding sentence if the
Executive is an equity participant or has agreed to become an equity participant
in the purchasing entity or group (except for (i) passive ownership of less than
five percent (5%) of the voting securities of the purchasing entity; or
(ii) ownership of equity participation in the purchasing entity or group which
is otherwise deemed not to be significant, as determined prior to the Change in
Control by a majority of the non-employee continuing Directors of the Board).

Section 1.07 “Company” means Inspire Pharmaceuticals, Inc. and its successors
and its or their U.S. affiliated companies.

Section 1.08 “Disability” means a total and permanent disability as defined in
the Company’s long-term disability plan.

Section 1.09 “Executive” means any officer of the Company who is subject to
Section 16 of the Securities Exchange Act of 1934, as amended, immediately prior
to a Change in Control of the Company.

Section 1.10 “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.

Section 1.11 “Inspire” means Inspire Pharmaceuticals, Inc.

Section 1.12 “Participant” means any Executive eligible for Benefits in
accordance with Article II.

Section 1.13 “Person” shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) Inspire or
any of its subsidiaries; (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of Inspire or any of its subsidiaries; (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities; (iv) a corporation owned, directly or indirectly, by the
shareholders of Inspire in substantially the same proportions as their ownership
of stock of the Company; or (v) an entity or entities which

 

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are eligible to file and have filed a Schedule 13G under Rule 13d-l(b) of the
Securities Exchange Act of 1934, as amended, which Schedule indicates beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of common
stock of Inspire or the combined voting power of Inspire’s then outstanding
securities.

Section 1.14 “Plan” means this Inspire Pharmaceuticals, Inc. Executive Change in
Control Severance Benefit Plan, as set forth herein, and as the same may from
time to time be amended.

Section 1.15 “Plan Year” means for the first Plan Year, the period commencing on
March 29, 2008 and ending on December 31, 2008, and for each subsequent Plan
Year, the period commencing on each January 1 during which this Plan is in
effect and ending on the subsequent December 31.

Section 1.16 “Target Incentive Bonus” means the target incentive bonus
applicable to the Executive under the Company’s primary annual performance
incentive plan for any given performance measuring period that is equal to a
year.

Section 1.17 “Termination Due to Change in Control” means a termination of an
Executive’s employment by the Company (or the Executive’s Voluntary Resignation
for Good Reason) within two (2) years following a Change in Control.
“Termination Due to Change of Control” shall also include the termination of the
Executive by the Company prior to a Change of Control at the direction of, or in
concert with, a person or entity that becomes in a position to control at least
fifty percent (50%) of the voting power of the Company immediately following the
Change of Control.

Section 1.18 “Voluntary Resignation for Good Reason” means the occurrence of any
one of the following events:

(a) the assignment to the Executive by the Company of any duties inconsistent
with the Executive’s status as an executive officer of the Company or a
substantial adverse alteration in the nature or status of the Executive’s
responsibilities or position from those in effect immediately prior to the
Change in Control;

(b) a reduction by the Company in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time
except for (i) across-the-board salary reductions similarly affecting all
salaried employees of the Company or (ii) across-the-board salary reductions
similarly affecting all senior executive officers of the Company and all senior
executives of any Person in control of the Company;

(c) the relocation of the Executive’s principal place of employment to a
location more than fifty (50) miles from the Executive’s principal place of
employment immediately prior to the Change in Control (unless such relocation is
closer to the Executive’s principal residence) or the Company’s requiring the
Executive to be based anywhere other than such principal place of employment (or
permitted relocation thereof that is closer to the Executive’s principal
residence) except for required travel on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations as
they existed immediately prior to the Change in Control;

 

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(d) the failure by the Company, to pay to the Executive any portion of the
Executive’s current compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation program of
the Company, within seven (7) days of the date such compensation is due;

(e) the failure by the Company to continue in effect any compensation plan in
which the Executive participates immediately prior to the Change in Control
which is material to the Executive’s total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive’s participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive’s participation
relative to other participants, as existed immediately prior to the Change in
Control; or

