Document:

Exhibit 10.7

 

Execution copy

 

AXCELIS TECHNOLOGIES, INC.

 

EXECUTIVE SEPARATION AGREEMENT

 

THIS EXECUTIVE SEPARATION
AGREEMENT, dated as of July1, 2005, is made by and between Axcelis
Technologies, Inc. (hereinafter referred to as the “Company”) and David W.
Duff  (hereinafter referred to as “Executive”).  In consideration of the mutual covenants
contained herein, the parties agree as follows:

 

1.             Termination
of Active Employment; Separation Period.  
Executive’s active employment with the Company will terminate not later
than Friday, July 29, 2005 (the “Separation Commencement Date”).  During the period from July 30, 2005 through
April 28, 2006, Executive will continue to provide services to the Company on a
part time basis from his home office.  
As described in Section 2, Executive will receive the salary
continuation and benefits during the period following the Separation
Commencement Date and ending Friday, April 28, 2006 (the “Separation Period”).  It is understood that Executive may accept
employment with a third party during the Separation Period.  During the Separation Period, the Executive
shall:

 

1.1.          engage
in special projects mutually agreed upon with the Chief Executive Officer;

 

1.2.          cooperate
with the reasonable requests of the Company to support the transition of the
Executive’s duties to other Company personnel; and

 

1.3.          continue
to be an employee to the extent necessary to provide the benefits described in
Section 2.

 

 At the end of the Separation Period, all
aspects of Executive’s employment shall terminate (the Termination Date”).

 

2.             Termination
Compensation.

 

2.1.          Axcelis
Time Management (ATM).  Executive
will receive a lump sum amount for his ATM balance, following the commencement
of the Separation Period (ATM will cease to accrue as of the commencement of
the Separation Period).

 

2.2.          Salary
Continuation.  The Company will pay
Executive, on a salary continuation basis, Executive’s base salary at the
Separation Commencement Date during the Separation Period, less legally
required payroll tax deductions and the elective deductions referred to in
Section 2.4.

 

 

2.3.          Benefits.  Attachment
A sets forth detailed information on the impact of Executive’s
separation on Company-provided benefits. 
During the Separation Period, the Company shall:

 

(a)           Allow
Executive to continue to contribute to the Company’s 401(k) Plan, (the
Executive shall receive any contribution that may be made by the Company to his
account) to the extent permissible under the Plan and applicable law and
maintain Executive’s status as employed for the purposes of the Eaton Cash
Balance Plan, if applicable;

 

(b)           Allow
Executive to continue to participate in the Company’s Employee Stock Purchase
Plan in accordance with plan terms, subject to the applicable deductions from
the payments under Section 2.1 to reflect such participation;

 

(c)           Allow
Executive to continue to vest in his stock options until the Termination Date
and to exercise any vested options until the Termination Date and for 90 days
thereafter, to the extent so provided in the option;

 

(d)           Continue
Executive’s participation in the medical and dental plans (including the Mass
General Hospital Executive Registry Program) selected by Executive prior to the
Separation Commencement Date, subject to the applicable deductions from the
payments under Section 2.1 to reflect such participation (Executive will cease
to be covered by the Company’s short and long term disability insurance
Company-provided life insurance upon the Separation Commencement Date);

 

(e)           Continue
to afford the Executive the privileges afforded under the “Executive Tax
Preparation and Financial Planning Program” subject to the limits outlined in
the program overview document;

 

(f)            The
Company agrees to allow the Executive to retain the laptop computer used by him
during the Separation Period;

 

(g)           The
Company agrees to allow Executive to maintain email during his Separation
Period or until Executive finds other employment; and

 

(h)           The
Company agrees to give the mobile phone to the Executive and pay the Executive
a lump sum amount to cover cell phone premiums at his plan level (but not more
than $99 per month) covering the Separation Period.

 

2.4.          Outplacement
Services.  At the request of
Executive, the Company will pay up to $12,500 for an outplacement service for
services rendered in assisting Executive in locating other employment.  These payments are contingent upon Executive’s
cooperation with the outplacement service and upon active efforts by Executive
to locate another position.

 

2.5.          Executive
Acknowledgement of Compensation. The Executive acknowledges that in
exchange for entering into this Agreement the Executive has received good,
sufficient and valuable consideration in excess of that to which the Executive
would otherwise have been entitled in the absence of this Agreement.  The Executive acknowledges

 

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that the Executive has been paid in full for any and
all wages, including accrued unused vacation pay.  Unless otherwise provided for expressly in
this Agreement, all other benefits have ceased as of the Separation
Commencement Date.

 

2.6.          Effect
of Breach on Compensation.   The
Executive agrees that the compensation and benefits contained in this Agreement
and which flow to the Executive from the Company are subject to termination,
reduction or cancellation in the event that the Executive takes any action or
engages in any conduct deemed by the Company to be in violation of this
Agreement.

