Employment Agreement

Amended and Restated Employment Agreement

Executive Retention Agreement

Severance Agreement

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this 1st day of March 2007, is entered into by Sepracor Inc., a Delaware corporation with its principal place of business at 84 Waterford Drive, Marlborough, Massachusetts 01752-7231(the “Company”), and Adrian Adams, residing at                                         (the “Executive”).

The Company desires to employ the Executive and the Executive desires to be employed by the Company.  In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows:

1.                                       Term of Employment.  The Company hereby agrees to employ the Executive and the Executive hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on March 1, 2007 (the “Commencement Date”) and ending on March 1, 2012 (the “Term”)Notwithstanding the foregoing, the Term shall be extended automatically without further action by either party by one (1) additional year (added to the end of the Term) on each succeeding anniversary of March 1, 2012, unless either party shall have served written notice upon the other party at least sixty (60) days preceding the date upon which such Term would end (such period, as it may be extended, the “Employment Period”), unless sooner terminated in accordance with the provisions of Section 4.

2.                                       Title and Capacity.  The Executive shall initially serve as President and Chief Operating Officer of the Company and in that capacity Executive shall report directly to the Chief Executive Officer of the Company and shall, except as permitted

 


hereby, devote all of his business time and services to the business and affairs of the Company.  The Company acknowledges that it is the present expectation of the Board and the parties hereto that Executive will be elected to the position of Chief Executive Officer within six months of the Commencement Date.  At such time as the Executive is elected to the position of Chief Executive Officer, he shall report directly to the Board and shall assume the duties and responsibilities inherent in such position and such other duties and responsibilities as the Board shall from time to time reasonably assign to him.

Executive shall also perform such other duties consistent with his position at such time as may be reasonably assigned by the Chief Executive Officer (if Executive does not then hold such position) and/or the Board of Directors of the Company (the “Board”) from time to time.  Executive shall serve on the Board and may also serve as a director or officer of any of the Company’s operating subsidiaries if the Executive shall be elected to such position, for no additional compensation or benefits.  The Executive hereby accepts such service and agrees to undertake the duties and responsibilities inherent in such positions.  The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company.

Notwithstanding anything herein to the contrary, Executive shall be entitled to engage in (a) service on the board of directors of a no more than three other companies, businesses or trade organizations, provided, that, the Executive shall provide the Company prior written notice of his intention to join any such board and provided further that he shall not serve on the board of any entity that competes with the Company, (b) service on the board of directors of not-for-profit or charitable organizations, (c) other

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charitable activities and community affairs and (d) managing his personal investments and affairs, in each case to the extent such activities do not materially interfere with the performance of his duties and responsibilities to the Company.

3.                                       Compensation and Benefits.

3.1                                 Salary.  During the term of this Agreement, the Company agrees to pay to the Executive a base salary at the annualized rate of $800,000 (“Base Salary”) commencing on the Commencement Date.  The Base Salary shall be subject to annual review by the Board but shall not be reduced below $800,000 per annum.  Such salary shall be payable to Executive in bi-weekly installments and in accordance with the Company’s normal payroll procedures.

3.2                                 Bonus.  The Executive shall be eligible for a performance-based annual bonus for each fiscal year of the Term (the “Annual Bonus”).  The Annual Bonus shall be based upon annual quantitative and qualitative performance targets as established by the Board in its sole discretion in accordance with the Company’s bonus plan; provided, that the Executive’s annual bonus level target shall be set at one hundred percent (100%) of Base Salary.  For fiscal year 2007, the Executive shall be entitled to a pro rata guaranteed bonus based on an Annual Bonus of one hundred percent (100%) of his Base Salary.  The Annual Bonus is not earned until the close of business on the last business day of the Company’s fiscal year.  Any Annual Bonus payable hereunder shall be payable, if at all, after the date of the delivery of the audited financial statements for the applicable fiscal year.

3.3                                 Stock and Option Grant.  At the first meeting of the Compensation Committee of the Board of Directors following the Executive’s first day of employment,

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the Company shall grant to the Executive, under the Company’s 2000 Stock Incentive Plan (the “Stock Plan”), 125,000 shares of restricted stock and an option to purchase 500,000 shares of Company stock (the “Initial Grant”).  The terms and conditions of the Initial Grant (other than the exercise price per share, which shall be equal to the closing price of the Company’s stock on the grant date) shall be set forth in the award agreements attached hereto as Schedules A and B.  The stock option portion of the Initial Grant shall vest in five equal installments on each of the first five anniversaries of the grant date, and the restricted stock award portion of the Initial Grant shall vest in three equal installments on each of the first three anniversaries of the grant date.  The Board, in its sole discretion, may grant further incentive compensation awards to the Executive from time to time.  The Company represents and warrants to Executive that the Company has full power and authority, subject to Compensation Committee approval, and shares available under the Stock Plan to make the Initial Grant.

