Document:

exv4wxcyx12y

 

Exhibit 4(c)(12)

	 	 	 
	

	 	875 Third Avenue, 3rd Floor
	 

	 	New York, NY 10022
	 

	 	T (212) 407-5748
	 

	 	F (212) 755-2947

July 18, 2007

CONFIDENTIAL

Lars Ekman

213 Avenida Cortez

La Jolla, CA 92037

Re: Severance Agreement

Dear Lars:

     This letter agreement (“Agreement”) confirms the arrangements agreed upon by you and Elan
Pharmaceuticals, Inc. (the “Company”) and sets forth the terms and conditions of your involuntary
termination of employment as EVP & President, Global Research & Development on December 31, 2007
(“Severance Date”). The Agreement supersedes and replaces any and all severance-related payments
or benefits under any documents as well as any oral or written agreements including but not limited
to your November 20, 2000 offer letter and the Elan U.S. Severance Plan. Upon your execution of
this Agreement (and you not later revoking the waiver and release (“Waiver”) that is part of this
Agreement), the Company shall provide you the payments and benefits set forth below.
Notwithstanding the foregoing, any benefits which become payable under this Agreement shall be paid
only after the seven (7) day revocation period for a signed Waiver has passed without revocation.
To accept the terms and conditions set forth below, you must sign and date this Agreement where
indicated and return it to me within 21 days from your Severance Date. Please return a signed copy
of this Agreement to me by facsimile, mail or hand delivery at the Company’s address.

1. Termination Benefits.

     A. Severance Pay and Accrued Vacation. You will be paid a lump-sum of $2,500,000,
less applicable federal, state and local tax withholding within five weeks of your Severance Date.
In addition, you will receive any accrued and unused vacation time due in accordance with the
Company’s vacation policy on your Severance Date.

     B. Equity Grants. As of your Severance Date, all of your unvested equity grants (e.g.,
stock options and RSUs) will accelerate and become fully vested with the exception of the 2/1/2006
RSU grant (see footnote number 1 below). You will have 24 months after your

 

 

Lars Ekman

Severance Agreement

July 18, 2007

Severance Date to exercise your equity grants. This modified exercise period includes those equity
grants that vested before your Severance Date. Notwithstanding the previous sentences, your rights
and obligations with respect to such equity grants will be determined in accordance with the terms
of the applicable plan. Specific unvested equity grants that shall become vested upon your
Severance Date include:

	 	•	 	Stock options:

	 	•	 	10,000 @ $16.27 (granted on 3/10/2004)
	 
	 	•	 	30,000 @ $7.47 (granted on 3/10/2005)
	 
	 	•	 	95,850 @ $15.90 (granted on 2/1/2006)
	 
	 	•	 	106,371 @ $13.95 (granted on 2/21/2007)

	 	•	 	RSUs:

	 	•	 	18,868 (granted on 2/1/2006) 1
	 
	 	•	 	16,487 (granted on 2/21/2007)

A letter enclosing your Optionee Statement and stock option exercise forms will be sent to you
separately by the Company’s Stock Administrator upon your separation. This letter will also direct
you how to exercise your stock options should you choose to do so.

     C. Health and Welfare Benefits. Upon your Severance Date, you will be eligible to
elect individual and dependent continuation group health coverage under Section 4980B(f) of the
Internal Revenue Code (“COBRA”) for the maximum COBRA coverage period available, subject to all
conditions and limitations of COBRA. If you or one or more of your covered dependents elect COBRA
coverage, the Company shall pay the cost of the COBRA coverage for the 18-month period beginning on
January 1, 2008 or, if shorter, until COBRA otherwise expires. You will also be eligible to
participate in the Company-sponsored life and supplemental life insurance programs for you and your
spouse at the coverage levels elected on the date immediately preceding your Severance Date. The
Company will pay the cost of such coverage for an 18-month period beginning on January 1, 2008. Further, you will receive a lump-sum
payment of $70,200 on or before March 15, 2008 to assist you with the purchase of health and life
insurance coverage for you and your dependents after the initial 18-month period of Company-paid
coverage for such programs has expired.

 

			
	1	 	As to the 2/1/2006 RSU grant referred to above, the
plan does not permit accelerated vesting so, in lieu of the RSUs, you will
receive a cash payment, less applicable federal, state and local tax, based on
the closing NYSE value of the Company’s ADRs on the Severance Date. This will
be paid within five weeks of your Severance Date.

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Lars Ekman

Severance Agreement

July 18, 2007

     D. German Pension Plan. In order to make up the accrued benefit that you would have
earned had you remained employed at Schwarz until age 60, the Company shall continue to make an
annual $60,000 payment to Viktoria Life Insurance. The Company will do so by making a lump-sum
payment representing the remaining payments due in the fourth quarter of 2007.

     E. Eligibility for Special Milestone Payments. Provided you agree to become a
non-executive director of the Elan Corp. plc Board of Directors, you will be eligible to receive
the lump-sum payments described below if the Company achieves the related milestones.

	 	•	 	$250,000 if Elan/Wyeth file an NDA for AAB-001

	 	•	 	$750,000 if AAB-001 is approved for commercialization by the U.S. Food and Drug
Administration.

You will be paid a lump-sum cash payment of such amounts less applicable federal, state and local
tax withholding within two weeks of the Company attaining such milestones, provided that you are
still a member of the Board of Directors at the time of each event. If you are not a member of the
Board of Directors and your service as a member of the Board of Directors ceased involuntarily (so
long as involuntarily is not for “cause”) you will still receive the milestone payments if the
milestones occur within a 24-month period of your termination from the Board.

     F. Career Transition Services. The Company shall provide you with career transition
assistance services through Drake Beam and Morin for two years following your Severance Date. You
will receive separate, detailed information about the career transition services, including the
types of available services, how to enroll and the locations of available programs.

     G. Other Employee Benefits. Unless otherwise provided in the Agreement, all other
employee benefits to which you are entitled shall cease as of your Severance Date. Any payment or
benefit to which you are entitled under the Elan 401(k) Savings Plan or the Elan Deferred
Compensation Plan shall be payable in accordance with the terms of such plan. If you have any
questions concerning your account in the Elan 401(k) Savings Plan or the Elan Deferred Compensation
Plan, please contact Sherry Bravo at (858) 784-6322.

     H. Section 409A Compliance. For purposes of this Agreement, each of the payments of
severance (except the second payment in Paragraph (A) above) and continued welfare benefits under
sub-paragraphs 1A, 1C, and 1E above are designated as separate payments for purposes of the
short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F). As a result,

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Severance Agreement

July 18, 2007

payments that are made on or before the 15th day of the third month of the calendar year
following the applicable year of termination are exempt from the requirements of Code Section 409A.

2. Nonadmission of Liability. You acknowledge that this Agreement, compliance with this
Agreement and the provision of consideration hereunder are not and shall not be construed in any
way as an admission of wrongdoing or liability on the part of Elan, any of the Releasees hereunder
(as defined in Paragraph 6), or any other person or business entity. You further acknowledge that
Elan denies all allegations of wrongdoing and specifically disclaims any liability for any alleged
violation of my rights, or for any alleged violation of any order, law, statute, duty, or contract
on the part of Elan or any of the Releasees hereunder (as defined in Paragraph 6).

3. Ownership of Claims. You represent that you have not transferred or assigned, or
purported to transfer or assign, to any person or entity, any claim described in this Agreement.
You further agree to indemnify and hold harmless each and all of the Releasees identified in
Paragraph 6 below against any and all claims based upon, arising out of, or in any way connected
with any such actual or purported transfer or assignment.