(f) the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of
the Company’s savings, life insurance, medical, health and accident, or
disability plans in which the Executive was participating immediately prior to
the Change in Control, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the time of
the Change in Control, or the failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is entitled on the
basis of the higher of the agreed upon vacation days set forth in the terms and
conditions of the Executive’s employment with the Company or the Executive’s
years of service with the Company in accordance with the Company’s normal
vacation policy in effect at the time of the Change in Control;

Notwithstanding anything herein to the contrary, (i) the Executive’s agreement
that any circumstances will not result in a Voluntary Resignation for Good
Reason shall not be effective unless it is made in a signed written document
that specifically references Section 1.18 of this Plan; and (ii) an alteration
of the Executive’s title without any other changes to the Executive’s
responsibilities or position, shall not be sufficient to give rise to Voluntary
Resignation for Good Reason.

ARTICLE II

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

Section 2.01 Eligibility.

(a) Except as otherwise provided in this Plan, each Executive who experiences a
Termination Due to Change in Control shall be eligible for Benefits under this
Plan in accordance with the provisions set forth herein.

(b) Notwithstanding anything herein to the contrary, the Executive shall not be
entitled to any Benefit under this Plan, if his or her termination of employment
is caused by:

(i) A termination by the Company for Cause;

(ii) Death;

 

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(iii) Disability; or

(iv) The Executive’s voluntary termination that is not a Voluntary Termination
for Good Reason.

Section 2.02 Termination of Eligibility for Benefits. A Participant shall cease
to participate in this Plan, and all Benefits shall cease (other than those
Benefits that have vested or been triggered hereunder) upon the occurrence of
the earliest of:

(a) Termination of this Plan more than one (1) year prior to a Change in
Control; and

(b) Completion of payment to the Participant of the Benefits for which the
Participant is eligible.

Section 2.03 General Release. Notwithstanding anything in this Plan to the
contrary, unless determined otherwise by the Administrative Committee in its
sole discretion, no Benefits shall be due or paid under this Plan to any
Executive, unless the Executive executes (and does not rescind) a written
general release, in the form attached hereto as Exhibit A.

Section 2.04 Noncompete, Nonsolicit, and Confidentiality. Notwithstanding
anything in this Plan to the Contrary, Executive shall forfeit any and all
unpaid Benefits under this Plan if he or she breaches any noncompete,
nonsolicit, confidentiality or similar agreement that he or she has entered into
with the Company.

ARTICLE III

BENEFITS

Section 3.01 Amount of Severance Pay. The amount of severance pay payable to a
Participant shall be equal to the applicable multiplier set forth in the chart
below multiplied by the sum of:

(a) the Executive’s highest of the Annual Base Rate of Pay for the calendar year
in which his or her Termination Due to Change in Control occurs or any of the
two calendar years immediately preceding such year; plus

(b) the higher of the Executive’s Target Incentive Bonus applicable as of the
date of (i) the Change in Control or (ii) his or her Termination Due to Change
in Control.

 

Position (Level)

   Multiplier

Chief Executive Officer

   2.5

Executive Vice President and Chief Financial Officer

   2.0

Senior Vice President

   1.5

 

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Section 3.02 Health and Welfare Benefits. For the number of years immediately
following the Executive’s termination date equal to the applicable multiplier
set forth in Section 3.01 above, the Company shall arrange to provide the
Participant (which includes the Participant’s eligible dependents for purposes
of this Section) with life, disability, accident and health insurance benefits
substantially similar to those which the Participant was receiving immediately
prior to the Date of Termination (or, with respect to any benefit, immediately
prior to the Change in Control, if such benefit was of greater value at that
time); provided, however, that, unless the Participant expressly consents to a
different method in writing by reference to this Section 3.02 of this Plan, such
health insurance benefits shall be provided through a third-party insurer.
Benefits otherwise receivable by the Participant pursuant to this Section 3.02
shall be eliminated prospectively in the event that, and at the time that,
comparable benefits (including continued coverage for any preexisting medical
condition of any person covered by the benefits provided to the Participant and
his or her eligible dependents immediately prior to a notice of Termination Due
to Change in Control) are actually received by or made available to the
Participant by a subsequent employer without cost during such period (and any
such benefits actually received by or made available to the Participant shall be
reported to the Company by the Participant). The applicable benefit continuation
period for the Participant and the Participant’s qualifying dependents under the
Consolidated Omnibus Budget Reconciliation Act of 1984, as amended, shall
commence at the expiration of the period of continued benefits referenced above
in this Section 3.02. To the extent that the provision of any of the in kind
benefits in this Section 3.02 would result in the imposition of excise tax under
Section 409A of the Code, the Company shall pay the Executive the fair market
value of such benefit in cash in accordance with Section 4.01(a) of this Plan.