 

3.             Executive
Obligations.

 

3.1.          Return
of Property.  The Executive shall
return all papers, files, documents, computers, reference guides, equipment,
keys, identification, credit cards, software, computer access codes, disks and
institutional manuals, or other property belonging to the Company within one
week after the Separation Commencement Date; provided the Executive shall
return the laptop computer referenced in Section 2 above not later than the end
of the Separation Period. The Executive shall not retain any copies,
duplicates, reproductions or excerpts of any of the Company’s property.   The Executive may retain copies of all
agreements between the Executive and the Company and other documents relating
to his personal performance.

 

3.2.          Nondisclosure
of Confidential Information.  During
the course of the Executive’s employment with the Company, the Executive has
become acquainted with and/or developed confidential information belonging to
the Company and its customers. The Executive agrees not to use or to disclose
to any person or entity any confidential information of the Company or of any
past or present customer of the Company, including but not limited to financial
data or projections, customer lists, projects, economic information, systems,
plans, methods, procedures, operations, techniques, know-how, trade secrets or
merchandising or marketing strategies. In addition, Executive shall continue to
be bound by the terms of Employee
Invention Assignment, and Confidentiality Agreement, which the Executive
executed in connection with his employment. That Agreement is affixed hereto
and incorporated by reference as Attachment B.

 

3.3.          Nondisparagement.  Provided the Executive is not in breach of
his obligations under this Agreement, the Company agrees not to disparage or
make negative statements about the Executive. The Executive agrees not to
disparage or make negative statements about the Company or any of its officers,
directors, agents, employees, successors and assigns.

 

3.4.          Non-Compete
and Non-Solicitation.  The Executive
hereby agrees with the Company that for a period of 12 months following the
Termination Date:

 

(a)           The
Executive shall not, without the prior written consent of the Chief Executive
Officer of the Company, directly or indirectly, engage in, be employed by, act
as a consultant or advisor to, be a director, officer, owner or partner of, or
acquire an interest in, any

 

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business engaged in manufacturing implant, rapid
thermal processing, photostabilization or dry strip semiconductor processing
systems (a “competitive business”), nor directly or indirectly have any
interest in, own, manage, operate, control, be connected with as a stockholder,
lender, joint venturer, officer, employee, partner or consultant, or otherwise
engage, invest or participate in any competitive business; provided, however,
that nothing contained in this Section 3.4 shall prevent the Executive from
investing or trading in publicly traded stocks, bonds, commodities or
securities or in real estate or other forms of investment for Executive’s own
account and benefit (directly or indirectly);

 

(b)           The
Executive shall not actively solicit any employee of the Company or any of its
subsidiaries or affiliates to leave the employment thereof; and the Executive
shall not enter onto Company property without prior written consent from the
Chief Executive Officer of the Company or other executive officer of the
Company; and

 

(c)           The
Executive shall not induce or attempt to induce any customer, supplier,
licensor, licensee or other individual, corporation or business organization
having a business relationship with the Company or its subsidiaries or
affiliates to cease doing business with the Company or its subsidiaries or
affiliates or in any way interfere with the relationship between any such
customer, supplier, licensor, licensee or other individual, corporation or
business organization and the Company or its subsidiaries or affiliates.  Solicitation of customers for the purposes of
this obligation refers to existing and/or contemplated products as of the time
of this Agreement.

 

(d)           The
applicable time periods set forth in this Section 3.4 shall be extended by the
time of any (1) breach by the Executive of any terms of this Agreement, or (2)
litigation involving the Executive and the Company in respect of any of the
provisions of this Agreement (whether by the Executive seeking relief from the
terms hereof or by the Company seeking to enforce the terms hereof or
otherwise).

 

3.5.          Resignations from Corporate Office.  Not
later than the Separation Commencement Date, the Executive will execute and
deliver to the Company his resignation as a Vice President of the Company and
any subsidiaries of the Company, attached here to as Attachment C.  Executive
expressly acknowledges that the compensation payable to Executive under this
Agreement is in full satisfaction of any compensation due to him in connection
with his corporate positions described in this Section 3.5.

 

3.6.          Sumitomo Eaton Nova Corporation. 
Concurrently with the execution of this Agreement, the Executive will
execute and deliver to the Company his resignation as a Director of Sumitomo
Eaton Nova Corporation (“SEN”), in the form attached here to as Attachment D.   The Company shall determine when and if the
Executive’s resignation is submitted to SEN.   
Executive shall, at the Company’s request and expense, continue to serve
as a member of the Board of Directors of SEN until the earlier of (a) the date
his resignation from such Board is submitted by the Company and become
effective or (b) Executive’s term of office expires on June 30, 2006.   The Executive agrees to cooperate in all
ways (including with respect to Board votes) with the Company’s instructions
relating to his membership on the SEN Board and resignation from such Board. Executive
expressly acknowledges that the compensation

 

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payable to Executive under this
Agreement is in full satisfaction of any compensation due to him in connection
with his corporate positions described in this Section 3.6.