4. No Filings. You represent that you have not filed any action, claim, charge, or
complaint against Elan or any other Releasee identified in Paragraph 6 below, with any local,
state, or federal agency or court. In the event that any agency or court assumes jurisdiction of
any lawsuit, claim, charge or complaint, or purports to bring any legal proceedings against any
Releasee on your behalf, you promptly will request that the agency or court withdraw from or
dismiss the lawsuit, claim, charge, or complaint with prejudice.

5. Covenant Not to Sue. In consideration for the promises set forth in this Agreement, you
agree on behalf of yourself and your heirs that you will not file, participate in, or instigate the
filing of any lawsuits, complaints or charges by you or by any other person or party in any state
or federal court or any proceedings before any local, state or federal agency, except as required
by law, claiming that Releasees identified in Paragraph 6 below, or any of them have violated any
law or obligation, including, but not limited to, any claims that have been made or that could
have been made, based upon events or omissions occurring prior to the effective date of this
Agreement. You agree to withdraw and dismiss all claims, charges, or actions currently on file
against Releasees. You also agree that in the event you receive notice of your right to
participate in any type of class action against Releasees that you will take all appropriate steps
to “opt out”

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Severance Agreement

July 18, 2007

of the class action litigation. In the event of a breach of the covenant contained in
this Paragraph, you agree that you will indemnify the Releasees and each of them for all damages
and expenses, including attorneys’ fees and costs, incurred by any Releasee in defending,
participating in, or investigating any matter or proceeding covered by this Paragraph. In
addition, should you breach any of the covenants undertaken pursuant to this Paragraph, Elan will
be entitled to recover from you all payments made and shall also be entitled to withhold any future
payments due under this Agreement.

6. Release. You hereby, for yourself and your heirs, representatives, attorneys,
executors, administrators, successors, and assigns, release, acquit, and forever discharge: Elan
and all of Elan’s past and present affiliates, and each of their respective subsidiaries,
divisions, joint venturers, predecessors, successors, assigns, consultants, subcontractors,
employee benefit plans and the trustees, fiduciaries, and administrators of those plans, and
stockholders, officers, directors, partners, servants, agents, employees, independent contractors,
representatives, attorneys, and all persons acting under, by, through, or in concert with any of
them, and each of them (all of whom are referred to herein as “Releasees”), from any and all
actions, causes of action, grievances, obligations, attorneys’ fees, costs, expenses, damages,
losses, claims, liabilities, suits, debts, demands, and benefits, of whatever character, in law or
in equity, known or unknown, suspected or unsuspected, matured or unmatured, of any kind or nature
whatsoever, based on any act, omission, event, occurrence, or nonoccurrence from the beginning of
time to the effective date of this Agreement, including but not limited to any claims or causes of
action arising out of or in any way relating to your employment with Elan or the ending of your
employment with Elan.

     You agree that this release of claims includes, but is not limited to, claims for breach of
any implied or express contract or covenant, claims for promissory estoppel; claims of entitlement
to any pay (other than the compensation promised in Paragraph 2); claims of wrongful denial of
insurance and employee benefits, including but not limited to claims for benefits or monies under
Elan’s benefit plans, Elan’s severance plan, or any other plan; claims for wrongful termination,
public policy violations, defamation, invasion of privacy, fraud, misrepresentation, emotional
distress or other common law or tort causes of action; claims of harassment, retaliation or
discrimination under federal, state, or local law; claims based on any federal, state or other
governmental statute, regulation or ordinance, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866, the Civil
Rights Act of 1871, the Civil Rights Act of 1991, the National Labor Relations Act, the Older
Workers’ Benefit Protection Act, the Employee Retirement Income Security Act, the California Family
Rights Act, the California Constitution, and/or the California Labor Code, including

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Severance Agreement

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Labor Code
Section 132a, or under Elan’s personnel policies. You understand by signing this Release you are
not releasing any claim for vested stock options under the applicable option agreement(s). Nor are
you waiving any other claims or rights which cannot be waived by law, including the right to file
an administrative charge of discrimination or to file for unemployment insurance benefits; you are,
however, waiving the right to monetary recovery in connection with any such charge.

7. Release of Unknown Claims. For the purpose of implementing full and complete releases,
you expressly acknowledge that the release given in this Agreement is intended to include, without
limitation, claims you did not know or suspect to exist in your favor at the time of the effective
date of this Agreement, regardless of whether the knowledge of such claims, or the facts upon which
they might be based would materially have affected the settlement of this matter; and that the
consideration given under the Agreement was also for the release of those claims and contemplates
the extinguishment of any such unknown claims, despite the fact that California Civil Code Section
1542 may provide otherwise. You expressly waive any right or benefit available to you in any
capacity under the provisions of Section 1542, which provides as follows:

     A GENERAL RELEASE DOES NOT EXTEND TO ALL CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

     8. Notice and Revocation. You understand and agree that you:

	 	(a)	 	Have had a full twenty-one (21) days within which to consider this Agreement
before executing it.
	 
	 	(b)	 	Have carefully read and fully understand all of the provisions of this
Agreement.
	 
	 	(c)	 	Are, through this Agreement, releasing Elan and Releasees from any and all
claims you may have against Elan and/or Releasees.
	 
	 	(d)	 	Knowingly and voluntarily agree to all of the terms set forth in this
Agreement.

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Severance Agreement

July 18, 2007

	 	(e)	 	Knowingly and voluntarily intend to be legally bound by the same.
	 
	 	(f)	 	Were advised and hereby are advised in writing to consider the terms of this
Agreement and consult with an attorney of your choice prior to executing this
Agreement.
	 
	 	(g)	 	Have a full seven (7) days following execution of this Agreement to revoke this
Agreement and have been and hereby am advised in writing that this Agreement shall not
become effective or enforceable until the revocation period has expired.

     Any revocation by you must be made in writing and must be received by General Counsel, Legal
Department, Elan Pharmaceuticals, Inc., 800 Gateway Blvd., South San Francisco, CA 94080, within
such seven (7) day period. If you timely revoke this Agreement, you shall not be eligible to
receive the consideration set forth in Paragraph 1 of this Agreement. If you timely submit the
signed Agreement and do not timely exercise your right to revoke the Agreement, you shall be
eligible to receive all of the consideration set forth in this Agreement.

	 	(h)	 	Understand that rights or claims under the Age Discrimination in Employment Act
of 1967 (29 U.S.C. § 621 et seq.) that may arise after the date of this Agreement is
executed are not waived. You also understand that nothing in this Agreement shall be
construed to prohibit you from filing a charge or complaint, including a challenge to
the validity of this Agreement, with the Equal Employment Opportunity Commission or
participating in any investigation or proceeding conducted by the Equal Employment
Opportunity Commission.

9. Counsel. You acknowledge you are encouraged to contact your personal attorney at your
own expense to review the Waiver and Release Agreement if you so desire.

10. Successors. This Agreement shall be binding upon the parties, and their heirs,
representatives, executors, administrators, successors, insurers, and assigns, and shall inure to
the benefit of each and all of the Releasees, and to their heirs, representatives, executors,
administrators, successors, and assignees.

11. Confidentiality. You recognize and acknowledge and agree that during your employment
with Elan you have had access to highly confidential and proprietary information relating to Elan
and trade secrets (“Proprietary Information,” as described herein) and the use, misappropriation or
disclosure of Proprietary Information would cause irreparable injury to Elan;

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and it is essential
to the protection of Elan’s good will and to the maintenance of Elan’s competitive position that
Proprietary Information be kept secret and that you not disclose Proprietary Information to others,
or use any Proprietary Information to your own advantage or the advantage of any third parties.
For purposes of this Agreement, the term “Proprietary Information” shall include any and all
information, in any form whatsoever, including but not limited to, hard copy, computer floppy
diskette, CD, CD-ROM drive, information retained in electronic storage, or other information
storage means, relating to the Company’s technology; techniques; processes; tools; research and
development; market research, data and strategy; and, information relating to sales, pricing and
customers, including customer-specific sales information, pricing policies and strategies. You
acknowledge and agree that your obligations under this Paragraph shall survive the Severance Date.