Section 3.03 Acceleration of Vesting. Notwithstanding anything in this Plan or
in any Company-sponsored equity compensation plan to the contrary, all
outstanding unvested options and awards under any Company-sponsored equity
compensation grant held by any Executive shall become immediately vested and
fully exercisable immediately prior to a Change in Control. Notwithstanding
anything in any such equity compensation plan to the contrary, in the event of a
Change in Control, all outstanding options under any such plan shall remain
exercisable for the lesser of three (3) years or the period of time remaining in
the term of the option.

Section 3.04 Outplacement Services. The Company shall provide each Participant
with outplacement services for a period of twelve (12) months following a
Termination Due to Change in Control.

Section 3.05 Legal Fees and Expenses. The Company also shall reimburse all
reasonable legal fees and expenses incurred by the Participant in disputing any
issue hereunder in a good faith attempt to obtain or enforce any benefit or
right provided by this Plan.

Section 3.06 Reduction for Other Payments; Offsets. The Benefits payable
hereunder to any Participant shall be reduced by any and all payments required
to be made by the Company or its affiliates under federal, state, and local law,
under any employment agreement or special severance arrangement or under any
other separation policy, plan, or program. The Benefits payable hereunder to any
Participant shall also be reduced by (i) any benefits previously paid to such
Participant under this or any other separation or severance plan sponsored by
the Company with respect to any periods of service with respect to which
Benefits are being paid under this Plan; and (ii) any and all amounts that the
Participant owes to the Company or an affiliate.

 

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Section 3.07 Excess Parachute Payments. Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Plan or otherwise) (each, a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to the excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then:

(a) If the total of such Payments to the Executive, exceeds 2.99 times the
Executive’s “base amount” as defined in Section 280G of the Code by more than
ten (10) percent, then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive 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 Excise Tax imposed on
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments; or

(b) If the total of such Payments to the Executive, exceeds 2.99 times the
Executive’s “base amount” as defined in Section 280G of the Code by ten
(10) percent or less, then the cash severance payments payable under this Plan
shall be reduced to the maximum amount that would be payable without subjecting
the Executive to the excise tax imposed by Section 4999 of the Code.

ARTICLE IV

METHOD OF SEVERANCE PAYMENTS

Section 4.01 Method of Payment. The severance benefits to which a Participant is
entitled under Sections 3.01, 3.02, 3.03, 3.04 and 3.07, shall be paid or
delivered in accordance with the provisions of this Article IV.

(a) To the extent that cash payments to be made to an Executive exceed the
lesser of two (2) times the compensation limit established by Section 401(a)(17)
of the Internal Revenue Code, as amended or two (2) times the Executive’s
compensation (as defined for purposes of the involuntary separation exception to
Section 409A of the Code), such cash payments shall be made in a single sum cash
payment but shall be delayed for a period of six months following the
Executive’s termination of employment. During such six-month delay such payments
shall earn interest at the applicable prime rate of interest in effect at the
beginning of the delay as published in the Wall Street Journal. Cash payments
that do not exceed the limits described above in this paragraph shall be made in
a single lump sum within ten (10) business days immediately following the
expiration of the applicable revocation period described in paragraph (c) of
this Section below.

 

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(b) Payment shall be made in person, by certified mail to the last address
provided by the Participant to the Company or, at the request of the
Participant, by deposit to a bank account identified by the Participant.
Separate payment(s) shall be made to pay any earned and unused vacation pay for
the year during which the Employment Termination Date occurs.

(c) Notwithstanding anything herein to the contrary, no Benefits under this Plan
shall be made prior to the execution of the release required under Section 2.03,
and the expiration of the required release revocation period, but in no event
later than ten (10) business days immediately following the expiration of the
applicable revocation period.