 

3.7.          Cooperation.  The Executive will cooperate fully with the
Company in its defense of or other participation in any administrative,
judicial or other proceeding arising from any charge, complaint or other action
which has been or may be filed against the Company and with respect to which
Executive has knowledge. The Executive agrees to be responsive to requests for
information related to the smooth transition of a successor to his position.

 

4.             SEC
Reporting and Applicability of the Company’s Insider Trading Policy.

 

4.1.          Rule
144.  For the purposes of Rule 144
promulgated by the Securities Exchange Commission, the Executive shall cease to
be an “affiliate” of the Company on the Separation Commencement Date.

 

4.2.          Section
16 Reporting.  The Executive shall
cease to be a reporting person under the Securities Exchange Act of 1934, as
amended, as of the Separation Commencement Date, provided however, the
Executive must file a Form 4 with the SEC to report any purchase, sale, or
option exercise after the Separation Commencement Date if the transaction
occurs within six months following a Form 4 transaction going the opposite way
(e.g., sale vs. purchase) prior to the Separation Commencement Date.

 

5.             Insider
Trading Policy.  Assuming the Executive
does not acquire material non-public information after the Separation
Commencement Date, beginning on the date two trading days after the Company’s
public announcement of its earnings for the fiscal quarter ending after the
Separation Commencement Date, the Executive will no longer be subject to
restrictions on trading arising under the Company’s insider trading policy.

 

6.             General
Release and Covenant Not to Sue.

 

6.1.          Release.  In consideration of the Company’s covenants
in this Agreement, the Executive hereby releases and discharges the Company and
its officers, directors, agents, employees, successors and assigns (“Released
Parties”) from any and all claims by the Executive arising before the signing
of this Agreement, including all claims arising out of the Executive’s
employment with the Company or the termination thereof (except (1) those relating to performance of this Agreement, (2) the
Company’s obligations under the Indemnification Agreement between the Executive
and the Company dated August 6, 2002 (the “Indemnification Agreement”) and (3)
the Company’s obligations under the Change of Control Agreement dated August 6,
2002 if Executive can reasonably demonstrate, based solely on events occurring
prior to July 29, 2005, that Executive’s termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control) and claims arising under common law
and claims arising under federal or state labor and employment laws and laws
prohibiting discrimination on the basis of age, sex, race, national origin or
disability. The laws

 

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referred to in the preceding sentence include Title
VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act of 1963, as
amended; the Age Discrimination in Employment Act of 1967 (ADEA), as amended;
the Fair Labor Standards Act of 1938, as amended; the Americans With Disabilities
Act of 1990, as amended; the Rehabilitation Act of 1973, as amended; the Family
and Medical Leave Act of 1993, as amended; Chapter 151B of the Massachusetts
General Laws, Chapter 149 of the Massachusetts General Laws; the Massachusetts
Civil Rights Act and the Massachusetts Equal Rights Law; the Worker Adjustment and Retraining Notification (“WARN”)
Act; Maryland Ann. Code Article 100 Sections 88-94, and Maryland Ann. Code
Article 49B, Sections 1 et seq; or any
other state or federal law, order, public policy or regulation affecting or
relating to the rights and/or claims of employees.  Nothing in this Agreement shall be construed
to be a release of certain ADEA and Title VII rights that is not allowed by
law, except that the Executive waives and shall not accept any damages from any
such claims.

 

6.2.          Covenant
Not to Sue.  The Executive represents
and warrants that he has not filed any complaints, charges, or claims for
relief against the Released Parties with any local, state or federal court or
administrative agency.  The Executive
agrees and covenants not to sue or bring any claims or charges against the
Released Parties with respect to any matters arising out of or relating to the
Executive’s employment with or separation from the Company, other than
enforcement of the terms of this Agreement or the Indemnification
Agreement.  In the event that the
Executive institutes any such action, that claim shall be dismissed upon
presentation of this Agreement and he shall reimburse the Company for all legal
fees and expenses incurred in defending such claim and obtaining its dismissal.

 

6.3.          No
Implied Admission.  It is understood
and agreed that this Agreement does not constitute any admission by the Company
that any action taken with respect to the Executive was unlawful or wrongful,
or that such action constituted a breach of contract or violated any federal or
state law, policy, rule or regulation.

 

7.             Compliance
with Federal Older Workers Benefit Protection Act of 1990.

 

7.1.          Time
To Consider Agreement.  The Executive
acknowledges that he has been advised in writing to consult with an attorney
and has had ample opportunity to consult with and review this Agreement with an
attorney of his choice, and has been given a period of at least forty-five (45)
days within which to consider whether to sign this Agreement.  If the Executive has signed this Agreement
prior to the end of this forty-five (45) day period, he represents that he has
done so knowingly and voluntarily.