12. Confidentiality/Non-Disclosure of this Agreement. You agree that you have not
disclosed the terms of this Agreement, or the negotiations leading thereto, to anyone other than
your attorney or immediate family members. Except to the extent required by law, you represent and
agree that you will keep the terms of this Agreement completely confidential and that
confidentiality is of the essence of this Agreement. Accordingly, you shall keep confidential and
not publicize or disclose any of the terms of this Agreement in any manner whatsoever, whether in
writing or orally, to any person, directly or indirectly, or by or through any agent or
representative, except as necessary to effectuate the terms of the Agreement, other than to the
following: (1) immediate family members; (2) attorneys and legal support personnel; (3)
accountants; (4) tax consultants; (5) psychiatrists and psychologists; and (6) such other
representatives or entities required by law and/or court order. With respect to any individuals
referred to in subparts (1) through (6) to whom you disclose any information regarding this
Agreement and its terms, you agree that you will inform such individual prior to your disclosure
that the information is strictly confidential and may not be reviewed, discussed or disclosed,
orally or in writing with any other person, organization or entity, and you shall not disclose any
confidential information if you have reason to believe such person(s) will not guard the
confidential nature of the information. Upon inquiry regarding this Agreement and/or the
circumstances surrounding the termination of your employment with Elan, you agree that you shall
state (and shall inform any individuals referred to in subparts (1) through (6) to whom you
disclose any information regarding this Agreement and its terms to state) only that your employment
with Elan ended and you shall give no other indication, verbal or otherwise, regarding the amount
or fact of payment to you hereunder or the other terms set forth in this Agreement.

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Severance Agreement

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     In the event that you are required by law or court order to disclose, publicize, or to permit,
authorize or instigate the disclosure of this Agreement, in whole or in part, you must notify Elan
in writing at least seven (7) business days prior to the disclosure in order to provide Elan with
the opportunity to object to such disclosure. Such written notification shall be sent to: General
Counsel, Legal Department, Elan Pharmaceuticals, Inc., 800 Gateway Blvd., South San Francisco, CA
94080. You agree to cooperate fully with Elan if Elan decides to object to such disclosure. This
confidentiality agreement specifically includes, but is not limited to, an obligation, on the part
of you and your attorneys and other representatives and your family members, not to disclose, or
cause to be disclosed, the terms of the Agreement to any current or former employee or independent
contractor of Elan or any affiliate of Elan, or to any individual associated with the press or
media. You agree that you shall be responsible and liable for any disclosure prohibited by this
Paragraph 12, including disclosures made by you, your representatives, your consultants and/or
family members.

13. Full and Independent Knowledge. The Parties represent that they fully understand all
of the provisions of the Agreement, and are voluntarily entering into this Agreement.

14. No Representations. The Parties acknowledge that, except as expressly set forth
herein, no representation of any kind or character has been made to induce the execution of this
Agreement.

15. Breach; Arbitration. Any dispute regarding any aspect of this Agreement or any act
that allegedly has or would violate any provision of this Agreement will be submitted to binding
arbitration, only after mutual exhaustion of a reasonable meet and confer effort to resolve such
dispute, according to then current rules of JAMS/Endispute. The decision of the arbitrator shall
be final and conclusive, and the parties waive the right to trial de novo or appeal excepting only
for the purpose of confirming the arbitrator’s decision, for which purpose the Parties agree that
the San Diego County Superior Court shall have jurisdiction. The prevailing Party or Parties will
be entitled to recover reasonable attorneys’ fees and costs of bringing or defending the
arbitration and any action for enforcement, the amount of the awards to be determined by the
arbitrator and the Court, respectively.

16. Waiver. The failure of Elan or you to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver thereof, or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

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Severance Agreement

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17. No Re-Hire. You understand and acknowledge that neither Elan, nor any of its current
subsidiaries, divisions, or affiliates shall be under any obligation to re-hire or retain you as
either an employee or independent contractor, and that any refusal by Elan or its current
subsidiaries, divisions, or affiliates to re-hire or retain you will not subject them to liability
on any grounds. You agree that you shall not apply for work as an employee or independent
contractor with Elan or any of its current subsidiaries, divisions, parent, successor, or
affiliated companies, and that any application to be an employee or independent contractor that you
make to such company may be rejected without cause and without any liability whatsoever by the
company to which application is made.

18. Miscellaneous.

	 	(a)	 	The language of all parts in this Agreement shall be construed as a whole,
according to its fair meaning, and not strictly for or against either party.
	 
	 	(b)	 	Should any provision in this Agreement be declared or determined to be illegal
or invalid, the validity of the remaining parts, terms, or provisions shall not be
affected thereby, and the illegal or invalid part, term, or provision shall be deemed
not to be part of this Agreement, and all remaining provisions shall remain valid and
enforceable.
	 
	 	(c)	 	This Agreement, in addition to the Employee Proprietary Information and
Inventions Agreement that you previously signed (the terms of which are incorporated
herein by reference), constitutes a single, integrated contract setting forth the
entire agreement between the parties and fully supersedes any and all prior agreements
and understandings between the parties pertaining to the subject matter of this
Agreement.
	 
	 	(d)	 	The headings used herein are for reference only and shall not affect the
construction of this Agreement.
	 
	 	(e)	 	This Agreement is made and entered into in the State of California and shall in
all respects be interpreted and governed under the law of that State.

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Severance Agreement

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19. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

20. Good Faith Compliance. Each party hereto agrees to cooperate in good faith and to do
all things necessary to effectuate this Agreement.

     PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES THE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

	 	 	 	 	 
	 	 	 
	DATED: 7/20, 2007 	  	/s/ Lars Ekman
 	 
	 	 	LARS EKMAN 	 
	 	 	 	 
	 
	DATED: 7/25, 2007 	ELAN PHARMACEUTICALS, INC.

 	 
	 	By  	/s/ Kathleen Martorano
 	 
	 	 	 	 
	 	 	Its  EVP, Human Resources 	 
	 

*     *     *     *

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

We appreciate your dedication and service with Elan and we wish you all the best with your future
endeavours. Please do not hesitate to contact me with any questions.

Sincerely,

Kathleen Martorano

Executive Vice President, Strategic Human Resource

11exv4wxcyx18y

 

Exhibit 4(c)(18)

ELAN U.S.

Severance Plan

Effective March 1, 2001 and

Amended and Restated as of January 1, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I Introduction
	 	 	1	 
	ARTICLE II Definitions
	 	 	1	 
	ARTICLE III Eligibility
	 	 	4	 
	ARTICLE IV Pay and Benefits In Lieu of WARN Notice
	 	 	6	 
	ARTICLE V Severance Pay and Severance Benefits
	 	 	6	 
	ARTICLE VI Waiver and Release Agreement
	 	 	13	 
	ARTICLE VII Plan Administration
	 	 	14	 
	ARTICLE VIII Procedures for Making and Appealing Claims for Plan Benefits
	 	 	14	 
	ARTICLE IX Amendment/Termination/Vesting
	 	 	16	 
	ARTICLE X No Assignment
	 	 	16	 
	ARTICLE XI Confidential Information/Cooperation
	 	 	16	 
	ARTICLE XII Miscellaneous Provisions
	 	 	17	 

 

 

ELAN U.S.