ARTICLE V

THE ADMINISTRATIVE COMMITTEE

Section 5.01 Authority and Duties. Prior to the occurrence of a Change in
Control, the Administrative Committee shall have the full power, authority, and
discretion to construe, interpret, and administer this Plan, to correct
deficiencies therein, and to supply omissions; provided that in doing so it acts
in the best interests of Participants and in a manner consistent with the terms
of this Plan. Notwithstanding anything herein to the contrary, after a Change in
Control occurs, neither the Administrative Committee nor any other entity shall
have discretion in administering, construing, or interpreting this Plan.

Section 5.02 Payment. The Company shall make payments of Benefits, in such
amount as provided under Article III, from its general assets to Participants in
accordance with the terms of this Plan.

ARTICLE VI

AMENDMENT AND TERMINATION

Prior to the occurrence of a Change in Control, this Plan may be amended,
suspended, discontinued, or terminated at any time by the Board or its designee,
in whole or in part, for any reason, and without either the consent of or the
prior notification to any Participant. Notwithstanding the foregoing, no such
amendment shall become effective to the extent that it adversely affects a
Participant if a Change in Control occurs within one (1) year after the later of
the effective date of such amendment or the date such amendment is adopted. Upon
the occurrence of a Change in Control and for a period of twenty-four
(24) months thereafter, the Plan, as it applies to any Participant, may only be
amended by the Board or its designee with the express written consent of such
affected Participant. In no event shall any amendment or termination of this
Plan that is adopted or becomes effective after a Participant experiences a
Termination Due to Change in Control adversely affect the benefits and rights to
which such Participant is or may become entitled hereunder.

ARTICLE VII

CLAIMS PROCEDURES

Section 7.01 Claim. Each eligible terminated Executive may contest the
administration of Benefits by completing and filing with the Administrative
Committee a written request for review in the manner specified by the
Administrative Committee. Each such application must be filed within sixty
(60) days following the Executive’s termination of employment and must be
supported by such information as the Administrative Committee deems relevant and
appropriate.

 

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Section 7.02 Appeals of Denied Claims for Benefits. In the event that any claim
for benefits is denied in whole or in part, the claimant whose claim has been so
denied shall be notified of such denial by the Administrative Committee within
ninety (90) days of receipt of the claim (unless the Administrative Committee
determines that special circumstances require an extension of time of up to an
additional ninety (90) days for processing the claim). The notice advising of
the denial shall specify the reason(s) for denial, make specific reference to
relevant Plan provisions, describe any additional material or information
necessary for the claimant to perfect the claim (explaining why such material or
information is needed), and shall advise the claimant of the procedure for the
appeal of such denial and a statement of the claimant’s right to bring a civil
action under Section 502(a) of ERISA following an adverse benefit determination
on appeal. All appeals shall be made by the following procedure:

(a) A claimant whose claim has been denied shall file with the Administrative
Committee a notice of desire to appeal the denial. Such notice shall be filed
within sixty (60) days of notification by the Administrative Committee of the
initial claim denial, be made in writing, and set forth all of the facts upon
which the appeal is based. Appeals not timely filed shall be barred.

(b) The Administrative Committee shall consider the merits of the claimant’s
written presentations, the merits of any facts or evidence in support of the
denial of benefits, and such other facts and circumstances as the Administrative
Committee shall deem relevant.

(c) The Administrative Committee shall render a determination upon the appealed
claim within sixty (60) days of its receipt of such appeal (unless the
Administrative Committee determines that special circumstances require an
extension of time of up to an additional sixty (60) days for processing the
appeal). The determination shall specify the reason(s) for the denial, make
specific reference to relevant Plan provisions, and contain a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA.

(d) The determination so rendered shall be binding upon all parties.

