Document:

exv10w1

Exhibit 10.1

FOURTH LOAN MODIFICATION AGREEMENT

     This Fourth Loan Modification Agreement (this “Loan Modification Agreement”)
is entered into as of July 15, 2009, by and among (a) SILICON VALLEY BANK, a
California corporation, with its principal place of business at 3003 Tasman Drive,
Santa Clara, California 95054 (“Bank”) and (b) FINISAR CORPORATION, a Delaware
corporation, with its chief executive office located at 1399 Moffett Park Drive,
Sunnyvale, California 94089 (“Finisar”) and OPTIUM CORPORATION, a Delaware
corporation, with its principal place of business at 500 Horizon Drive, Suite 505,
Chalfont, Pennsylvania 18914 (“Optium”) (hereinafter,
Finisar and Optium are
jointly and severally, individually and collectively, referred to as “Borrower”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank
pursuant to a loan arrangement
dated as of March 14, 2008, evidenced by, among other documents, a certain Loan and
Security Agreement dated as
of March 14, 2008, among Borrower and Bank, as affected by a certain Joinder
Agreement dated as of October 30,
2008, as amended by a certain First Loan Modification Agreement dated as of October
30, 2008, as further amended
by a certain Second Loan Modification Agreement dated as of February 6, 2009, and
as further amended by a certain
Third Loan Modification Agreement dated as of June 10, 2009 (as amended and
affected, the “Loan Agreement”).
Capitalized terms used but not otherwise defined herein shall have the same meaning
as in the Loan Agreement.

2.
DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by
the Collateral as
described in the Loan Agreement (together with any other collateral security
granted to Bank, the “Security
Documents”). Hereinafter, the Security Documents, together with all other documents
evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

	 	A.	 	Modifications to Loan Agreement.

	 	1	 	The effectiveness of this Loan Modification Agreement is expressly conditioned upon
Borrower’s receipt of net cash proceeds of at least Forty Million
Two Hundred Fifty
Thousand Dollars ($40,250,000.00) in connection with the sale of
Borrower’s “Network
Tools” division.
	 
	 	2	 	The Loan Agreement shall be amended by deleting
the following, appearing as Section 2.2
thereof:

“2.2 Overadvances; Further Limitation.

     (a) If, at any time, the sum of (i) the outstanding
principal amount
of any Advances (including any amounts used for Cash
Management Services),
plus (ii) the face amount of any outstanding Letters
of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of
Credit Reserve), plus (iii) the FX
Reserve, exceeds the lesser of either the Revolving
Line or the Borrowing Base,
Borrower shall immediately pay to Bank in cash such
excess.

     (b) In order to have Credit Extensions made pursuant
to Sections
2.1.1, 2.1.2, 2.1.3 and 2.1.4 outstanding that exceed
Twenty-Five Million Dollars
($25,000,000.00) in the aggregate, Borrower shall
provide evidence to Bank,
upon Bank’s request, that it has unrestricted cash (as
set forth on its most recent
balance sheet delivered pursuant to Section 6.2) in an
amount equal to at least the
sum of (i) Fifty Million Dollars ($50,000,000.00) plus
(ii) the aggregate amount
of Credit Extensions made pursuant to Sections 2.1.1,
2.1.2, 2.1.3 and 2.1.4
outstanding at such time. Borrower shall be required
to comply with this
provision at all times that the aggregate amount of
Credit Extensions outstanding

 

 

exceeds Twenty-Five Million Dollars ($25,000,000.00). With respect to each
request of a Credit Extension that, when made, would result in the aggregate
principal amount of Credit Extensions made pursuant to Sections 2.1.1, 2.1.2,
2.1.3 and 2.1.4 outstanding exceeding Twenty-Five Million Dollars
($25,000,000.00), Borrower shall deliver to Bank evidence of Borrower’s
compliance with this provision (after giving effect to such Credit Extension)
as a condition precedent to such Credit Extension. If at any time the
aggregate amount of Credit Extensions outstanding exceeds the amount
permitted by this Section 2.2(b), then Borrower shall immediately pay to Bank
in cash such excess.”

	 	 	 	and inserting in lieu thereof the following:

“2.2 Overadvances. If, at any time, the sum of (i) the outstanding
principal amount of any Advances (including any amounts used for Cash
Management Services), plus (ii) the face amount of any outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve), plus (iii) the FX Reserve, exceeds the lesser of either the
Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank
in cash such excess.”

	 	3	 	The Loan Agreement shall be amended by deleting the following appearing as Section
6.7 thereof:

“6.7 Financial Covenants

     Borrower shall maintain at all times, to be tested as of the last day of
each month, unless otherwise noted:

     (a) Adjusted Quick Ratio.

     (i)
Quarterly Adjusted Quick Ratio. An
Adjusted Quick Ratio of at least (A) 1.10 to 1.00 as of April
30, 2009, (B) 1.15 to 1.00 as of July 31, 2009 and October 31,
2009, and (C) 1.25 to 1.00 as of January 31, 2010 and as of
the last day of each of Borrower’s fiscal quarters thereafter
(it being understood that the last day of each of Borrower’s
fiscal quarters occurs in January, April, July and October).