SEVERANCE PLAN

(Effective March 1, 2001, and

Amended and Restated Effective as of January 1, 2008)

ARTICLE I

Introduction

     Athena Neurosciences, Inc. (the “Company”) adopted the Elan U.S. Severance Plan (the “Plan”),
effective March 1, 2001, for the benefit of certain “Eligible Employees” of the Company and certain
Affiliates specified by the Company. The Plan is intended to apply to United States based
“Employees,” as described herein. The Plan was amended and restated on January 1, 2004, August 15,
2004 and January 1, 2006. By this instrument, the Company hereby amends and restates the Plan,
effective January 1, 2008. The Plan shall be binding on any successor to all or substantially all
of the Company’s assets or business.

     The Plan is an unfunded welfare benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). Except as otherwise provided herein, the Plan
supersedes any prior formal or informal severance plans, programs or policies of the Company or its
Affiliates covering Eligible Employees. The Plan operates on a calendar year.

ARTICLE II

Definitions

     2.1. “Affiliate” means any member of the group of corporations, trades or businesses
or other organizations comprising the “controlled group” with Athena Neurosciences, Inc. under
Section 414 of the Code.

     2.2. “Change in Control” means:

	 	(a)	 	The consummation of a merger or consolidation of Elan Corporation, plc with or
into another entity or any other corporate reorganization, if more than fifty percent
(50%) of the combined voting power of the continuing or surviving entity’s issued
shares or securities outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not shareholders of Elan Corporation, plc
immediately prior to such merger, consolidation or other reorganization;
	 
	 	(b)	 	The sale, transfer or other disposition of all or substantially all of Elan
Corporation, plc’s assets;
	 
	 	(c)	 	A change in the composition of the Board of Directors of Elan Corporation, plc,
as a result of which fewer than fifty percent (50%) of the incumbent directors are

 

 

	 	 	 	directors who either (i) had been directors of Elan Corporation, plc on the date 24
months prior to the date of the event that may constitute a Change in Control (the
“original directors”) or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination and the
directors whose election or nomination was previously so approved; or
	 
	 	(d)	 	Any transaction as a result of which any person is the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Elan Corporation, plc representing at least fifty percent (50%) of the total voting
power represented by Elan Corporation, plc’s then outstanding voting securities (e.g.,
issued shares). The term “person” shall have the same meaning as when used in sections
13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary
holding securities under an employee benefit plan of Elan Corporation, plc or of any
subsidiary of Elan Corporation, plc and (ii) a company owned directly or indirectly by
the shareholders of Elan Corporation, plc in substantially the same proportions as
their ownership of the ordinary shares of Elan Corporation, plc.

     A transaction shall not constitute a Change in Control if its sole purpose is to create a
holding company that will be owned in substantially the same proportions by the persons who held
Elan Corporation, plc’s issued shares immediately before such transaction.

     2.3. “Company” means Athena Neurosciences, Inc.

     2.4. “Comparable Position” means a position either with the Company or any of its
Affiliates or with a successor or transferee of all or a part of the business of the Company or
Affiliate, on terms which do not cause a Significant Reduction in Scope or Base Compensation and do
not entail a Relocation. The Plan Administrator, in its sole discretion, will determine a
Comparable Position.

     2.5. “Confidential Information” means trade secrets and other propriety information of
an Employer or any Affiliate. If an Eligible Employee entered into a confidentiality or
proprietary rights agreement with an Employer or any Affiliate, the term “Confidential Information”
for purposes of this Plan shall have the meaning ascribed to any such term or concept as it is
defined under, or used in, the separate agreement.

     2.6. “Eligible Employee” means each Employee who is not (i) covered by a written
employment agreement that contains a severance provision, or covered by a written severance
agreement (for the duration of that agreement); (ii) classified as “temporary,” including without
limitation, anyone classified as an “intern” or “co-op”; (iii) a consultant; (iv) a “leased
employee” as defined in Section 414(n) of the Internal Revenue Code; or (v) a person performing
services for an Employer on a contract basis or as an independent contractor or

2

 

consultant or
through a purchase order, supplier agreement or any other form of agreement that the Employer
enters into for services.

     2.7. “Employee” means any full-time or part-time employee of an Employer.

     2.8. “Employer” means the Company and each Affiliate identified on Attachment A,
including the wholly-owned subsidiaries of the Affiliates identified on Attachment A.

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

     2.10. “Executive Employee” means an Eligible Employee who has the title of Senior Vice
President or Executive Vice President or any other title ranked at or higher than Senior Vice
President.

     2.11. “Involuntary Termination” means a termination of an Eligible Employee’s
employment by the Employer due to a business condition, as determined in the sole discretion of the
Company. The term Involuntary Termination shall include (i) a termination effective when the
Eligible Employee exhausts a leave of absence during, or at the end of, a WARN Notice Period and
(ii) a situation where an Eligible Employee on an approved leave of absence during which the
Employee’s position is protected under applicable law (e.g., a leave under the Family Medical Leave
Act), returns from such leave, and cannot be placed in employment with the Employer.

     2.12. “Plan” means the Elan U.S. Severance Plan, as set forth in this instrument and
as hereafter amended.

     2.13. “Relocation” means a material change in the geographic location at which the
Eligible Employee performs services. Such change in an Eligible Employee’s primary job site will
be considered material if the new location increases the Eligible Employee’s commute between home and
primary job site by at least thirty (30) miles. Notwithstanding the foregoing, this term shall not
apply to an Eligible Employee who is a field-based sales representative or who works from home.

     2.14. “Severance Date” means the final day of employment with the Employer which date
shall be communicated in writing by the Employer to the Employee.

     2.15. “Significant Reduction in Scope or Base Compensation” means a material
diminution in the Eligible Employee’s base compensation or material diminution in the Eligible
Employee’s authority, duties, or responsibilities. The Plan Administrator, in its sole discretion,
shall determine whether an Eligible Employee experiences a “Significant Reduction”.

3

 

     2.16. “Triggering Event” means an Involuntary Termination, Relocation or Significant
Reduction in Scope or Base Compensation.

     2.17. “WARN Notice Date” means the date the Employer is required to notify an Eligible
Employee pursuant to the WARN Act that he or she is to be terminated from employment with the
Employer in conjunction with a “plant closing” or “mass layoff” as described in the WARN Act.

     2.18. “WARN Notice Period” means the sixty (60) consecutive calendar day period
commencing on an Eligible Employee’s WARN Notice Date.

     2.19. “Week of Pay” shall be determined based on the Eligible Employee’s status as a
salaried or hourly Employee. If the Eligible Employee is a salaried Employee, Week of Pay shall be
the Eligible Employee’s regular weekly base salary compensation rate in effect on his/her Severance
Date. If the Eligible Employee is an hourly Employee, Week of Pay shall be the Eligible Employee’s
regular hourly base compensation rate multiplied by his/her regularly scheduled number of hours
worked per week in effect on his/her Severance Date. If the Eligible Employee works part-time,
his/her Week of Pay is determined on a prorated basis by calculating his/her average number of
hours per week actually worked during the prior Year of Service.

     2.20. “Years of Service” shall be determined in accordance with the Employer’s
personnel records. An Eligible Employee shall receive credit for a Year of Service for each twelve
(12) month period of active service with the Employer. For partial years of employment, the
Eligible Employee shall receive credit for a full Year of Service if he or she completes at least
six (6) full months of active service. If an Eligible Employee has not completed at least six full
months of active service during a partial year, he or she shall not receive credit for a Year of
Service.