No Executive may bring a civil action under Section 502(a) of ERISA until the
Executive has exhausted his or her rights under this Section 7.02.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Nonalienation of Benefits. None of the payments, benefits, or
rights of any Participant shall be subject to any claim of any creditor, and, in
particular, to the fullest extent permitted by law, all such payments, benefits
and rights shall be free from attachment, garnishment, trustee’s process, or any
other legal or equitable process available to any creditor of such Participant.
No Participant shall have the right to alienate, anticipate, commute, plead,
encumber, or assign any of the benefits or payments which he/she may expect to
receive, contingently or otherwise, under this Plan.

 

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Section 8.02 No Contract of Employment. Neither the establishment of this Plan,
nor any modification thereof, nor the creation of any fund, trust or account,
nor the payment of any benefits shall be construed as giving any Participant or
Executive, or any person whosoever, the right to be retained in the service of
the Company, and all Participants and other Executives shall remain subject to
discharge to the same extent as if this Plan had never been adopted.

Section 8.03 Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.

Section 8.04 Heirs, Assigns, and Personal Representatives. This Plan shall bind
any successor of the Company, its assets or its businesses in the same manner
and to the same extent that the Company would be obligated under this Plan as if
no succession had taken place. The term “Company” as used in this Plan, shall
mean and refer to the Company as heretofore defined and any successor or
assignee to the business or assets which by reason of a Change in Control
becomes bound by this Plan

Section 8.05 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.

Section 8.06 Number. Except where otherwise clearly indicated by context, the
singular shall include the plural, and vice-versa.

Section 8.07 Unfunded Plan. This Plan shall not be funded. No Participant shall
have any right to, or interest in, any assets of the Company that may be applied
by the Company to the payment of Benefits.

Section 8.08 Payments to Incompetent Persons, Etc. Any benefit payable to or for
the benefit of a minor, an incompetent person or other person incapable of
receipting therefor shall be deemed paid when paid to such person’s guardian or
to the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Company, the Administrative
Committee and all other parties with respect thereto.

Section 8.09 Lost Payees. Benefits shall be deemed forfeited if the
Administrative Committee is unable to locate a Participant to whom Benefits are
due. Such Benefits shall be reinstated if application is made by the Participant
for the forfeited Benefits within one (1) year of the Participant’s employment
termination date and while this Plan is in operation.

Section 8.10 Controlling Law. This Plan shall be construed and enforced
according to the laws of the State of North Carolina to the extent not
superseded by federal law.

 

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Inspire Pharmaceuticals, Inc.

Executive Change in Control Severance Benefit Plan

Exhibit A

(General Release)

This General Release (“General Release”) is entered into by and between Inspire
Pharmaceuticals, Inc. (the “Company”) and [FULL NAME of EXECUTIVE] (the
“Executive”).

WHEREAS, the Company has provided written notification to the Executive that
his/her employment with the Company has or will be terminated effective
[Termination Date];

WHEREAS, as a result of the termination of the Executive’s employment and
subject to the Executive’s execution of this General Release, the Executive is
entitled to a severance payment under the Inspire Pharmaceuticals, Inc.
Executive Change in Control Severance Benefit Plan (the “Severance Plan”);

WHEREAS, the Executive desires to execute this General Release and, thereby,
become eligible for receipt of severance benefits and, through this General
Release, the Company and the Executive also wish to resolve, finally and
completely and with prejudice, any and all matters between them relating to the
Executive’s employment with the Company and the termination of that employment;

NOW, THEREFORE, in consideration of the above recitals and the mutual promises
and covenants set forth below, the Company and the Executive, intending to be
legally bound hereby, agree as follows:

1. In exchange for the Executive’s execution of this General Release, the
Executive is eligible to receive benefits under the Severance Plan.

2. The Executive expressly agrees that, except as specifically provided in
Section 1 above and as contemplated under the Severance Plan, he/she shall
receive no other payment or benefit from the Company, and the Company shall not
ever be required to make any further payment or provide any further benefit, for
any reason whatsoever, to him/her or to any person or entity regarding any claim
or right whatsoever which might possibly be asserted by him/her or on the
Executive’s behalf. The Executive acknowledges that he/she would not be entitled
to the severance payment described herein merely upon the termination of the
Executive’s employment with the Company without the benefit of this General
Release and he/she acknowledges that the severance payment is sufficient
consideration for the Executive’s execution of this General Release.