3.4                                 Benefits.  The Executive shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to its employees, to the extent that the Executive is eligible under (and subject to the provisions of) the plan documents governing those programs.  The Executive shall be entitled to four (4) weeks paid vacation per year, accruing at a rate of 1.67 days per month during the Employment Period and to be taken at such times as may be reasonably determined by Executive consistent with his duties.

3.5                                 Reimbursement of Expenses.  The Company shall reimburse the Executive for all reasonable travel (which shall be deemed to include first class airfare or reimbursement or equivalent to a first class airfare ticket in the event Executive uses his

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personal time-share aircraft), entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement or in connection with Executive’s commuting to and from his personal residence in the Philadelphia area and the Company’s offices, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may request.

3.6                                 Housing Expenses.  The Company understands that the Executive intends to maintain his primary residence outside the Massachusetts area.  The Company agrees to provide the Executive with a housing allowance for reasonable housing and living expenses of $5,600 per month, related to the rental or purchase of a home, within suitable distance to the Company’s headquarters, which payment shall be made on a fully tax grossed-up basis.  The Company also will reimburse the Executive for (i) reasonable travel, meals and lodging expenses incurred by him for up to two trips for the purpose of securing such house or apartment within a suitable distance to the Company’s headquarters and (ii) reasonable moving expenses in relocating his belongings from his residence in Florida to such house or apartment.

3.7                                 Executive’s Legal Fees.  The Company agrees to pay the Executive’s reasonable legal costs and expenses in connection with negotiating and drafting this Agreement up to a maximum of $15,000.

3.8                                 Automobile.  The Company agrees to provide the Executive with an automobile allowance or a leased automobile with a retail value of up to $75,000, which payments shall be made on a fully tax grossed-up basis.  In addition, the Company

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agrees to pay all insurance, maintenance, fuel and other customary costs associated with operating the automobile.

3.9                                 Withholding.  All salary, bonus and other compensation payable to the Executive shall be subject to applicable withholding taxes.

4.                                       Employment Termination.  This Agreement and the employment of the Executive under this Agreement shall terminate upon the occurrence of any of the following:

4.1                                 At the election of the Executive if the Company fails to name him Chief Executive Officer of the Company within six (6) months from the Commencement Date, on the date of such election.

4.2                                 On the expiration date of the Employment Period.

4.3                                 At the election of the Company, for Cause (as defined below), immediately upon written notice by the Company to the Executive, which notice shall identify the Cause upon which termination is based.  For the purposes of this Section 4.3, Cause for termination shall mean:  (a) the Executive’s willful and continued failure to substantially perform his reasonable assigned duties (other than any such failure resulting from incapacity due to physical or mental illness or any failure after the Executive gives notice of termination for Good Reason and Good Reason exists), which failure is not cured within 30 days after a written demand for substantial performance is received by the Executive from the Board of Directors of the Company which specifically identifies the manner in which the Board of Directors believes the Executive has not substantially performed the Executive’s duties; (b) the Executive’s willful engagement in illegal conduct or gross misconduct which is materially and demonstrably injurious to the

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Company; or (c) a material breach of Section 6 or 7 this Agreement by the Executive.  For purposes of this Section 4.3, no act or failure to act by the Executive shall be considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company.

4.4                                 Upon the death or disability of the Executive.  As used in this Agreement, the term “disability” shall mean the Executive’s absence from the full-time performance of the Executive’s duties with the Company for one hundred eighty (180) consecutive calendar days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

4.5                                 At the election of the Executive for Good Reason as defined herein.  The Executive may terminate his employment for Good Reason at any time, following 30-days prior written notice of such termination to the Company.  Such notice shall provide factual details of the basis behind such termination and the Company shall have a thirty (30) day period thereafter to cure such matter.  As used herein, the term “Good Reason” shall mean:  (a) a material breach by the Company of the terms of this Agreement, including the failure to pay Base Salary or any Annual Bonus when due; or (b) any material adverse change by the Company in Executive’s titles, authorities, duties, responsibilities or lines of reporting inconsistent with the terms hereof or the assignment to Executive by the Company of titles, authorities, duties, responsibilities or lines of reporting inconsistent with the terms hereof, or (c) a relocation of the principal offices of

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the Company to an area more than forty (40) miles from the location of such offices as of the date hereof.