 

7.2.          Revocation
Right.  It is agreed and understood
that for a period of seven (7) days following the execution of this Agreement,
which period shall end at 5:00 p.m. on the seventh day following the date of
execution by the Executive, he may revoke this Agreement.  This Agreement will not become effective
until this revocation period has expired. 
This seven (7) day revocation period cannot be shortened by agreement of
the parties or by any other means.

 

8.             Miscellaneous.

 

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8.1.          Availability
of Equitable Remedies.  The Executive
agrees and warrants that the covenants contained herein are reasonable, that
valid consideration has been and will be received therefor and that the
agreements set forth herein are the result of arms-length negotiations between
the parties hereto.  The Executive
recognizes and acknowledges that the provisions of Section 3 are vitally
important to the continuing welfare of the Company, and its subsidiaries and
affiliates, and that money damages constitute a totally inadequate remedy for
any violation thereof.  Accordingly, in
the event of any such violation by the Executive, the Company, and its
subsidiaries and affiliates, in addition to any other remedies they may have,
shall have the right to institute and maintain a proceeding to compel specific
performance thereof or to obtain an injunction restraining any action by the
Executive in violation of Section 3.

 

8.2.          Severability.   In the event that any provision of this
Agreement is found by a court, arbitrator or other tribunal to be illegal,
invalid or unenforceable, then such provision shall not be voided, but shall be
enforced to the maximum extent permissible under applicable law, and the
remainder of this Agreement shall remain in full force and effect.

 

8.3.          Entire
Agreement.  This Agreement and its
Exhibits constitutes the entire agreement between the parties about or relating
to the Executive’s termination of employment from the Company, or the Company’s
obligations to the Executive with respect to his termination and fully
supersedes any and all prior agreements or understanding between the parties,
other than the Indemification Agreement.

 

8.4.          Binding
Benefit.  This agreement shall be
binding on the parties and upon their heirs, administrators, representatives,
executors, successors and assigns and shall inure to their benefit and to that
of their heirs, administrators, representatives, executors, successors and
assigns.

 

8.5.          Amendments.  This Agreement may not be altered, amended or
modified, except by a further written document signed by the Executive and the
Company.

 

8.6.          Governing
Law. This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without regard to or application of choice-of-law rules or
principles.

 

8.7.          Limitations
on Recovery.  In the event that the
Executive institutes legal proceedings to enforce this Agreement, he agrees
that the sole remedy available shall be enforcement of the terms of this
Agreement and/or a claim for damages resulting from the breach of this Agreement,
but that under no circumstances shall the Executive be entitled to receive or
collect any damages for claims that Executive has released under this
Agreement.

 

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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.

 

 

	
   

  	
  AXCELIS TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynnette C. Fallon

  	
   

  
	
   

  	
  Lynnette C. Fallon, Executive Vice President,

  HR/Legal and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ David W. Duff

  	
   

  
	
   

  	
  David W. Duff

  	
   

  
	
  Attachments

  
	
   

  
	
  A
  –

  	
   

  	
  Benefits
  After Termination Date

  
	
  B
  —

  	
   

  	
  Employee
  Invention Assignment and Confidentiality Agreement

  
	
  C
  –

  	
   

  	
  Resignation
  from Office

  
	
  D—

  	
   

  	
  Resignation from SEN

  
						

 

8Exhibit 10.1

 

SEPRACOR
INC.

 

2000 STOCK
INCENTIVE PLAN

 

1.             Purpose

 

The purpose of this 2000 Stock Incentive Plan
(the “Plan”) of Sepracor Inc., a Delaware corporation
(the “Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company’s stockholders.  Except where the context otherwise requires,
the term “Company” shall include any of the Company’s present or future
subsidiary corporations as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the “Code”) and any other business venture (including, without limitation,
joint venture or limited liability company) in which the Company has a
significant interest, as determined by the Board of Directors of the Company
(the “Board”).

 

2.             Eligibility

 

All of the Company’s employees, officers,
directors, consultants and advisors (and any individuals who have accepted an
offer for employment) are eligible to be granted options, restricted stock
awards, or other stock-based awards (each, an “Award”) under the Plan.  Each person who has been granted an Award
under the Plan shall be deemed a “Participant”.

 

3.             Administration,
Delegation

 

(a)           Administration
by Board of Directors.  The Plan will
be administered by the Board.  The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable.  The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.

 

(b)           Appointment
of Committees. To the extent permitted by applicable law, the Board may
delegate any or all of its powers under the Plan to one or more committees or
subcommittees of the Board (a “Committee”). 
All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board referred to in Section 3(b) to the extent that
the Board’s powers or authority under the Plan have been delegated to such
Committee.