     (ii)
Intraquarterly Adjusted Quick Ratio.
An Adjusted Quick Ratio of at least (A) 0.95 to 1.00 as May
31, 2009 and June 30, 2009, and (B) 1.00 to 1.00 as of August
31, 2009 and as of the last day of each of the first two
months in each of Borrower’s fiscal quarters thereafter (it
being understood that the first two months in each of
Borrower’s fiscal quarters are February, March, May, June,
August September, November and December).

     (b) EBITDA. As of the last day of each of Borrower’s
fiscal quarters, Borrower shall have EBITDA for the six-month
period
ending on the last day of such quarter of at least (i) Fifteen
Million
Dollars ($15,000,000.00) for the quarter ending April 30, 2009,
(ii)
Seven Million Five Hundred Thousand Dollars ($7,500,000.00) for
the
quarter ending July 31, 2009, (iii) Fifteen Million Dollars
($15,000,000.00) for the quarter ending October 31, 2009, and (iv)

 

 

Twenty Million Dollars ($20,000,000.00) for the quarter ending
on January 31, 2010 and as of the last day of each quarter
thereafter.”

	 	 	 	and inserting in lieu thereof the following:

“6.7 Financial Covenants

     Borrower shall maintain at all times, to be tested as of the last day of
each month, unless otherwise noted:

     (a) Adjusted Quick Ratio.

     (i) Quarterly Adjusted Quick Ratio. An
Adjusted Quick Ratio of at least (A) 1.10 to 1.00 as of
April 30, 2009, (B) 1.15 to 1.00 as of July 31, 2009,
October 31, 2009, January 31, 2010 and April 30, 2010,
and (C) 1.25 to 1.00 as of July 31, 2010 and as of the
last day of each of Borrower’s fiscal quarters thereafter
(it being understood that the last day of each of
Borrower’s fiscal quarters occurs in January, April, July
and October).

     (ii) Intraquarterly Adjusted Quick
Ratio. An Adjusted Quick Ratio of at least (A) 0.95 to
1.00 as May 31, 2009, June 30, 2009, August 31, 2009, and
September 30, 2009, and (B) 1.00 to 1.00 as of November 30,
2009 and as of the last day of each of the first two months
in each of Borrower’s fiscal quarters thereafter (it being
understood that the first two months in each of Borrower’s
fiscal quarters are February, March, May, June, August
September, November and December).

     (b) EBITDA. As of the last day of each of Borrower’s
fiscal quarters, Borrower shall have EBITDA for the six-month
period
ending on the last day of such quarter of at least (i) Fifteen
Million
Dollars ($15,000,000.00) for the quarter ending April 30, 2009,
(ii)
Seven Million Five Hundred Thousand Dollars ($7,500,000.00) for
the
quarter ending July 31, 2009, and (iii) Fifteen Million Dollars
($15,000,000.00) for the quarter ending October 31, 2009 and as of
the last day of each quarter thereafter.”

	 	4	 	The Loan Agreement shall be amended by deleting the following, appearing as Section
7.7 thereof:

“7.7
Distributions; Investments. (a) Pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock
other than Permitted Distributions; or (b) directly or indirectly acquire or
own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so.”

	 	 	 	and inserting in lieu thereof the following:

“7.7 Distributions; Investments. (a) Pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock
other than Permitted Distributions; provided that Borrower may redeem certain
of its convertible notes so long as (i) an Event of Default does not exist at
the time of such redemption and would not exist after giving effect to such
redemption, and

 

 

(ii) the aggregate amount of cash used by Borrower in connection with such
redemption does not exceed Fifty Million Dollars ($50,000,000.00); or (b)
directly or indirectly acquire or own any Person, or make any Investment in
any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so.”

	 	5	 	The Loan Agreement shall be amended by deleting the following text, appearing in the
definition of Eligible Accounts in Section 13.1 thereof:

     “(a) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date regardless of invoice payment period terms;

     (b) Accounts owing from an Account Debtor, fifty percent (50%)
or more of whose Accounts have not been paid within ninety (90) days of
invoice
date;

     (c) Accounts owing from an Account Debtor which does not have
its principal place of business in the United States, unless such
Accounts are
otherwise Eligible Accounts and covered in full by credit insurance
satisfactory to
Bank;

	 	 	 	and inserting in lieu thereof the following:

     “(a) Accounts that the Account Debtor has not paid within ninety
(90) days (or, for Accounts for which the Account Debtor is Ericsson or one
of its affiliates, one hundred (100) days) of invoice date regardless of
invoice payment period terms;

     (b) Accounts owing from an Account Debtor, fifty percent (50%)
or more of whose Accounts have not been paid within ninety (90) days
(or, for
Accounts for which the Account Debtor is Ericsson or one of its
affiliates, one
hundred (100) days) of invoice date;

     (c) Accounts owing from an Account Debtor which does not have
its principal place of business in the United States, unless such
Accounts are (i)
otherwise Eligible Accounts, (ii) covered in full by credit insurance
satisfactory to
Bank, and (iii) approved by Bank in writing in Bank’s sole and absolute
discretion
on a case-by-case basis (it being understood Bank has approved Ericsson,
Huawei
and Jabil Circuit);

	 	6	 	The Loan Agreement shall be amended by deleting the following definitions, appearing
in Section 13.1 thereof:

““Eligible Foreign Accounts” are Accounts that would be Eligible
Accounts but for the fact that the Account Debtor’s principal place of
business is not in the United States that are approved by Bank in writing in
Bank’s sole and absolute discretion on a case-by-case basis.”