4.6                                 At the election of the Executive without Good Reason, upon not less than sixty (60) calendar days prior written notice of termination by the Executive to the Company; provided, however, that the Company may, in its sole discretion, determine that the termination of the Executive shall become effective immediately and in which case the termination shall still be considered at the election of the Executive without Good Reason.

4.7                                 At the election of the Company, without Cause, upon not less than sixty (60) days written notice to Executive.

4.8                                 At the election of the Company or the Executive in connection with a Change in Control of the Company as set forth in the Executive Retention Agreement between the Company and the Executive (the “ERA”), dated as of the date hereof.  For purposes of this Agreement, “Change in Control” shall have the meaning set forth in the ERA.

5.                                       Effect of Termination.

5.1                                 Termination For Failing To Name Executive CEO.  In the event the Company fails to name Executive to the position of Chief Executive Officer of the Company within six (6) months from the Commencement Date, and he elects to terminate his employment, provided the Executive executes and does not revoke a Separation Agreement and Release of Claims for the benefit of the Company substantially in the form set forth on Schedule C hereto (the “Separation Agreement”), the Company shall pay or cause to be paid to Executive, within thirty (30) days of the

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date of his termination: (1) a lump-sum payment of two million dollars ($2,000,000); and (2) the amount of any accrued but unpaid Base Salary, unused vacation and unreimbursed business, housing and automobile expenses and the Company thereafter shall have no further obligation to Executive under this Agreement, other than for payment of any other amounts or benefits accrued and vested under any applicable benefit plan or otherwise in accordance with applicable law.

5.2                                 Non-Renewal, Termination Without Good Reason By the Executive or Termination For Cause By the Company.  In the event the Executive’s employment is terminated by non-renewal pursuant to Section 4.2, for Cause by the Company pursuant to Section 4.3, or at the election of the Executive pursuant to Section 4.6, the Company shall pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last calendar day of his actual employment by the Company.

5.3                                 Termination for Death or Disability.  In the event the Executive’s employment is terminated by death or because of disability pursuant to Section 4.4, the Company shall pay to the estate of the Executive or to the Executive, as the case may be, (A) within thirty (30) days of the date of the Executive’s death or determination of disability, the compensation which would otherwise be payable to the Executive up to the end of the month in which the termination of his employment because of death or disability occurs; and (B) an annual bonus in an amount equal to the total bonus he would be paid for such year, if any, multiplied by a fraction, the numerator of which is the number of days in the year that have elapsed since January 1 and the denominator of which is 365, payable when bonuses are paid for that year (a “Pro Rata Bonus”).  In

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addition, the Company shall permit Executive or Executive’s estate or representative to exercise the vested stock option portion of the Initial Grant for a period of no less than one year after any such termination of employment.

5.4                                 Termination By the Executive With Good Reason or By the Company Without “Cause”.  In the event the Executive’s employment is terminated by the Executive with Good Reason pursuant to Section 4.5 or by the Company without Cause pursuant to Section 4.7, the Company shall pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last calendar day of his actual employment by the Company.  In addition, provided the Executive executes and does not revoke the Separation Agreement, the Company shall: (1) continue to pay the Executive the Base Salary for twenty-four (24) months in accordance with the Company’s regular payroll practices; (2) pay the Executive a Pro Rata Bonus; (3) pay the Executive, in bi-weekly installments, over a twenty-four month period, an amount equal in the aggregate to two (2) times the average Annual Bonus earned for the two years prior to the date of his termination (in the event Executive has not been employed for a sufficient period to earn two such bonuses, such calculation shall be made assuming Executive earned a bonus for any such year at a target level of performance (taking into account any minimum bonus amount)); (4) provide to the Executive for two (2) years following the date of his termination, payment of COBRA premiums for medical, dental, and vision benefits pursuant to plans maintained by the Company under which Executive and/or Executive’s family is eligible to receive benefits; provided, however, that, notwithstanding the foregoing, the benefits described in this subsection may be discontinued prior the end of the period, but only to the extent, that Executive receives

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substantially similar benefits from a subsequent employer; and (5) permit Executive to exercise the stock option portion of the Initial Grant for a period of no less than six months after the date of termination.

5.5                                 Termination Following a Change in Control.  In the event the Executive’s employment is terminated pursuant to Section 4.8 by the Company or by the Executive within 24 months following the Change in Control Date, as defined in the ERA, the Executive will be entitled to the benefits set forth in the ERA in accordance with the terms of the ERA. 