 

1

 

4.             Stock Available
for Awards

 

(a)           Number
of Shares. Subject to adjustment under Section 8, Awards may be made
under the Plan for up to 2,500,000 shares of common stock, $.10 par value per
share, of the Company (the “Common Stock”). 
If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or results in
any Common Stock not being issued, the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan, subject,
however, in the case of Incentive Stock Options (as hereinafter defined), to
any limitation required under the Code. 
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

 

(b)           Per-Participant
Limit.  Subject to adjustment under Section 8,
for Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the “Exchange Act”), the maximum number of shares of
Common Stock with respect to which Awards may be granted to any Participant
under the Plan shall be 500,000
per calendar year. The per-Participant limit described in this Section 4(b) shall
be construed and applied consistently with Section 162(m) of the Code (“Section 162(m)”).

 

5.             Stock Options

 

(a)           General.  The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the number of shares of Common
Stock to be covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option, including
conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable.  An
Option which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a “Nonstatutory Stock Option”.

 

(b)           Incentive
Stock Options.  An Option that the
Board intends to be an “incentive stock option” as defined in Section 422
of the Code (an “Incentive Stock Option”) shall only be granted to employees of
the Company and shall be subject to and shall be construed consistently with
the requirements of Section 422 of the Code.  The Company shall have no liability to a
Participant, or any other party, if an Option (or any part thereof) which is
intended to be an Incentive Stock Option is not an Incentive Stock Option.

 

(c)           Exercise
Price. The Board shall establish the exercise price at the time each Option
is granted and specify it in the applicable option agreement, provided,
however, that the exercise price shall not be less than 100% of the fair market
value of the Common Stock, as determined by the Board, at the time the Option
is granted.

 

(d)           Duration
of Options. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable option
agreement, provided however, that no Option will be granted for a term in
excess of ten years.

 

2

 

(e)           Exercise
of Option.  Options may be exercised
by delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Board together with payment in full as specified in Section 5(f) for
the number of shares for which the Option is exercised.

 

(f)            Payment
Upon Exercise.  Common Stock
purchased upon the exercise of an Option granted under the Plan shall be paid
for as follows:

 

(1)           in
cash or by check, payable to the order of the Company;

 

(2)           except
as the Board may, in its sole discretion, otherwise provide in an option
agreement, by (i) delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price or (ii) delivery by the Participant to the Company
of a copy of irrevocable and unconditional instructions to a creditworthy
broker to deliver promptly to the Company cash or a check sufficient to pay the
exercise price;

 

(3)           when
the Common Stock is registered under the Exchange Act, by delivery of shares of
Common Stock owned by the Participant valued at their fair market value as
determined by (or in a manner approved by) the Board in good faith (“Fair
Market Value”), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Stock was owned by the
Participant at least six months prior to such delivery;

 

(4)           to
the extent permitted by the Board, in its sole discretion by (i) delivery
of a promissory note of the Participant to the Company on terms determined by
the Board, or (ii) payment of such other lawful consideration as the Board
may determine; or

 

(5)           by
any combination of the above permitted forms of payment.

 

(g)           Substitute
Options. In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Options in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.  Substitute Options may be granted on such
terms as the Board deems appropriate in the circumstances, notwithstanding any
limitations on Options contained in the other sections of this Section 5.

 

6.             Restricted Stock

 

(a)           Grants.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock, subject to the right of the
Company to repurchase all or part of such shares at their issue price or other
stated or formula price (or to require forfeiture of such shares if issued at
no cost) from the recipient in the event that conditions specified by the Board
in the applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a “Restricted
Stock Award”).

 

3

 

(b)           Terms
and Conditions.  The Board shall
determine the terms and conditions of any such Restricted Stock Award,
including the conditions for repurchase (or forfeiture) and the issue price, if
any.  Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company
(or its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant
to receive amounts due or exercise rights of the Participant in the event of
the Participant’s death (the “Designated Beneficiary”).  In the absence of an effective designation by
a Participant, Designated Beneficiary shall mean the Participant’s estate.

 

7.             Other Stock-Based
Awards

 

The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the
Board may determine, including the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the grant
of stock appreciation rights.

 

8.             Adjustments for
Changes in Common Stock and Certain Other Events

 

(a)           Changes
in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any distribution to holders of Common
Stock other than a normal cash dividend, (i) the number and class of
securities available under this Plan, (ii) the per-Participant limit set
forth in Section 4(b), (iii) the number and class of securities and
exercise price per share subject to each outstanding Option, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (v) the terms of each other outstanding Award shall be appropriately
adjusted by the Company (or substituted Awards may be made, if applicable) to
the extent the Board shall determine, in good faith, that such an adjustment
(or substitution) is necessary and appropriate. 
If this Section 8(a) applies and Section 8(c) also
applies to any event, Section 8(c) shall be applicable to such event,
and this Section 8(a) shall not be applicable.