““LIBOR Rate” means, for each Interest Period in respect of LIBOR Credit
Extensions comprising part of the same Credit Extensions, an interest rate per
annum (rounded upward to the nearest l/16th of one percent (0.0625%)) equal to
LIBOR for such Interest Period divided by one (1) minus the Reserve
Requirement for such Interest Period.”

““LIBOR Rate Margin” is three percent (3.0%).”

 

 

““Prime Rate” is Bank’s most recently announced “prime rate,” even
if it is not Bank’s lowest rate.”

““Prime Rate Margin” is one-half of one percent (0.50%).”

““Revolving Line” is an Advance or Advances in an aggregate amount of
up to Forty-Five Million Dollars ($45,000,000.00) outstanding at any
time.”

	 	 	 	and inserting in lieu thereof the following:

““Eligible Foreign Accounts” are Accounts that (a) would be Eligible
Accounts but for the fact that the Account Debtor’s principal place of
business is not in the United States, (b) are approved by Bank in
writing in Bank’s sole and absolute discretion on a case-by-case basis,
and (c) are not covered in full by credit insurance satisfactory to
Bank.”

““LIBOR Rate” means, for each Interest Period in respect of LIBOR
Credit Extensions comprising part of the same Credit Extensions, an
interest rate per annum (rounded upward to the nearest 1/16th of one
percent (0.0625%)) equal to the greater of (a) one and one-half percent
(1.50%), and (b) LIBOR for such Interest Period divided by one (1)
minus the Reserve Requirement for such Interest Period.”

““LIBOR Rate Margin” is three and one-half percent (3.50%).”

““Prime Rate” is the greater of (a) four percent (4.0%), and (b)
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.”

““Prime Rate Margin” is one percent (1.0%).”

““Revolving Line” is an Advance or Advances in an aggregate amount of
up to Twenty-Five Million Dollars ($25,000,000.00) outstanding at any
time.”

	 	7	 	The Borrowing Base Certificate appearing as Exhibit E to the Loan Agreement
is hereby
replaced with the Borrowing Base Certificate attached hereto as Schedule
1.

4. FEES. Borrower shall pay to Bank a modification fee equal to Ten Thousand Dollars
($10,000.00), which
fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof.
Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this Loan Modification
Agreement.

5. RATIFICATION OF PERFECTION CERTIFICATES.

     (a) Finisar hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained
in a certain Perfection Certificate dated as of July 15, 2009 between Finisar and Bank, and
acknowledges, confirms
and agrees that the disclosures and information Finisar provided to Bank in the Perfection
Certificate have not
changed, as of the date hereof.

     (b) Optium hereby ratifies, confirms and reaffirms, all and singular, the terms and
disclosures contained
in a certain Perfection Certificate dated as of July 15, 2009 between Optium and Bank, and
acknowledges, confirms
and agrees that the disclosures and information Optium provided to Bank in the Perfection
Certificate have not
changed, as of the date hereof.

6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to
reflect the changes described above.

 

 

7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms
and conditions of all security or other collateral granted to the Bank, and confirms
that the indebtedness secured
thereby includes, without limitation, the Obligations.

8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no
offsets, defenses, claims, or counterclaims against Bank with respect to the
Obligations, or otherwise, and that if
Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims
against Bank, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower
hereby RELEASES Bank
from any liability thereunder.

9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations,
Bank is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan
Documents. Except as expressly modified pursuant to this Loan Modification Agreement,
the terms of the Existing
Loan Documents remain unchanged and in full force and effect. Bank’s agreement to
modifications to the existing
Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank
to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement shall
constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable parties all
makers of Existing Loan
Documents, unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this
Loan Modification Agreement.

10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall
have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

 

 

     This Loan Modification Agreement is executed as a sealed instrument
under the laws of the State of California as of the date first written
above.

	 	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	BANK:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	FINISAR CORPORATION	 	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ S. K. Workman
	 	 	 	By:
	 	/s/ Nick Tsiagkas	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name:   S. K. Workman
	 	 	 	 	 	Name:   Nick Tsiagkas	 	 
	 

	 	Title:     CFO
	 	 	 	 	 	Title:     Relationship Manager	 	 

	 	 	 	 	 
	OPTIUM CORPORATION

 	 	 
	By:  	/s/ S. K. Workman
 	 	 
	 	Name:  	S. K. Workman                                                       	 	 
	 	Title:  	CFO 	 	 

 

 

	 	 	 	 	 

SCHEDULE 1 

EXHIBIT E

BORROWING BASE CERTIFICATE

Borrower: Finisar Corporation and Optium Corporation

Lender: Silicon Valley Bank

Commitment Amount: $25,000,000.00

	 	 	 	 	 
	ACCOUNTS RECEIVABLE
	 	 	 	 
	1. Accounts Receivable Book Value as of                                 
	 	$	                    	 
	2. Additions (please explain on reverse)
	 	$	                    	 
	3. TOTAL ACCOUNTS RECEIVABLE
	 	$	                    	 
	 