5.6                                 Six Month Delay.  If any payment, compensation or other benefit provided to the Executive in connection with his employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is a specified employee as defined in Section 409A(a)(2)(B)(i), no part of such payments shall be paid before the day that is six (6) months plus one (1) day after the date of his termination (the “New Payment Date”).  In the case of welfare benefit continuation, the Company shall use its best efforts to enable Executive to obtain such benefits at Executive’s expense prior to the New Payment Date.  The aggregate of any payments that otherwise would have been paid to the Executive (or on Executive’s behalf) during the period between the date of his termination and the New Payment Date shall be paid to the Executive in a lump sum on such New Payment Date.  Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.

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6.                                       Non-Competition and Non-Solicitation.

(a)                                  While the Executive is employed by the Company and for a period of twelve (12) months following the Executive’s termination or cessation of such employment for any reason, the Executive will not directly or indirectly:

(i)                                     Engage in any business or enterprise (whether as an owner, partner, officer, employee, director, investor, lender, consultant, independent contractor or otherwise, except as the holder of not more than 5% of the combined voting power of the outstanding stock of a publicly held company) that (A) is competitive with the Company’s business and (B) develops, designs, produces, markets, sells or renders any product or service competitive with any product or service developed, produced, marketed, sold or rendered by the Company while the Executive was employed by the Company;

(ii)                                  Either alone or in association with others, recruit or solicit any person who was employed by the Company at any time during the period of the Executive’s employment with the Company, except for an individual whose employment with the Company has been terminated for a period of six months or longer; and

(iii)                               Either alone or in association with others, solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company which were contacted, solicited or served by the Executive while he was employed by the Company.

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(b)                                 If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

(c)                                  The Executive acknowledges that the restrictions contained in this Agreement are necessary for the protection of the business and goodwill of the Company and are considered by the Executive to be reasonable for such purpose.  The Executive agrees that any material breach of this Agreement will cause the Company substantial and irrevocable damage and therefore, in the event of any such material breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief without posting a bond.

(d)                                 The geographic scope of this Section shall extend to anywhere the Company or any of its subsidiaries is doing business during the Term or has plans, during the Term, to do business.

(e)                                  The Executive agrees to provide a copy of this Agreement to all person and Entities with whom the Executive seeks to be hired or do business before accepting employment or engagement with any of them.

(f)                                    If the Executive violates the provisions of this Section, the Executive shall continue to be held by the restrictions set forth in this Section, until a period equal to the period of restriction has expired without any violation.

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7.                                       Proprietary Information and Developments.

7.1                                 Proprietary Information.

(a)                                  The Executive agrees that all information, whether or not in writing, of a private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is and shall be the exclusive property of the Company.  By way of illustration, but not limitation, Proprietary Information may include discoveries, inventions, products, product improvements, product enhancements, processes, methods, techniques, formulas, compositions, compounds, negotiation strategies and positions, projects, developments, plans (including business and marketing plans), research data, clinical data, financial data (including sales, costs, profits and pricing methods), personnel data, computer programs (including software used pursuant to a license agreement), customer and supplier lists, and contacts at or knowledge of customers or prospective customers of the Company.  Except as required by applicable law, the Executive will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without prior written approval from the Board of Directors or a designee of the Board of Directors, either during or after his employment with the Company, unless and until such Proprietary Information has become public knowledge without fault by the Executive.

(b)                                 The Executive agrees that all files, documents, letters, memoranda, reports, records, data, sketches, drawings, methods, laboratory notebooks, program listings, computer equipment or devices, computer programs or other written,

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photographic, or other tangible material containing Proprietary Information, whether created by the Executive or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company and are to be used by the Executive only in the performance of his duties for the Company.  All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Executive shall be delivered to the Company upon the earlier of (i) a request by the Company or (ii) termination of his employment.  After such delivery, the Executive shall not retain any such materials or copies thereof or any such tangible property.

(c)                                  The Executive agrees that his obligation not to disclose or to use information and materials of the types set forth in subsections (a) and (b) above, and his obligation to return materials and tangible property set forth in subsection (b) above, also extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Executive.

7.2                                 Developments.

(a)                                  The Executive will make full and prompt disclosure to the Company of all inventions, creations, improvements, discoveries, trade secrets, secret processes, technology, know-how, copyrightable materials, methods, developments, software, and works of authorship or other creative works, whether patentable or not, which are created, made, conceived or reduced to practice by him or under his direction or jointly with others during his employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Developments”).