 

(b)           Liquidation
or Dissolution.  In the event of a
proposed liquidation or dissolution of the Company, the Board shall upon
written notice to the Participants provide that all then unexercised Options
will (i) become exercisable in full as of a specified time at least 10
business days prior to the effective date of such liquidation or dissolution
and (ii) terminate effective upon such liquidation or dissolution, except
to the extent exercised before such effective date.  The Board may specify the effect of a
liquidation or dissolution on any Restricted Stock Award or other Award granted
under the Plan at the time of the grant of such Award.

 

4

 

(c)           Acquisition
and Change in Control Events

 

(1)           Definitions

 

(a)                                  An
“Acquisition Event” shall mean:

 

(i)                                     any
merger or consolidation of the Company with or into another entity as a result
of which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property; or

 

(ii)                                  any
exchange of shares of the Company for cash, securities or other property
pursuant to a statutory share exchange transaction.

 

(b)                                 A
“Change in Control Event” shall mean:

 

(i)                                     the
acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company
if, after such acquisition, such Person beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) 30% or more of either
(x) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subsection (i), the following acquisitions shall
not constitute a Change in Control Event: (A) any acquisition directly
from the Company (excluding an acquisition pursuant to the exercise, conversion
or exchange of any security exercisable for, convertible into or exchangeable
for common stock or voting securities of the Company, unless the Person
exercising, converting or exchanging such security acquired such security
directly from the Company or an underwriter or agent of the Company), (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (C) any
acquisition by any corporation pursuant to a Business Combination (as defined
below) which complies with clauses (x) and (y) 
of subsection (iii) of this definition; or

 

(ii)                                  such
time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, 

 

5

 

the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any
date a member of the Board (x) who was a member of the Board on the date of the
initial adoption of this Plan by the Board or (y) who was nominated or elected
subsequent to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election; provided, however, that there shall be excluded from
this clause (y) any individual whose initial assumption of office occurred as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents, by or on behalf of a person other than the Board; or

 

(iii)                               the
consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other disposition
of all or substantially all of the assets of the Company (a “Business
Combination”), unless, immediately following such Business Combination, each of
the following two conditions is satisfied: (x) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of the then-outstanding shares of common stock and the combined voting
power of the then-outstanding securities entitled to vote generally in the
election of directors, respectively, of the resulting or acquiring corporation
in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or
substantially all of the Company’s assets either directly or through one or
more subsidiaries) (such resulting or acquiring corporation is referred to
herein as the “Acquiring Corporation”) in substantially the same proportions as
their ownership of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, respectively, immediately prior to such Business Combination
and (y) no Person (excluding the 

 

6

 

Acquiring Corporation or any employee benefit
plan (or related trust) maintained or sponsored by the Company or by the
Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more
of the then-outstanding shares of common stock of the Acquiring Corporation, or
of the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors (except to
the extent that such ownership existed prior to the Business Combination).

 

(2)           Effect
on Options

 

(a)                                  Acquisition
Event.  Upon the occurrence of an
Acquisition Event (regardless of whether such event also constitutes a Change
in Control Event), or the execution by the Company of any agreement with
respect to an Acquisition Event (regardless of whether such event will result
in a Change in Control Event), the Board shall provide that all outstanding
Options shall be assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof); provided  that
if such Acquisition Event also constitutes a Change in Control Event, except to
the extent specifically provided to the contrary in the instrument evidencing
any Option or any other agreement between a Participant and the Company, such
assumed or substituted options shall be immediately exercisable in full upon
the occurrence of such Acquisition Event. 
For purposes hereof, an Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the Option confers the right
to purchase, for each share of Common Stock subject to the Option immediately
prior to the consummation of the Acquisition Event, the consideration (whether
cash, securities or other property) received as a result of the Acquisition
Event by holders of Common Stock for each share of Common Stock held
immediately prior to the consummation of the Acquisition Event (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if the consideration received as a result of the Acquisition
Event is not solely common stock of the acquiring or succeeding corporation (or
an affiliate thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon the
exercise of Options to consist solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof) equivalent in fair market
value 

 

7

 

to the per share consideration received by
holders of outstanding shares of Common Stock as a result of the Acquisition
Event.

 

Notwithstanding
the foregoing, if the acquiring or succeeding corporation (or an affiliate
thereof) does not agree to assume, or substitute for, such Options, then the
Board shall, upon written notice to the Participants, provide that all then
unexercised Options will become exercisable in full as of a specified time
prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by the
Participants before the consummation of such Acquisition Event; provided,
however, in the event of an Acquisition Event under the terms of which holders
of Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Acquisition Event (the “Acquisition
Price”), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount (if
any) by which (A) the Acquisition Price multiplied by the number of shares
of Common Stock subject to such outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate exercise price of such Options.

 

(b)                                 Change
in Control Event that is not an Acquisition Event.  Upon the occurrence of a Change in Control
Event that does not also constitute an Acquisition Event, except to the extent
specifically provided to the contrary in the instrument evidencing any Option
or any other agreement between a Participant and the Company, all Options
then-outstanding shall automatically become immediately exercisable in full.