	 	 	 	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
	 	 	 	 
	4. Amounts over 90 days due
	 	$	                    	 
	5. Balance of 50% over 90 day accounts
	 	$	                    	 
	6. Credit balances over 90 days
	 	$	                    	 
	7. Concentration Limits
	 	$	                    	 
	8. Foreign Accounts
	 	$	                    	 
	9. Governmental Accounts
	 	$	                    	 
	10. Contra Accounts
	 	$	                    	 
	11. Promotion or Demo Accounts
	 	$	                    	 
	12. Intercompany/Employee Accounts
	 	$	                    	 
	13. Disputed Accounts
	 	$	                    	 
	14. Deferred Revenue
	 	$	                    	 
	15. Other (please explain on reverse)
	 	$	                    	 
	16. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	$	                    	 
	17. Eligible Accounts (#3 minus #16)
	 	$	                    	 
	18. ELIGIBLE AMOUNT OF ACCOUNTS (80% of #17)
	 	$	                    	 
	19. Eligible Foreign Accounts
	 	$	                    	 
	20. ELIGIBLE AMOUNT OF ELIGIBLE FOREIGN ACCOUNTS (lesser of (a)
65% of
#19, and (b) $5,000,000))
	 	$	                    	 
	 
	 	 	 	 
	BALANCES
	 	 	 	 
	21. Maximum Loan Amount
	 	$	                    	 
	22. Total Funds Available Lesser of #21 or (#18 plus #20)
	 	$	                    	 
	23. Present balance owing on Line of Credit
	 	$	                    	 
	24. Outstanding under Sublimits
	 	$	                    	 
	25. RESERVE POSITION (#22 minus #23 and #24)
	 	$	                    	 

The undersigned represents and warrants that this is true, complete and correct, and
that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.

 

 

	 	 	 	 	 	 	 	 
	COMMENTS:

	 	 
	 	BANK USE ONLY	 
	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Received by:                                         	 
	FINISAR CORPORATION	 	 	 	AUTHORIZED SIGNER	 
	OPTIUM CORPORATION	 	 	 	Date:                                                       	 
	 

	 	 	 	 	 	Verified:                                                  	 
	 

	 	 	 	 	 	AUTHORIZED SIGNER	 
	By:

	 	 	 	 	 	Date:                                                       	 
	 

	 	 	 	 	 	 
	 

	Authorized Signer
	 	 	 	Compliance Status:      Yes           No	 
	Date:exv10w1

Exhibit 10.1

SEPARATION AGREEMENT

     This Separation Agreement is made between David A. Broecker (“Executive”) and Alkermes, Inc.
(the “Company,” together with Executive, the “Parties”).

     WHEREAS,
Executive has served as an executive officer, including CEO, of the
Company since
February 2001;

     WHEREAS, the Parties entered into an employment agreement dated December 12, 2007, and amended
that agreement as of October 7, 2008 (the agreement as amended is hereinafter referred to as the
“Employment Agreement”);

     WHEREAS, the Employment Agreement contains terms which expressly survive the termination of
Executive’s employment;

     WHEREAS, Executive holds restricted shares of the Company’s common stock and options to
purchase shares of the Company’s common stock (which are both vested and unvested options) that are
governed by the Alkermes, Inc. 2008 Stock Option and Incentive Plan, the Alkermes, Inc. 2002
Restricted Stock Award Plan (as amended and approved on October 9, 2007), and the Alkermes, Inc.
1999 Stock Option Plan (as amended and approved on November 2, 2006) and associated stock option
certificates and restricted stock certificates (collectively “Equity Documents”);

     WHEREAS, the Company has agreed to provide Executive with certain termination benefits (the
“Termination Benefits”) provided that, among other things, the Executive enters into a separation
agreement which includes a general release of claims in favor of the Company and related persons
and entities;

     WHEREAS, the Company and the Executive have agreed that the Executive will resign his
employment with the Company;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:

1. Employment Separation. Executive’s employment with the Company shall end on December
31, 2009 (“Separation Date”). Executive confirms that, effective September 10, 2009, he has
resigned his position as President and Chief Executive Officer of the Company, his position as a
Director of the Company, and all other offices and positions that he holds with the Company or any
of its subsidiaries or affiliates. Between September 10, 2009 and the Separation Date, Executive
will receive his regular bi-weekly salary payments. Executive confirms that he will use all
accrued, unused vacation pay to which he is entitled as of September 10, 2009 by the Separation
Date. Executive will not accrue additional vacation entitlement after September 10, 2009.

2. Business Expense Reimbursement. The Company shall reimburse Executive for any
outstanding, reasonable business expenses that Executive has incurred on the Company’s behalf
through the Separation Date, provided the Company receives

 

 

appropriate documentation pursuant to
the Company’s business expense reimbursement policy on or before the Separation Date.

3. Termination Benefits. In exchange for, among other things, his signing, delivering and
not revoking a General Release of Claims in the form of Exhibit A hereto (the “Release”),
the Company agrees to provide Executive with the following Termination Benefits:

     (a) The Company shall pay Executive $1,151,250, which represents an amount equal to one and
one-half times the sum of the Executive’s Base Salary and his Average Incentive Compensation (as
such terms are defined in the Employment Agreement, such amount referred to herein as the
“Severance Amount”). The Severance Amount shall be paid out in substantially equal bi-weekly
installments over eighteen (18) months, in arrears beginning on the first payroll date that occurs
after thirty-five days from the Separation Date. Solely for the purposes of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), each bi-weekly payment is considered a
separate payment. The death of the Executive shall not relieve the Company of its obligations
hereunder.