ARTICLE III

Eligibility

     3.1. Conditions of Eligibility. To be eligible for benefits as described in Article
V, the Eligible Employee must (i) remain an Employee through the Severance Date, (ii) through the
Severance Date, fulfill the normal responsibilities of his/her position, including meeting regular
attendance, workload and other standards of the Employer, as applicable, and (iii) submit the
signed Waiver and Release Agreement required by the Plan Administrator on, or within forty-five
(45) days after, his/her Severance Date or receipt of the Waiver and Release Agreement (whichever
occurs later) and not revoke the signed Waiver and Release Agreement. In addition, in the event of
a Relocation or a Significant Reduction in Scope or Base Compensation, the Eligible Employee must
provide his/her Employer with written notice within ninety (90) days after the occurrence of such
event. The Employer shall then have thirty (30) days to cure such event.

4

 

     3.2. Conditions of Ineligibility. An otherwise Eligible Employee shall not receive
severance pay or severance benefits under the Plan if:

	 	(a)	 	the Employee ceases to be an Eligible Employee as defined by the Plan;
	 
	 	(b)	 	the Employee terminates employment with the Employer by reason of death;
	 
	 	(c)	 	the Employer terminates the Employee’s employment for one or more of the
following reasons (determined in the sole discretion of the Plan Administrator):
Commission by the Employee of an act of fraud, theft, misappropriation of funds,
dishonesty, bad faith or disloyalty; violation by the Employee of any federal, state,
local law or regulation; violation by the Employee of any rule, regulation or policy of
the Employer or other job related misconduct; failure to perform the duties of the
position held by such Employee in a manner which satisfies the reasonable expectations
of the Employer; failure by the Employee to meet any requirement reasonably imposed
upon such Employee by the Employer as a
condition of continued employment; or dereliction or neglect by the Employee in the
performance of such Employee’s job duties;
	 
	 	(d)	 	the Employee terminates employment with the Employer through job abandonment;
	 
	 	(e)	 	other than as set forth in the last sentence of Section 2.11, the Employee is
eligible to receive long-term disability benefits from the Employer (as determined
under the applicable Employer-sponsored long-term disability plan) as of the date the
Triggering Event would have occurred had the individual been actively at work on such
date;
	 
	 	(f)	 	the Employee is employed in an operation, division, department or facility,
that is sold, leased or otherwise transferred, in whole or in part, from an Employer,
and (i) the Employee accepts any position with the new owner/operator, or (ii) the
Employee is offered a Comparable Position by the new owner/operator;
	 
	 	(g)	 	the Employee gives notice of his/her voluntary termination (other than as
provided in Section 2.16) prior to his/her Severance Date or the effective date of a
sale, lease or transfer of an operation, division, department or facility, as described
in Section 3.2(f), regardless of the effective date of such termination;
	 
	 	(h)	 	the Employee ceases working with the Employer and receives severance benefits
under the terms of another group reorganization/restructuring benefit plan or severance
program sponsored by the Employer;

5

 

	 	(i)	 	the Employee is offered a Comparable Position from an Employer, or accepts any
position with an Employer, even if it is not a Comparable Position;
	 
	 	(j)	 	the Employee experiences a Triggering Event after the Plan is terminated;
	 
	 	(k)	 	the Employee does not timely execute and return to the Plan Administrator a
valid Waiver and Release Agreement;
	 
	 	(l)	 	the Employee works primarily in an office located in a country other than the
United States and is entitled to severance benefits under the laws of such country or
the policies of the company at which he or she is based and such severance benefits may
not be waived; or
	 
	 	(m)	 	the Employee is offered a Comparable Position by, or accepts any position with,
an employer with which the Company or any of its Affiliates has reached an agreement or
arrangement under which the employer agrees to offer employment to the otherwise
Eligible Employee.

     The foregoing list of conditions is intended to be illustrative and may not be all inclusive;
the Plan Administrator will determine in the Plan Administrator’s sole discretion whether an
Eligible Employee is eligible for severance pay and severance benefits under the Plan.

ARTICLE IV

Pay and Benefits In Lieu of WARN Notice

     4.1. Wage Payments. If an Eligible Employee is entitled to advance notice of a “plant
closing” or a “mass layoff” under the WARN Act, but experiences a Triggering Event before the end
of a WARN Notice Period, the Eligible Employee shall be entitled to receive Weeks of Pay until the
end of the WARN Notice Period as if he or she were still employed through such date. The Weeks of
Pay under this Section 4.1 will be issued according to the normal payroll practices of the Employer
and shall not be subject to the Waiver and Release Agreement.

     4.2. Benefits. An Eligible Employee described in Section 4.1 shall be entitled to
benefits under an Employer-sponsored medical and dental benefit plans, as amended from time to
time, through the end of the WARN Notice Period on the same terms and under the same conditions as
applied to the Eligible Employee immediately prior to the Triggering Event. The benefits under
this Section 4.2 are not subject to the Waiver and Release Agreement.

ARTICLE V

Severance Pay and Severance Benefits

     5.1. Generally. In exchange for providing the Employer with an enforceable Waiver and
Release Agreement, in a form acceptable to the Plan Administrator, an Eligible Employee

6

 

who
terminates employment on account of a Triggering Event shall be eligible to receive severance pay
and severance benefits as described below and subject to the other provisions of this Plan. The
consideration for the voluntary Waiver and Release Agreement shall be the severance pay and
severance benefits the Eligible Employee would not otherwise be eligible to receive.

     5.2. Severance Pay. Severance pay shall be determined in accordance with the table
below based on the Eligible Employee’s “Band” classification and in accordance with the terms
hereof. If the applicable Triggering Event occurs within two years following a Change in Control
and the Eligible Employee was an Employee at the time of the Change in Control, the Eligible
Employee’s severance pay shall be determined under the column in the table below titled
“Change in Control Severance Pay” and shall be paid in accordance with the terms hereof. The
Band applicable to any Eligible Employee shall be determined by the Plan Administrator, in its sole
discretion, based on the Eligible Employee’s job position relative to the job grading system in
place for the applicable Employer.

7

 

	 	 	 	 	 
	Employment	 	 	 	 
	Classification	 	Severance Pay	 	Change in Control Severance Pay
	 
	 	 	 	 
	Band I

	 	Six (6) Weeks of
Pay plus two (2)
additional Weeks of
Pay for each Year
of Service, limited
to a maximum period
of thirty-nine (39)
Weeks of Pay.
	 	Same as severance pay
	 
	 	 	 	 
	Band II

	 	Nine (9) Weeks of
Pay plus two (2)
additional Weeks of
Pay for each Year
of Service, limited
to a maximum period
of thirty-nine (39)
Weeks of Pay.
	 	Same as severance pay
	 
	 	 	 	 
	Band III

	 	Fifteen (15) Weeks
of Pay plus two (2)
additional Weeks of
Pay for each Year
of Service, limited
to a maximum period
of forty-five (45)
Weeks of Pay.
	 	Same as severance pay
	 
	 	 	 	 
	Band IV

	 	Fifteen (15) Weeks
of Pay plus two (2)
additional Weeks of
Pay for each Year
of Service, limited
to a maximum period
of forty-five (45)
Weeks of Pay.
	 	Same as severance pay
	 
	 	 	 	 
	Band V

	 	Twenty-four (24)
Weeks of Pay plus
two (2) additional
Weeks of Pay for
each Year of
Service, limited to
a maximum period of
fifty-two (52)
Weeks of Pay.
	 	The greater of (i) severance
pay described at left or (ii)
twenty-six (26) Weeks of Pay
plus an amount equal to the
bonus attributable to the
Eligible Employee’s most
recent Year of Service.
	 