 

(3)           Effect
on Restricted Stock Awards

 

(a)                                  Acquisition
Event that is not a Change in Control Event. Upon the occurrence of an
Acquisition Event that is not a Change in Control Event, the repurchase and
other rights of the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Company’s successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in the same manner and to the
same extent as they applied to the Common Stock subject to such Restricted
Stock Award.

 

8

 

(b)                                 Change
in Control Event.  Upon the
occurrence of a Change in Control Event (regardless of whether such event also
constitutes an Acquisition Event), except to the extent specifically provided
to the contrary in the instrument evidencing any Restricted Stock Award or any
other agreement between a Participant and the Company, all restrictions and
conditions on all Restricted Stock Awards then-outstanding shall automatically
be deemed terminated or satisfied.

 

(4)           Effect
on Other Awards

 

(a)                                  Acquisition
Event that is not a Change in Control Event. The Board shall specify the
effect of an Acquisition Event that is not a Change in Control Event on any
other Award granted under the Plan at the time of the grant of such Award.

 

(b)                                 Change
in Control Event.  Upon the
occurrence of a Change in Control Event (regardless of whether such event also
constitutes an Acquisition Event), except to the extent specifically provided
to the contrary in the instrument evidencing any other Award or any other
agreement between a Participant and the Company, all other Awards shall become
exercisable, realizable or vested in full, or shall be free of all conditions
or restrictions, as applicable to each such Award.

 

(5)           Limitations.  Notwithstanding the foregoing provisions of
this

 

Section 8(c), if the Change in Control
Event is intended to be accounted for as a “pooling of interests” for financial
accounting purposes, and if the acceleration to be effected by the foregoing
provisions of this Section 8(c) would preclude accounting for the
Change in Control Event as a “pooling of interests” for financial accounting
purposes, then no such acceleration shall occur upon the Change in Control
Event.

 

9.             General Provisions
Applicable to Awards

 

(a)           Transferability
of Awards.  Except as the Board may
otherwise determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. 
References to a Participant, to the extent relevant in the context,
shall include references to authorized transferees.

 

9

 

(b)           Documentation.  Each Award shall be evidenced by a written
instrument in such form as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

 

(c)           Board
Discretion.  Except as otherwise
provided by the Plan, each Award may be made alone or in addition or in
relation to any other Award.  The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.

 

(d)           Termination
of Status.  The Board shall determine
the effect on an Award of the disability, death, retirement, authorized leave
of absence or other change in the employment or other status of a Participant
and the extent to which, and the period during which, the Participant, the
Participant’s legal representative, conservator, guardian or Designated
Beneficiary may exercise rights under the Award.

 

(e)           Withholding.  Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards to such Participant no later than
the date of the event creating the tax liability.  Except as the Board may otherwise provide in
an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to a
Participant.

 

(f)            Amendment
of Award.  The Board may amend,
modify or terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization, and converting an Incentive Stock Option
to a Nonstatutory Stock Option, provided that the Participant’s consent to such
action shall be required unless the Board determines that the action, taking
into account any related action, would not materially and adversely affect the
Participant.

 

(g)           Conditions
on Delivery of Stock.  The Company
will not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove restrictions from shares previously delivered under the Plan
until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel,
all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements
of any applicable laws, rules or regulations.

 

(h)           Acceleration.  The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of restrictions in full or in part or 

 

10

 

that any other Awards may become exercisable in full or in part or free
of some or all restrictions or conditions, or otherwise realizable in full or
in part, as the case may be.

 

10.           Miscellaneous

 

(a)           No
Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.

 

(b)           No
Rights As Stockholder.  Subject to
the provisions of the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a stockholder with respect to any shares
of Common Stock to be distributed with respect to an Award until becoming the
record holder of such shares. 
Notwithstanding the foregoing, in the event the Company effects a split
of the Common Stock by means of a stock dividend and the exercise price of and
the number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

 

(c)           Effective
Date and Term of Plan.  The Plan
shall become effective on the date on which it is adopted by the Board, but no
Award granted to a Participant that is intended to comply with Section 162(m)
shall become exercisable, vested or realizable, as applicable to such Award,
unless and until the Plan has been approved by the Company’s stockholders to
the extent stockholder approval is required by Section 162(m) in the
manner required under Section 162(m) (including the vote required under Section 162(m)).
No Awards shall be granted under the Plan after the completion of ten years
from the earlier of (i) the date on which the Plan was adopted by the
Board or (ii) the date the Plan was approved by the Company’s
stockholders, but Awards previously granted may extend beyond that date.

 

(d)           Amendment
of Plan.  The Board may amend,
suspend or terminate the Plan or any portion thereof at any time, provided that
to the extent required by Section 162(m), no Award granted to a
Participant that is intended to comply with Section 162(m) after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award, unless and until such amendment shall have been approved by the
Company’s stockholders as required by Section 162(m) (including the vote
required under Section 162(m)).