     (b) Subject to Executive’s copayment of premium amounts at the active employees’ rate, he
shall continue to participate in the Company’s group health, dental and vision program for eighteen
(18) months following the Separation Date; provided, however, that the continuation of such
benefits under this subparagraph shall reduce and count against Executive’s rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

     (c) Anything in this Agreement to the contrary notwithstanding, if any payment or benefit that
Executive becomes entitled to under this Agreement is considered deferred compensation subject to
interest, penalties and additional tax imposed pursuant to Section 409A(a) of the Code as a result
of the application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable
or benefit shall be provided prior to the date that is the earlier of (A) six months after
Executive’s separation from service, or (B) Executive’s death, and the initial payment shall
include a catch-up amount covering amounts that would otherwise have been paid during the first
six-month period but for the applications of this Subparagraph 3(c). The Parties intend that this
Agreement will be administered in accordance with Section 409A of the Code. The Parties agree that
this Agreement may be amended, as reasonably requested by either Party, and as may be necessary to
fully comply with Section 409A of the Code and all related rules and regulations in order to
preserve the payments and benefits provided hereunder without additional cost to either Party.

     (d) Treatment of Executive’s Stock Options. The stock options held by Executive
immediately prior to September 10, 2009 are set forth on Exhibit B hereto (all of such
options, the “Stock Options”). Subject to the approval of the Compensation Committee of
the Board of Directors of the Company, all Stock Options are hereby amended such that, effective as
of the Separation Date, they are exercisable until the earlier of (1) the stated expiration date of
such Stock Option, and (2) June 30, 2011.

 

 

          (i) Subject to the approval of the Compensation Committee of the Board of Directors of
the Company, the following Stock Options are hereby amended such that such options are
fully vested as of the earlier of Executive’s death or the Separation Date:

          (A) The remaining 28,125 shares of a Stock Option to purchase 112,500 shares
of the Company’s Common Stock at an exercise price of $18.60 per share, granted on
December 9, 2005; and

          (B) The remaining 14,062 shares of a Stock Option to purchase 56,250 shares of
the Company’s Common Stock at an exercise price of $20.79 per share, granted on May
2, 2006.

          (ii) Subject to the approval of the Compensation Committee of the Board of Directors
of the Company, the following Stock Options are hereby amended such that vesting is
accelerated as of the earlier of Executive’s death or the Separation Date as if Executive’s
employment with the Company terminated on June 30, 2010 (notwithstanding anything to the
contrary contained in the Stock Option award certificates or in the equity compensation
plan pursuant to which such Stock Option was granted) as a result of which the following
vesting shall occur:

          (A) 20,000 shares of a Stock Option to purchase 80,000 shares of the Company’s
Common Stock at an exercise price of $14.38 per share, granted on December 12,
2006, the remaining 20,000 shares of such award shall remain unvested and terminate
on the Separation Date;

          (B) 15,000 shares of a Stock Option to purchase 60,000 shares of the
Company’s Common Stock at an exercise price of $15.95 per share, granted on June 1,
2007, the remaining 15,000 shares of such award shall remain unvested and terminate
on the Separation Date;

          (C) 7,500 shares of a Stock Option to purchase 30,000 shares of the Company’s
Common Stock at an exercise price of $14.13 per share, granted on November 5, 2007,
the remaining 15,000 shares of such award shall remain unvested and terminate on
the Separation Date;

          (D) 27,500 shares of a Stock Option to purchase 110,000 shares of the
Company’s Common Stock at an exercise price of $12.29 per share, granted on May 27,
2008, the remaining 55,000 shares of such award shall remain unvested and terminate
on the Separation Date; and

          (E) 43,750 shares of a Stock Option to purchase 175,000 shares of the
Company’s Common Stock at an exercise price of $8.55 per share, granted on May 26,
2009, the remaining 131,250 shares of such award shall remain unvested and
terminate on the Separation Date.

 

 

          (iii) Executive acknowledges that the Stock Options amended pursuant to (i) and (ii)
above shall not be eligible to be taxed as an “incentive stock option” for purposes of
Section 422 of the Code.

     (e) Treatment of Executive’s Restricted Stock Awards. The restricted stock awards
granted to Executive prior to September 10, 2009 are set forth in Exhibit C hereto.

          (i) Subject to the approval of the Compensation Committee of the Board of Directors of
the Company and the continued employment of Executive until the earlier of the Separation
Date or his death, the following Restricted Stock Awards are hereby amended such that
vesting is accelerated as of the earlier of Executive’s death or the Separation Date as if
Executive’s employment with the Company terminated on June 30, 2010 (notwithstanding
anything to the contrary contained in the Restricted Stock Award certificates or in the
equity compensation plan pursuant to which such Restricted Stock Award was granted) as a
result of which the following vesting shall occur:

          (A) 3,750 shares of the Company’s Common Stock pursuant to a Restricted Stock
Award granted on June 1, 2007, the remaining 3,750 shares of such award shall
remain unvested and terminate on the Separation Date;

          (B) 1,000 shares of the Company’s Common Stock pursuant to a Restricted Stock
Award granted on November 5, 2007, the remaining 2,000 shares of such award shall
remain unvested and terminate on the Separation Date; and

          (C) 3,000 shares of the Company’s Common Stock pursuant to a Restricted Stock
Award granted on May 27, 2008, the remaining 6,000 shares of such award shall
remain unvested and terminate on the Separation Date.