	 	 	 	 
	Band VI

	 	Thirty-six (36)
Weeks of Pay plus
two (2) additional
Weeks of Pay for
each Year of
Service, limited to
a maximum period of
seventy-eight (78)
Weeks of Pay.
	 	The greater of (i) severance
pay described at left or (ii)
seventy-eight (78) Weeks of
Pay plus an amount equal to
the bonus attributable to the
Eligible Employee’s most
recent Year of Service

8

 

	 	 	 	 	 
	Employment	 	 	 	 
	Classification	 	Severance Pay	 	Change in Control Severance Pay
	 
	 	 	 	 
	Executive Employee

	 	Thirty-six (36)
Weeks of Pay plus
two (2) additional
Weeks of Pay for
each Year of
Service, limited to
a maximum period of
seventy-eight (78)
Weeks of Pay.
	 	If such Executive Employee is
a Senior Vice President, then
an amount equal to the greater
of (i) severance pay as
described at left or (ii) Two
times (2x) the sum of (a) the
base pay attributable to the
Executive Employee’s most
recent Year of Service and (b)
the bonus attributable to the
Executive Employee’s most
recent Year of Service.
	 
	 	 	 	 
	 

	 	 	 	If such Executive Employee is
an Executive Vice President
(or has a title that is the
equivalent thereof or higher),
then an amount equal to the
greater of (i) severance pay
as described at left or (ii)
Two and one half times (2.5x)
the sum of (a) the base pay
attributable to the Executive
Employee’s most recent Year of
Service and (b) the bonus
attributable to the Executive
Employee’s most recent Year of
Service.
	 
	 	 	 	 
	 

	 	 	 	* * *
	 
	 	 	 	 
	 

	 	 	 	Furthermore, all Executive
Employees will be entitled to
the benefits of the Modified
Excise Tax Gross-Up pursuant
to Section 5.4 under the Plan.

     Severance pay shall be paid in a lump sum payment as soon as practicable following the later
of the Severance Date or the end of the WARN Notice Period, as applicable, but in no event later
than March 15 of the year following the year of the Severance Date or the end of the WARN Notice
Period. Notwithstanding the foregoing, any severance pay and severance benefits which become
payable shall be paid only after the seven (7) day revocation period for a signed Waiver and
Release Agreement has passed. All legally required taxes and any sums owed the Employer shall be
deducted from Plan severance pay.

     If an Employer reemploys an Eligible Employee who is receiving severance pay and benefits
under the Plan, the individual shall become ineligible and such pay and benefits shall cease
effective as of the reemployment date. Further, the former Eligible Employee must repay

9

 

the portion of the severance pay attributable to the period that begins on the date the
Eligible Employee was reemployed. If the Plan Administrator, in its sole discretion, determines
that the former Eligible Employee’s services address a critical business need, then the Plan
Administrator may provide that no such repayment is required.

     5.3. Severance Benefits.

     (a) Medical and Dental Benefits Coverage Continuation. Under federal health care continuation
coverage law (referred to as “COBRA”), the Eligible Employee who is receiving health care coverage
under an Employer-sponsored plan is entitled to elect health care continuation coverage under the
applicable Employer health plan if his/her employment terminates for certain reasons. Any of the
Triggering Events would qualify the Eligible Employee to receive such continuation coverage,
subject to the terms of the applicable health plan and governing law. Under COBRA, the Eligible
Employee is required to pay the full cost for such coverage plus a two-percent administrative fee.
If an Eligible Employee experiences a Triggering Event before his or her WARN Notice Period (if
applicable) expires, his or her COBRA rights begin when the WARN Notice Period expires.

     If an Eligible Employee elects to exercise his/her applicable COBRA continuation rights under
the Employer health plan, the Eligible Employee will only be required to pay the same share of the
applicable premium that would apply if he or she were participating in the plan as an active
employee. This benefit continues for a period lasting as long as the Eligible Employee would be
entitled to receive regular (i.e., not Change in Control) severance pay under this Plan (as
described in the middle column on the previous page), limited to a maximum period of six (6)
months. Even if the Eligible Employee is entitled to Change in Control severance pay, the medical
and dental benefits described in this Section 5.3 stop after (i) the period that applies to regular
severance pay, or (ii) six (6) months, whichever period is shorter. Any partial month will be
rounded up to the next whole month. If the Employer elects to distribute severance pay in a lump
sum the health care subsidy will continue for as long as the Eligible Employee would have been
permitted to receive severance pay (limited to a maximum period of six (6) months), not including
any period by which Change in Control severance pay exceeds regular severance pay. Thereafter, the
Eligible Employee shall be required to pay the full applicable COBRA premium.

     All of the terms and conditions of an Employer-sponsored medical and dental benefit plans, as
amended from time to time, shall be applicable to an Eligible Employee (and his/her eligible
dependents, if applicable) participating in any form of continuation coverage under a
Employer-sponsored medical and dental benefit plans. This Plan is not to be interpreted to expand
an Eligible Employee’s health care continuation rights under COBRA.

     (b) Career Transition Assistance. A career transition assistance firm selected and paid for
by an Employer shall provide career transition assistance. An Eligible Employee must begin the
available career transition assistance services within sixty (60) days following his/her Severance
Date.

10

 

     Subject to the limitations set forth above, career transition assistance shall be provided in
accordance with the following table:

	 	 	 
	Employment	 	 
	Classification	 	Career Transition Services
	 
	 	 
	Band I

	 	QuickLaunch or reasonably equivalent
program.
	 
	 	 
	Band II

	 	One month Powerstart Program or reasonable
equivalent.
	 
	 	 
	Band III

	 	Three-month executive program.
	 
	 	 
	Band IV

	 	Six-month executive program.
	 
	 	 
	Band V

	 	Nine-month executive program.
	 
	 	 
	Band VI

	 	Twelve-month executive program.
	 
	 	 
	Executive Employee

	 	Twelve-month Key Executive Program.

     (c) Severance Reduction for WARN Notice Period. If the Employer is required to provide
advance notice to an Eligible Employee of a “plant closing” or “mass layoff” under the WARN Act,
and the Eligible Employee (i) is placed on a paid leave of absence during the WARN Notice Period
(or any portion thereof) or, (ii) receives wages and benefits under Sections 4.1 and 4.2 through
the end of the WARN Notice Period, the Employer shall offset against the Eligible Employee’s
severance pay and benefits described above the amount of pay and benefits the Eligible Employee
received under Sections 4.1 and 4.2. Under Section 5.2, this means the Weeks of Pay that would
otherwise apply are reduced by each Week of Pay the Eligible Employee received during the WARN
Notice Period. Partial weeks are prorated. Likewise, under Section 5.3, the period of
Employer-subsidized medical coverage is reduced by the time during which the Eligible Employee
received medical coverage during the WARN Notice Period.

     5.4 Taxes.

     (a) Parachute Gross-Up Payment. This Section 5.4 shall apply only if an Executive Employee
experiences a Triggering Event within two (2) years following a Change in Control and the Eligible
Employee was an Employee at the time of the Change in Control. If it is determined that the pay
and benefits under this Plan and any other plan or arrangement of an Employer (the “Total
Payments”) constitute a “parachute payment” (within the meaning of Section 280G of the Internal
Revenue Code (the “Code”) that would be subject to the excise tax imposed by Code Section 4999 or
any interest or penalties with respect to such excise tax (such excise tax and any such interest or
penalties are collectively referred to as the “Excise Tax”), then the Executive Employee shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount calculated to ensure
that after the Executive Employee pays all taxes (and any interest or penalties imposed with
respect to such taxes), including any Excise Tax

11

 

imposed upon the Gross-Up Payment, the Executive Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments.