 

11

 

(e)           Governing
Law.  The provisions of the Plan and
all Awards made hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware, without regard to any applicable
conflicts of law.

 

 

Adopted by the
Board of Directors on February 24, 2000

 

Adopted by the Stockholders on May 24,
2000

 

12

 

AMENDMENT
NO 1. TO

2000
STOCK INCENTIVE PLAN

OF

SEPRACOR
INC.

 

The 2000 Stock Incentive Plan (the “Plan”) of
Sepracor Inc. be, and hereby is, amended as follows:

 

1.             Section 4,
paragraph (a) is deleted in its entirety and the following is substituted
in its place:

 

“(a) Number of Shares.  Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 4,000,000 shares of common stock,
$.10 par value per share, of the Company (the “Common Stock”).  If any Award expires or is terminated,
surrendered or cancelled without having been fully exercised or is forfeited in
whole or in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the grant of
Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.”

 

 

Adopted by the
Board of Directors on February 21, 2002

 

Adopted by the
Stockholders on May 22, 2002

 

13

 

AMENDMENT
NO 2. TO

2000
STOCK INCENTIVE PLAN

OF

SEPRACOR
INC.

 

The 2000 Stock Incentive Plan (the “Plan”) of
Sepracor Inc. be, and hereby is, amended as follows:

 

1.             Section 4,
paragraph (a) is deleted in its entirety and the following is substituted
in its place:

 

“(a) Number of Shares.  Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 5,5000,000 shares of common stock,
$.10 par value per share, of the Company (the “Common Stock”).  If any Award expires or is terminated,
surrendered or cancelled without having been fully exercised or is forfeited in
whole or in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the grant of
Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.”

 

 

Adopted by the
Board of Directors on February 20, 2003

 

Adopted by the
Stockholders on May 22, 2003

 

14

 

AMENDMENT
NO 3. TO

2000
STOCK INCENTIVE PLAN

OF

SEPRACOR
INC.

 

The 2000 Stock Incentive Plan (the “Plan”),
as amended, of Sepracor Inc. be, and hereby is, further amended as follows:

 

1.             Section 4,
paragraph (a) is deleted in its entirety and the following is substituted
in its place:

 

“(a) Number of Shares.  Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 8,000,000 shares of common stock,
$.10 par value per share, of the Company (the “Common Stock”).  If any Award expires or is terminated, surrendered
or cancelled without having been fully exercised or is forfeited in whole or in
part or results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan, subject, however, in the case of Incentive Stock Options (as
hereinafter defined), to any limitation required under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.”

 

 

Adopted by the
Board of Directors on February 11, 2004.

 

Adopted by the
Stockholders on May 19, 2004.

 

15

 

AMENDMENT
NO. 4 TO

2000
STOCK INCENTIVE PLAN

OF

SEPRACOR
INC.

 

The 2000 Stock Incentive Plan (the “Plan”),
as amended, of Sepracor Inc. be, and hereby is, further amended as follows:

 

1.             Section 4,
paragraph (a) is deleted in its entirety and the following is substituted
in its place:

 

“(a) Number of Shares.  Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 9,500,000 shares of common stock,
$.10 par value per share, of the Company (the “Common Stock”).  If any Award expires or is terminated,
surrendered or cancelled without having been fully exercised or is forfeited in
whole or in part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the grant of
Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.”

 

 

Adopted by the
Board of Directors on April 1, 2005.

 

Adopted by the
Stockholders on May 19, 2005.

 

16

 

AMENDMENT
NO. 5 TO 

2000 STOCK INCENTIVE PLAN

OF

SEPRACOR INC.

 

The 2000 Stock Incentive Plan (the “Plan”) of
Sepracor Inc. be and hereby is, amended as follows:

 

1.             The
following Section 5(h) is hereby added:

 

(h)           Limitation
on Repricing.  Unless such action is
approved by the Company’s stockholders: (i) no outstanding Option granted
under the Plan may be amended to provide an exercise price per share that is
lower than the then-current exercise price per share of such outstanding Option
(other than adjustments pursuant to Section 8), and (ii) the Board
may not cancel any outstanding option (whether or not granted under the Plan)
and grant in substitution therefor new Awards under the Plan covering the same
or a different number of shares of Common Stock and having an exercise price
per share lower than the then-current exercise price per share of the cancelled
Option.

 

2.             Section 9(f) is
hereby deleted in its entirety and replaced with the following:

 

(f)            Amendment
of Plan.  Except as prohibited by Section 5(h),
the Board may amend, modify or terminate any outstanding Award, including but
not limited to, substituting therefore another Award of the same or a different
type, changing the date of exercise or realization, and converting an Incentive
Stock Option to a Non-Statutory Stock Option, provided that the Participant’s
consent to such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant.

 

 

Adopted by the Board of
Directors on May 13, 2005

 

17

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