          (ii) The Restricted Stock Awards covering 10,000 shares of the Company’s Common Stock,
granted on May 27, 2008 and 20,000 shares of the Company’s Common Stock, granted on May 26,
2009 each terminate on the Separation Date.

     (f) The Company will pay the cost of professional outplacement services up to a maximum of
$23,500 provided by a top tier outplacement services firm selected by Executive. The Company will
pay the outplacement agency directly. This supplemental termination benefit must be used by
Executive within six months of the Separation Date or be forfeited.

     (g) The Company will reimburse Executive up to $2,500 for the cost of obtaining advice from
an accountant or other tax advisor concerning tax issues under this Separation Agreement. Such
amount will be paid no later than the last day of 2010.

 

 

     (h) Executive may retain his personal contact information stored on his Company computer.

4. Employment Agreement.  Executive hereby reaffirms his continuing obligations pursuant
to the Employment Agreement, including but not limited to his co-operation, nonsolicitation and
nondisclosure obligations under Section 7 of the Employment Agreement, all of which are
incorporated by reference into this section and shall remain in full force and effect.

5. Non-disparagement  Executive agrees not to make any disparaging statements concerning
the Company or any of its affiliates or current or former officers, directors, shareholders,
employees or agents. The Company agrees to direct its executive officers not to make any
disparaging statements concerning the Executive to any third parties. This non-disparagement
obligation shall not in any way affect the obligation of the Executive, the Company, and any
officer, director, shareholder, employee or agent thereof, to testify truthfully in any legal
proceeding or government investigation.

6. Advice of Counsel. This Separation Agreement is a legally binding document and
Executive’s signature will commit Executive to its terms. Executive acknowledges that he has been
advised to discuss all aspects of this Separation Agreement with his attorney, that he has
carefully read and fully understands all of the provisions of this Separation Agreement and that
Executive is knowingly and voluntarily entering into this Separation Agreement.

7. Termination of Termination Benefits. Executive’s right to the Termination Benefits is
conditional on his compliance with his continuing obligations under the Employment Agreement and
his Covenant Not to Compete with the Company dated January 3, 2001 (the “Non-Compete”).  In the
event that Executive fails to comply with his obligations under Section 7 of the Employment
Agreement or his obligations under this Separation Agreement or his Non-Compete, in addition to any
other legal or equitable remedies it may have for such breach, the Company shall have the right to
terminate the Termination Benefits payable hereunder (i) immediately upon such failure to comply if
such failure to comply is incapable of being cured by the Executive; and (ii) with five days prior
written notice to the Executive informing him of the Company’s reasonable belief that a failure to
comply has occurred and if such failure to comply has not been cured within such five-day period. 
Such termination of those payments and benefits in the event of such breach by Executive shall not
affect Executive’s ongoing obligations, and shall be in addition to and not in lieu of the
Company’s rights to injunctive relief and other legal and equitable remedies that the Company may
have.

8. Enforceability. Executive acknowledges that, if any portion or provision of this
Separation Agreement, or the restrictions in Section 7 of the Employment Agreement or the
Non-Compete, shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision shall be valid and
enforceable to the fullest extent permitted by law.

 

 

9. Entire Agreement. This Separation Agreement along with the Employment Agreement, the
Non-Compete and the Equity Documents, as modified herein, constitute the entire agreement between
Executive and the Company concerning Executive’s relationship with the Company, and supersedes and
replaces any and all other prior agreements and understandings between the Parties concerning the
Executive’s relationship with the Company.

10. Waiver. No waiver of any provision of this Separation Agreement shall be effective
unless made in writing and signed by the waiving party. The failure of either Party to require the
performance of any term or obligation of this Separation Agreement, or the waiver by either Party
of any breach of this Separation Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.

11. Taxes. The Company shall undertake to make deductions, withholdings and tax reports
with respect to payments and benefits under this Separation Agreement and in connection with other
compensation matters to the extent that it reasonably and in good faith determines that it is
required to make such deductions, withholdings and tax reports. Payments under this Separation
Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this
Separation Agreement shall be construed to require the Company to make any payments to compensate
Executive for any adverse tax effect associated with any payments or benefits made to Executive in
connection with Executive’s employment with the Company.

12. Governing Law; Interpretation. This Separation Agreement shall be interpreted and
enforced under the laws of the Commonwealth of Massachusetts without regard to conflict of law
principles. In the event of any dispute, this Separation Agreement is intended by the Parties to
be construed as a whole, to be interpreted in accordance with its fair meaning, and not to be
construed strictly for or against either Party or the “drafter” of all or any portion of this
Separation Agreement.

13. Counterparts. This Separation Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be taken to be an original, but all of which
together shall constitute one and the same document. Facsimile and pdf signatures shall be deemed
to be of equal force and effect as originals.