3. The Executive, on behalf of himself/herself, his/her heirs, executors,
administrators, successors, and assigns, hereby expressly and unconditionally
releases, revises, settles, compromises, and forever discharges the Company, its
affiliates, partners, employees,

 

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representatives, employee benefit plans, funds, programs, or arrangements
providing pension, welfare, and fringe benefits, trustees, plan administrators,
attorneys, agents, and successors, and/or assigns, jointly and individually, of
and from any and all possible suits, claims, rights, demands, costs, actions,
causes of action, obligations, damages, and liabilities (“claims”) whether known
or unknown and of whatever kind or nature, which arose on or before the
effective date of this General Release, arising out of or in any way related to,
or as a consequence of, the Executive’s employment with the Company, the terms
and conditions of that employment, and the termination of his/her employment
with the Company, as well as the continuing effects thereof. This release
includes, but is not limited to, (i) all claims under any possible legal,
equitable, tort, contract, common law, or statutory theory, including, but not
limited to, any claim for constructive or wrongful discharge or for breach of
contract, and any claim for defamation; (ii) all claims under any possible
statutory theory, including, but not limited to, any and all claims under Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1990, 42 U.S.C.
§§ 1981, 1983, 1985 and 1988, the Age Discrimination in Employment Act of 1967,
the Older Workers Benefit Protection Act, the Americans with Disabilities Act,
any state human rights or human relations act and any amendments to any of these
statutes, as well as any other federal, state, or local law, statute, ordinance,
regulation, or executive order, prohibiting employment discrimination based on
religion, sex, ethnicity, race, color, national origin, handicap, disability,
age, retaliation, or any other characteristic proscribed by law; (iii) all
claims under the Fair Labor Standards Act, the Equal Pay Act of 1963, the
Executive Retirement Income Security Act of 1974, any wage payment and
collection law, and the federal and any state or local Family and Medical Leave
Act; and (iv) all claims for the fees, costs, and expenses of any and all
attorneys who have at any time or are now representing the Executive in
connection with this General Release or in connection with any matter released
by him/her. The Executive also covenants that, to his/her knowledge, he/she has
not sustained any work-related injury during his/her employment at the Company.

4. The Executive also represents that he/she has not previously filed or joined
in any complaint, charge, or lawsuit against the Company or any of its partners
or employees in any court of law or with any governmental agency on any of the
claims mentioned above. Notwithstanding any other language in this General
Release, the Executive understands that this General Release does not prohibit
him/her from filing an administrative charge of alleged employment
discrimination with the Equal Employment Opportunity Commission or any similar
agency. The Executive, however, waives the Executive’s right to any monetary or
other recovery against the Company or any of the released persons or entities
should any federal, state, or local administrative agency pursue any claim on
the Executive’s behalf arising out of or relating to the Executive’s employment
with the Company or the termination of the Executive’s employment with the
Company.

5. Nothing in this General Release affects the Executive’s right to elect, at
the Executive’s sole expense, continued coverage under the Company’s Welfare
Benefit Plan pursuant to the continuation coverage provisions of the
Consolidated Omnibus Budget Reconciliation Act.

6. The Executive agrees that the Company’s entry into this General Release is
not to be construed as, and is not, an admission that the Company violated any
of its duties or obligations to the Executive or treated the Executive
improperly, unlawfully, or unfairly in any

 

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manner whatsoever. Neither this General Release nor the implementation thereof
shall be construed to be, or shall be admissible in any proceedings as, evidence
of an admission by the Company of any violation of or failure to comply with any
federal, state, or local law, common law, agreement, rule, regulation, or order;
the preceding portion of this sentence does not preclude introduction of this
General Release by the Company to establish that any and all claims which the
Executive might possibly have were settled, compromised, and released according
to the terms of this General Release.

7. Except as required by law, the Executive agrees to keep confidential and not
discuss, disclose, or reveal, directly or indirectly, the terms of this General
Release to any person, corporation, or entity with the exception of the members
of the Executive’s immediate family, the Executive’s attorney, or the
Executive’s accountant who (prior to disclosure to them) shall likewise agree to
maintain the confidentiality of this General Release.