     (b) Determination by Accountant. All determinations and calculations required to be made
under this Section 5.4 shall be made by an independent accounting firm selected by the Executive
Employee from among the largest five accounting firms in the United States (the “Accounting Firm”).
The Accounting Firm shall provide its determination (the “Determination”), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter,
to the Executive Employee and the Company within ten (10) business days after the Executive
Employee or the Company made the request (if the Executive Employee reasonably believes that any of
the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Executive Employee, it shall furnish the Executive Employee with a
written statement that it has concluded that no Excise Tax is payable (including reasons therefor)
and that the Executive Employee has substantial authority not to report any Excise Tax on his
federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to
the Executive Employee within ten (10) business days after the Determination has been delivered to
the Company. Notwithstanding the foregoing, if the Executive Employee is a “specified employee” as
defined and applied in Code Section 409A and the Gross-Up Payment (and/or Underpayment as described
below in Section 5.4(c)) is not otherwise exempt from the application of Code Section 409A, any
Gross-Up Payment due above will be paid no earlier than the six-month anniversary of the Executive
Employee’s separation from service. In no event shall a Gross-Up Payment be made later than the
end of the Executive Employee’s taxable year next following the Executive Employee’s taxable year
in which the Executive Employee remits the Excise Tax. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive Employee, absent manifest error.

     (c) Over — and Underpayments. As a result of uncertainty in the application of Code Section
4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments not made by the Company should have been made (“Underpayments”) or that Gross-Up
Payments will have been made by the Company that should not have been made (“Overpayments”). In
either event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the Company shall promptly pay the amount of
such Underpayment to the Executive Employee or for his benefit. In the case of an Overpayment, the
Executive Employee shall, at the direction and expense of the Company, take such steps as are
reasonably necessary (including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by the Company, and otherwise reasonably cooperate
with the Company to correct such Overpayment, provided, however, that (i) the Executive Employee
shall in no event be obligated to return to the Company an amount greater than the net after-tax
portion of the Overpayment that the Executive Employee has retained or has recovered as a refund
from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner
consistent

12

 

with the intent of subsection (a) above, which is to make the Executive Employee whole, on an
after-tax basis, from the application of the Excise Tax, it being understood that the correction of
an Overpayment may result in the Executive Employee’s repaying to the Company an amount that is
less than the Overpayment.

     (d) Limitation on Parachute Payments. Any other provision of this Section 5.4
notwithstanding, if the Excise Tax could be avoided by reducing the Total Payment by ten percent
(10%) or less, then the Total Payments shall be reduced to the extent necessary to avoid the Excise
Tax and no Gross-Up Payment shall be made. If the Accounting Firm determines that the Total
Payments are to be reduced under the preceding sentence, then the Company shall promptly give the
Executive Employee notice to that effect and a copy of the detailed calculation thereof. The
Executive Employee may then elect, in his sole discretion, which and how much of the Total Payments
are to be eliminated or reduced (as long as after such election no Excise Tax shall be payable),
and the Executive Employee shall advise the Company in writing of his election within ten (10) days
of receipt of notice. If the Executive Employee makes no such election within such ten (10)-day
period, then the Company may elect which and how much of the Total Payments are to be eliminated or
reduced (as long as after such election no Excise Tax shall be payable), and it shall notify the
Executive Employee promptly of such election.

ARTICLE VI

Waiver and Release Agreement

     In order to receive the severance pay and severance benefits available under the Plan, an
Eligible Employee must submit a signed Waiver and Release Agreement form to the Plan Administrator
on or within forty-five (45) days after his/her Severance Date or receipt of the Waiver and Release
Agreement, whichever occurs later. The required Waiver and Release Agreement form is attached to
the Summary Plan Description as Attachment III. An Eligible Employee may revoke his/her signed
Waiver and Release Agreement within seven (7) days of his/her signing the Waiver and Release
Agreement.

     Any such revocation must be made in writing and must be received by the Plan Administrator
within such seven-(7) day period. An Eligible Employee who timely revokes his/her Waiver and
Release Agreement shall not be eligible to receive any severance pay or severance benefits under
the Plan. An Eligible Employee who timely submits a signed Waiver and Release Agreement form and
who does not exercise his/her right of revocation shall be eligible to receive severance pay and
severance benefits under the Plan.

     Eligible Employees shall be advised to contact their personal attorney at their own expense to
review the Waiver and Release Agreement form if they so desire.

13

 

ARTICLE VII

Plan Administration

     The Company shall designate a committee to serve as the “Plan Administrator” of the Plan and
the “named fiduciary” within the meaning of such terms as defined in ERISA. The Plan Administrator
shall have full power and discretionary authority to determine eligibility for Plan severance pay
and severance benefits and to construe the terms of the Plan, including, but not limited to, the
making of factual determinations, the determination of all questions concerning benefits and
procedures for claim review and the resolution of all other questions arising under the Plan.
Severance pay and severance benefits under the Plan will be payable only if the Plan Administrator
determines in the Plan Administrator’s discretion that the Eligible Employee is entitled to them.
The decisions of the Plan Administrator shall be final and conclusive with respect to all questions
concerning the administration of this Plan.

     The Plan Administrator may delegate to other persons responsibilities for performing certain
of the duties of the Plan Administrator under the terms of this Plan and may seek such expert
advice as the Plan Administrator deems reasonably necessary with respect to the Plan. The Plan
Administrator shall be entitled to rely upon the information and advice furnished by such
delegatees and experts, unless actually knowing such information and advice to be inaccurate or
unlawful. The Plan Administrator shall establish and maintain a reasonable claims procedure,
including a procedure for appeal of denied claims. The Plan Administrator has discretionary
authority to grant or deny benefits under this Plan. In no event shall an Eligible Employee or any
other person be entitled to challenge a decision of the Plan Administrator in court or in any other
administrative proceeding unless and until the claim and appeals procedures established under this
Plan have been complied with and exhausted.

     In the event of a group termination, as determined in the sole discretion of the Plan
Administrator, the Plan Administrator shall furnish affected Eligible Employees with such
additional information as may be required by law.

ARTICLE VIII

Procedures for Making and Appealing 

Claims for Plan Benefits 

     8.1. Claim for Benefits. It is not necessary that an Eligible Employee apply for
severance pay and severance benefits under the Plan. However, if an Eligible Employee wishes to
file a claim for severance pay and severance benefits, such claim must be in writing and filed with
the Plan Administrator. If the Eligible Employee does not provide all the necessary information
for the Plan Administrator to process the claim, the Plan Administrator may request additional
information and set deadlines for the Eligible Employee to provide that information. Within ninety
(90) days after receiving a claim, the Plan Administrator will:

	 	(a)	 	either accept or deny the claim completely or partially; and

14

 

	 	(b)	 	notify the claimant of acceptance or denial of the claim.

     8.2. Benefits Review. If the claim is completely or partially denied, the Plan
Administrator will furnish a written notice to the claimant containing the following information:

	 	(a)	 	specific reasons for the denial;
	 
	 	(b)	 	specific references to the Plan provisions on which any denial is based;
	 
	 	(c)	 	a description of any additional material or information that must be provided
by the claimant in order to support the claim and an explanation of why such material
or information is necessary; and
	 
	 	(d)	 	an explanation of the Plan’s appeal procedures which shall also include a
statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA
following a denial of the claim upon review.

     8.3. Appeal of Denied Claim. A claimant may appeal the denial of his/her claim and
have the Plan Administrator reconsider the decision. The claimant or the claimant’s authorized
representative has the right to:

	 	(a)	 	request an appeal by written request to the Plan Administrator not later than
sixty (60) days after receipt of notice from the Plan Administrator denying his claim;
	 
	 	(b)	 	review or receive copies, upon request and free of charge, any documents,
records or other information “relevant” (within the meaning of Department of Labor
Regulation 2560.503-1(m)(8)) to the claimant’s claim; and
	 
	 	(c)	 	submit written comments, documents, records and other information relating to
his or her claim.