 

 

     IN WITNESS WHEREOF, the Parties, intending to be legally bound, have executed this Separation
Agreement on the date(s) indicated below.

	 	 	 
	ALKERMES, INC.
	 	 
	 
	 	 
	/s/ Kathryn L. Biberstein

	 	September 10, 2009
	 

	 	 
	Kathryn L. Biberstein, Sr. V.P.

	 	Date
	 
	 	 
	/s/ David A. Broecker

	 	September 10, 2009
	 

	 	 
	David A. Broecker

	 	Date

 

 

EXHIBIT A

General Release of Claims

     I, David A. Broecker, acknowledge that, pursuant to Section 3 of my September 10, 2009
Separation Agreement (the “Separation Agreement”) with Alkermes, Inc. (the “Company”), I am
required to execute a release of any and all legal claims in a form satisfactory to the Company as
a condition of my eligibility for severance payments and benefits under the Separation Agreement.
Accordingly, in consideration for such payments, to which I acknowledge I otherwise would not be
entitled, I voluntarily release and forever discharge the Company, its affiliated and related
entities, its and their respective predecessors, successors and assigns, its and their respective
employee benefit plans and fiduciaries of such plans, and the current and former officers,
directors, shareholders, employees, attorneys, accountants and agents of each of the foregoing in
their official and personal capacities (collectively referred to as the “Releasees”)
generally from all claims, demands, debts, damages and liabilities of every name and nature, known
or unknown (“Claims”) that, as of the date when I sign this Agreement, I have, ever had,
now claim to have or ever claimed to have had against any or all of the Releasees. This release
includes, without limitation, all Claims:

	•	 	relating to my employment by and termination of employment with the Company and any of its
affiliated and related entities;
	 
	•	 	of wrongful discharge;
	 
	•	 	of breach of contract;
	 
	•	 	of retaliation or discrimination under federal, state or local law (including, without
limitation, Claims of age discrimination or retaliation under the Age Discrimination in
Employment Act);
	 
	•	 	under any other federal or state statute;
	 
	•	 	of defamation or other torts;
	 
	•	 	of violation of public policy;
	 
	•	 	for wages, bonuses, incentive compensation, stock, stock options, vacation pay or any other
compensation or benefits; and
	 
	•	 	for damages or other remedies of any sort, including, without limitation, compensatory
damages, punitive damages, injunctive relief and attorney’s fees;

provided, however, that this release shall not affect my vested rights under the Company’s Section
401(k) plan, my rights under this Agreement, the Separation Agreement, and the Equity Documents
referenced in the Separation Agreement; and any right I may have to indemnification under the
Company’s by-laws.

     I agree that I shall not accept damages of any nature, other equitable or legal remedies for
my own benefit, attorney’s fees, or costs from any of the Releasees with respect to any Claim
released hereby. As a material inducement to the Company to make the severance payments and health
and other benefit insurance premium payments under the Separation Agreement, I represent that I
have not assigned to any third party any Claim released hereby.

 

 

     I have had the opportunity to consider this Release for twenty-one (21) days before signing
it. If I have signed this Release within less than twenty-one (21) days of the date of its
delivery to me, I acknowledge by signing this Release that such decision was entirely voluntary and
that I had the opportunity to consider this Release for the entire twenty-one (21) day period. For
the period of seven (7) days from the date when I sign this Release, I have the right to revoke
this Release by written notice to Kathryn L. Biberstein, General Counsel, Alkermes, Inc., 88 Sidney
Street, Cambridge, MA 02139. For such a revocation to be effective, it must be delivered so that
it is received by the Company at or before the expiration of the seven (7) day revocation period.
This Release shall not become effective or enforceable during the revocation period. This Release
shall become effective on the first business day following the expiration of the revocation period.

     I understand that this Release is a legally binding document and my signature will commit me
to its terms. I acknowledge that I have been advised by the Company to discuss all aspects of this
Release with my attorney, that I have carefully read and fully understand all of the provisions of
this Release and that I am knowingly and voluntarily signing this Release.

     In signing this Release, I am not relying upon any promises or representations made by anyone
at or on behalf of the Company, other than the promises set forth in the Separation Agreement.

     You are advised to consult with an attorney before signing this Release.

	 	 	 
	/s/
David A. Broecker
	 
	David A. Broecker
	 
	 	 
	Dated:

	 	September 10, 2009
	 

	 	 

 

 

EXHIBIT B

DAVID BROECKER OPTIONS AS OF SEPTEMBER 10, 2009

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total	 	 	 	 	 	 
	Grant Date	 	Plan	 	Shares	 	Price	 	Vested	 	Unvested
	2/12/2001
	 	1999/ISO	 	 	13,632	 	 	$	29.3400	 	 	 	13,632	 	 	 	0	 
	2/12/2001
	 	1999/NQ	 	 	386,368	 	 	$	29.3400	 	 	 	386,368	 	 	 	0	 
	 
	 	 	 	 	400,000	 	 	 	 	 	 	 	400,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/2/2001
	 	1998/NQ	 	 	150,000	 	 	$	19.4000	 	 	 	150,000	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7/18/2002
	 	1999/ISO	 	 	18,753	 	 	$	4.7700	 	 	 	18,753	 	 	 	0	 
	7/18/2002
	 	1999/NQ	 	 	56,247	 	 	$	4.7700	 	 	 	56,247	 	 	 	0	 
	 