8. The Executive understands and agrees that the terms and conditions of this
General Release constitute the full and complete understandings, agreements, and
promises between him/her and the Company with respect to all matters covered by
this General Release, that there are no other agreements, covenants, promises,
or arrangements between him/her and the Company other than those set forth
herein, that the terms and conditions of this General Release cancel and
supersede any prior agreements or understandings that may have been between
him/her and the Company with respect to all matters covered by this General
Release, that no other promise or inducement has been offered to him/her except
as set forth herein, and that this General Release is binding upon him/her, the
Executive’s heirs, executors, administrators, and assigns. Notwithstanding any
language herein to the contrary, this General Release does not cancel or suspend
the Employee Confidentiality, Invention Assignment and Non-Compete Agreement (or
any other agreement(s) serving similar functions) entered into by and between
the Company and the Executive.

9. If any term, condition, clause, or provision of this General Release shall be
determined by a court of competent jurisdiction to be void or invalid at law, or
for any other reason, then only that term, condition, clause, or provision as is
determined to be void or invalid shall be stricken from this General Release,
and this General Release shall remain in full force and effect in all other
respects. The Executive expressly agrees that this General Release shall not be
construed against the Company and that it shall be governed by North Carolina
law.

10. The Executive hereby expressly warrants that he/she was advised in writing
of the Executive’s right to consult with an attorney prior to executing this
General Release. The Executive further expressly warrants that he/she has, in
fact, had the opportunity to consult with, and to be advised by, an attorney
before executing this General Release to help him/her fully understand and
appreciate its legal effect. The Executive acknowledges that he/she has been
afforded the opportunity to consider this General Release for a period of
twenty-one (21) days, which is a reasonable period of time. If the Executive
signs this General Release in less than twenty-one (21) days, he/she
acknowledges that he/she has thereby waived the Executive’s right to the full
twenty-one (21) day period. The Executive shall have a period of seven (7) days
following the Executive’s execution of this General Release to revoke it, and
this General Release shall not be effective or enforceable prior to the
expiration of that period. Revocation can be made by delivering a written notice
to the office of the Director of Human Resources of

 

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the Company. The revocation of this General Release by the Executive will
automatically revoke the Company’s obligation to pay the severance benefit to
the Executive. If the Executive does not advise the Company in writing that
he/she revokes this General Release within seven (7) days of the Executive’s
execution of it, this General Release shall be forever enforceable. The eighth
(8th) day following the Executive’s execution of this General Release shall be
deemed the Effective Date of this General Release.

11. This General Release may be signed in two (2) counterparts, each of which
shall be deemed an original when signed and shall constitute the same
instrument. The Company shall retain Counterpart No. 1 of this General Release
and the Executive shall retain Counterpart No. 2 of this General Release.

THE EXECUTIVE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THE FOREGOING GENERAL
RELEASE, THAT HE/SHE UNDERSTANDS COMPLETELY ITS CONTENTS, THAT HE/SHE
UNDERSTANDS THE SIGNIFICANCE AND CONSEQUENCE OF SIGNING IT, AND THAT HE/SHE
INTENDS TO BE LEGALLY BOUND BY ITS TERMS. THE EXECUTIVE FURTHER ACKNOWLEDGES
THAT HE/SHE HAS HAD A REASONABLE AND SUFFICIENT PERIOD OF TIME WITHIN WHICH TO
CONSIDER THIS GENERAL RELEASE AND THAT HE/SHE HAS HAD THE OPPORTUNITY TO REVIEW
THIS GENERAL RELEASE WITH COUNSEL. THE EXECUTIVE SWEARS THAT HE/SHE HAS AGREED
TO AND SIGNED THIS GENERAL RELEASE VOLUNTARILY AND AS HIS/HER OWN FREE WILL,
ACT, AND DEED, AND FOR FULL AND SUFFICIENT CONSIDERATION.

IN WITNESS WHEREOF, INSPIRE PHARMACEUTICALS, INC. and [FULL NAME OF EXECUTIVE]
have caused this General Release to be executed this day      of             .

 

 

[FULL NAME OF EXECUTIVE]

 

 

INSPIRE PHARMACEUTICALS, INC.

 

By:  

 

Title:  

 

 

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