     In deciding a claimant’s appeal the Plan Administrator shall take into account all comments,
documents, records and other information submitted by the claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial review of the claim.
If the claimant does not provide all the necessary information for the Plan Administrator to decide
the appeal, the Plan Administrator may request additional information and set deadlines for the
claimant to provide that information.

     The Plan Administrator will make a decision with respect to such an appeal within sixty (60)
days after receiving the written request for such appeal or, in special circumstances, within
one-hundred twenty (120) days after receiving the written request for such appeal. The claimant
will be advised of the Plan Administrator’s decision on the appeal in writing. The notice will set
forth (1) the specific reasons for the decision, (2) specific reference to Plan provisions upon
which the decision on the appeal is based, (3) a statement that the claimant is entitled to
receive,

15

 

upon request and free of charge, reasonable access to, and copies of, all documents,
records or other information relevant to the claimant’s claim, and (4) a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA following a wholly or
partially denied claim for benefits.

     In no event shall a claimant or any other person be entitled to challenge a decision of the
Plan Administrator in court or in any other administrative proceeding unless and until the claim
and appeal procedures described above have been complied with and exhausted.

ARTICLE IX

Amendment/Termination/Vesting

     Eligible Employees do not have any vested right to severance pay and/or severance benefits
under the Plan and the Company reserves the right, in its sole discretion, to amend or terminate
the Plan at any time in writing, signed by an authorized officer of the Company, provided, however,
that (i) no amendment nor termination shall reduce severance pay or severance benefits attributable
to a Triggering Event that occurs prior to the date the Plan terminates, and (ii) any amendment or
termination that becomes effective after a Change in Control shall not adversely affect the rights
of any Eligible Employee compared with such Eligible Employee’s rights if his or her employment
terminated effective immediately before such amendment or termination became effective.

     The Plan shall be effective only with respect to Triggering Events that occur before December
31, 2010. The Company may extend the Plan in its sole discretion.

ARTICLE X

No Assignment

     Severance pay and severance benefits payable under the Plan shall not be subject to
anticipation, alienation, pledge, sale, transfer, assignment, garnishment, attachment, execution,
encumbrance, levy, lien, or charge, and any attempt to cause such severance pay and severance
benefits to be so subjected shall not be recognized, except to the extent required by law.

ARTICLE XI

Confidential Information/Cooperation

     Recognizing that the disclosure or improper use of such Confidential Information will cause
serious and irreparable injury to an Employer, Eligible Employees with such access acknowledge that
(i) they will not at any time, directly or indirectly, disclose Confidential Information to any
third party or otherwise use such Confidential Information for their own benefit or the benefit of
others and (ii) payment of severance pay and severance benefits under the Plan shall cease if an
Eligible Employee discloses or improperly uses such Confidential Information. Any Eligible
Employee subject to an individual confidentiality agreement or

16

 

proprietary rights agreement with an
Employer or any Affiliate will be deemed to violate the terms of this Article XI if he or she
violates the terms of the individual confidentiality agreement or proprietary rights agreement.

     Subject to the terms of the Waiver and Release Agreement, each Eligible Employee shall
cooperate with any Employer and its legal counsel in connection with any current or future
investigation or litigation relating to any matter to which the Eligible Employee was involved or
of which the Eligible Employee has knowledge or which occurred during the Eligible Employee’s
employment. Such assistance shall include, but not be limited to, depositions and testimony and
shall continue until such matters are resolved. In addition, an Eligible Employee shall not in any
way disparage any Employer nor any person associated with an Employer to any person, corporation,
or other entity.

ARTICLE XII

Miscellaneous Provisions

     12.1. Return of Property. In order for an Eligible Employee to commence receiving
severance pay and severance benefits under the Plan, (i) he/she shall be required to return all
Employer property (including, but not limited to, Confidential Information, client lists, keys,
credit cards, documents and records, identification cards, equipment, laptop computers, software,
and pagers), and (ii) repay any outstanding bills, advances, debts, amounts due to an Employer, as
of his/her Severance Date.

     All pay and other benefits (except Plan severance pay and severance benefits) payable to an
Eligible Employee as of his/her Severance Date according to the established policies, plans, and
procedures of the Employer shall be paid in accordance with the terms of those established
policies, plans and procedures. In addition, any benefit continuation or conversion rights which
an Eligible Employee has as of his/her Severance Date according to the established policies, plans,
and procedures of the Employer shall be made available to him/her.

     12.2. Code Section 409A Compliance. It is the Company’s intent that amounts paid
under this Plan shall not constitute “deferred compensation” as that term is defined under Code
Section 409A and the regulations promulgated thereunder. However, if any amount paid under this
Plan is determined to be “deferred compensation” within the meaning of Code Section 409A and
compliance with one or more of the provisions of this Plan causes or results in a violation of Code
Section 409A, then such provision shall be interpreted or reformed in the manner necessary to
achieve compliance with Code Section 409A, including but not limited to, the imposition of a
six-month delay in payment to any “key employee” (as defined in Code Section 416(i)) following such
key employee’s date of termination which entitles him or her to a payment under this Plan.

     12.3. Representations Contrary To The Plan. No employee, officer, or director of an
Employer has the authority to alter, vary, or modify the terms of the Plan except by means of an

17

 

authorized written amendment to the Plan. No verbal or written representations contrary to the
terms of the Plan and its written amendments shall be binding upon the Plan, the Plan
Administrator, or an Employer.

     12.4. No Employment Rights. This Plan shall not confer employment rights upon any
person. No person shall be entitled, by virtue of the Plan, to remain in the employ of an Employer
and nothing in the Plan shall restrict the right of an Employer to terminate the employment of any
Eligible Employee or other person at any time.

     12.5. Plan Funding. No Eligible Employee shall acquire by reason of the Plan any
right in or title to any assets, funds, or property of the Company. Any severance pay, which
becomes payable under the Plan is an unfunded obligation and shall be paid from the general assets
of the Company. No employee, officer, director or agent of the Company personally guarantees in
any manner the payment of Plan severance pay and severance benefits.

     12.6. Applicable Law. This Plan shall be governed and construed in accordance with
ERISA and in the event that any reference shall be made to State law, the laws of the State of
Delaware shall apply, without regard to its conflicts of law provisions.

     12.7. Severability.
If any provision of the Plan is found, held or deemed by a court of competent jurisdiction to
be void, unlawful or unenforceable under any applicable statute or other controlling law, the
remainder of the Plan shall continue in full force and effect.

     12.8. Recovery Of Payments Made By Mistake. An Eligible Employee shall be required to
return to the Company any severance pay payment and any severance benefits payment, or portion
thereof, made by a mistake of fact or law.

	 	 	 	 	 
	 	ATHENA NEUROSCIENCES, INC.

 	 
	 	By:  	/s/ Richard T. Collier
 	 
	 	Its:  	Vice President and Secretary 
 	 

18

 

	 	 	 	 	 

Elan U.S.

Severance Plan

Attachment A

For purposes of this Plan, “Employer” means Athena Neurosciences, Inc. and each of the following
Affiliates to the extent each remains and Affiliate (including wholly-owned subsidiaries of these
Affiliates):

	1.	 	Elan Pharmaceuticals, Inc.
	 
	2.	 	Elan Drug Delivery, Inc.
	 
	3.	 	Elan Holdings, Inc.
	 
	4.	 	Elan Diagnostics, Inc.
	 
	5.	 	Elan Pharmaceutical Management Corp.
	 
	6.	 	Elan Operations, Inc.

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