	 	 	 	 	75,000	 	 	 	 	 	 	 	75,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/12/2002
	 	1998/NQ	 	 	25,500	 	 	$	7.3600	 	 	 	25,500	 	 	 	0	 
	12/12/2002
	 	1999/ISO	 	 	1,435	 	 	$	7.3600	 	 	 	1,435	 	 	 	0	 
	12/12/2002
	 	1999/NQ	 	 	248,065	 	 	$	7.3600	 	 	 	248,065	 	 	 	0	 
	 
	 	 	 	 	275,000	 	 	 	 	 	 	 	275,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4/25/2003
	 	1999/ISO	 	 	10,030	 	 	$	9.9700	 	 	 	10,030	 	 	 	0	 
	4/25/2003
	 	1999/NQ	 	 	112,470	 	 	$	9.9700	 	 	 	112,470	 	 	 	0	 
	 
	 	 	 	 	122,500	 	 	 	 	 	 	 	122,500	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/17/2003
	 	1999/NQ	 	 	110,250	 	 	$	14.5700	 	 	 	110,250	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/10/2003
	 	1999/NQ	 	 	67,250	 	 	$	12.1600	 	 	 	67,250	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7/12/2004
	 	1999/ISO	 	 	8,130	 	 	$	12.3000	 	 	 	8,130	 	 	 	0	 
	7/12/2004
	 	1999/NQ	 	 	81,870	 	 	$	12.3000	 	 	 	81,870	 	 	 	0	 
	 
	 	 	 	 	90,000	 	 	 	 	 	 	 	90,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/17/2004
	 	1999/NQ	 	 	210,000	 	 	$	14.9000	 	 	 	210,000	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/9/2005
	 	1999/ISO	 	 	5,376	 	 	$	18.6000	 	 	 	0	 	 	 	5,376	 
	12/9/2005
	 	1999/NQ	 	 	107,124	 	 	$	18.6000	 	 	 	84,375	 	 	 	22,749	 
	 
	 	 	 	 	112,500	 	 	 	 	 	 	 	84,375	 	 	 	28,125	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5/2/2006
	 	1999/ISO	 	 	4,810	 	 	$	20.7900	 	 	 	0	 	 	 	4,810	 
	5/2/2006
	 	1999/NQ	 	 	51,440	 	 	$	20.7900	 	 	 	42,188	 	 	 	9,252	 
	 
	 	 	 	 	56,250	 	 	 	 	 	 	 	42,188	 	 	 	14,062	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total	 	 	 	 	 	 
	Grant Date	 	Plan	 	Shares	 	Price	 	Vested	 	Unvested
	12/12/2006
	 	1999/NQ	 	 	80,000	 	 	$	14.3800	 	 	 	40,000	 	 	 	40,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6/1/2007
	 	1999/ISO	 	 	6,269	 	 	$	15.9500	 	 	 	0	 	 	 	6,269	 
	6/1/2007
	 	1999/NQ	 	 	53,731	 	 	$	15.9500	 	 	 	30,000	 	 	 	23,731	 
	 
	 	 	 	 	60,000	 	 	 	 	 	 	 	30,000	 	 	 	30,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11/5/2007
	 	1999/NQ	 	 	30,000	 	 	$	14.1300	 	 	 	7,500	 	 	 	22,500	 
	 
	5/27/2008
	 	1999/ISO	 	 	8,136	 	 	$	12.2900	 	 	 	0	 	 	 	8,136	 
	5/27/2008
	 	1999/NQ	 	 	101,864	 	 	$	12.2900	 	 	 	27,500	 	 	 	74,364	 
	 
	 	 	 	 	110,000	 	 	 	 	 	 	 	27,500	 	 	 	82,500	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5/26/2009
	 	2008/ISO	 	 	11,697	 	 	$	8.5500	 	 	 	0	 	 	 	11,697	 
	5/26/2009
	 	2008/NQ	 	 	163,303	 	 	$	8.5500	 	 	 	0	 	 	 	163,303	 
	 
	 	 	 	 	175,000	 	 	 	 	 	 	 	 	 	 	 	175,000	 

 

 

EXHIBIT C

DAVID BROECKER RESTRICTED STOCK AWARDS AS OF SEPTEMBER 10, 2009

Time Vesting RSAs

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total	 	 	 	 
	Grant Date	 	Plan	 	Shares	 	Vested	 	Unvested
	6/1/07
	 	2002 RSA	 	 	15,000	 	 	7,500	 	 	7,500
	11/5/07
	 	2002 RSA	 	 	4,000	 	 	1,000	 	 	3,000
	5/27/08
	 	2002 RSA	 	 	12,000	 	 	3,000	 	 	9,000

Performance Vesting RSAs

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total	 	 	 	 
	Grant Date	 	Plan	 	Shares	 	Vested	 	Unvested
	5/27/08
	 	2002 RSA	 	 	10,000	 	 	0	 	 	10,000
	5/26/09
	 	2008 Omni	 	 	20,000	 	 	0	 	 	20,000

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