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(b)                                 The Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right, title and interest in and to all Developments and all related patents, patent applications, copyrights and copyright applications.   However, this subsection (b) shall not apply to Developments that do not relate to any business or research and development conducted or planned to be conducted by the Company at the time such Development is created, made, conceived or reduced to practice and that are made and conceived by the Executive not during normal working hours, not on the Company’s premises and not using the Company’s tools, devices, equipment or Proprietary Information.  The Executive understands that, to the extent this Agreement shall be construed in accordance with the laws of any state that precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this subsection (b) shall be interpreted not to apply to any invention that a court rules and/or the Company agrees falls within such classes.  The Executive also hereby waives all claims to moral rights in any Developments.

(c)                                  The Executive agrees to cooperate fully with the Company and to take such further actions as may be necessary or desirable, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Developments.  The Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights and powers of attorney, that the Company may deem necessary or desirable in order to protect its rights

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and interests in any Development.  The Executive further agrees that if the Company is unable, after reasonable effort, to secure the signature of the Executive on any such papers, the Executive Vice President of Research and Development or the General Counsel of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Executive, and the Executive hereby irrevocably designates and appoints the Executive Vice President of Research and Development or the General Counsel of the Company as his agent and attorney-in-fact to execute any such papers on his behalf and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development under the conditions described in this sentence.

7.3                                 United States Government Obligations.  The Executive acknowledges that the Company from time to time may have agreements with other parties or with the United States Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work.  The Executive agrees to be bound by all such obligations and restrictions that are made known to the Executive and to take all action necessary to discharge the obligations of the Company under such agreements.

7.4                                 Other Agreements.  The Executive hereby represents that, other than documents filed with the Securities and Exchange Commission, he is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or any other party.  The Executive further represents that his performance of all the terms of this

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Agreement and the performance of his duties as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company and that the Executive will not disclose to the Company or induce the Company to use any confidential or proprietary information, knowledge or material belonging to any previous employer or others.  The Executive further represents that his performance of all the terms of this Agreement and the performance of his duties as an employee of the Company does not and will not breach any agreement to refrain from (i) competing, directly or indirectly, with the business of any former employer or others or (ii) from soliciting employees, customers or suppliers of any former employer or others.

8.                                       Indemnification.  The Company shall indemnify the Executive in accordance with its Certificate of Incorporation and By-Laws.

9.                                       Survival.  The provisions of Sections 6, 7 and 8 shall survive the termination of this Agreement for any reason.

10.                                 Notices.  Any notices delivered under this Agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto.  Either party may change the address to which notices are to be delivered by giving notice of such change to the other party in the manner set forth in this Section 10.

11.                                 Compliance with Code Section 409A.  It is intended that this Agreement comply with or be exempt from the requirements of Sections 409A(a)(2) through (4) of

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the Internal Revenue Code of 1986, as amended, and all regulations issued thereunder.  The Agreement shall be interpreted and administered for all purposes in accordance with this intent and may be amended by the Company, following consultation with Executive and Executive’s legal and tax advisors, at any time if such amendment is deemed necessary to satisfy this intent.

12.                                 Pronouns.  Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

13.                                 Entire Agreement.  This Agreement, together with the ERA, constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

14.                                 Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

15.                                 Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts (without reference to the conflict of laws provisions thereof).  Any action, suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within the Commonwealth of Massachusetts), and the Company and the Executive each consents to the jurisdiction of such a court.  The Company and the Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement or any other dealing between

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them relating to the subject matter of this transaction and the relationship that is being established.

16.                                 Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall not be assigned by him.

17.                                 Acknowledgment.  The Executive states and represents that he has had an opportunity to fully discuss and review the terms of this Agreement with an attorney.  The Executive further states and represents that he has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs his name of his own free act.

18.                                 Miscellaneous.

18.1                           No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

18.2                           The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

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18.3                           In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

Sepracor Inc.

 

 

 

 

 

By:

 /s/ Timothy J. Barberich

 

 

Title:

 Chairman and CEO

 

 

 

 

 

 

 

 

/s/ Adrian Adams

 

 

Adrian Adams

 

 

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SCHEDULE A
FORM OF RESTRICTED STOCK AGREEMENT

SEE ATTACHED AGREEMENT

 

 


SEPRACOR INC.

Restricted Stock Agreement

 

Name of Recipient:

 

 

 

Number of shares of restricted common
stock awarded:

 

 

 

Grant Date:

 

 

                Sepracor Inc. (the “Company”) has selected you to receive the restricted stock award described above, which is subject to the provisions of the Company’s 2000 Stock Incentive Plan (the “Plan”) and the terms and conditions contained in this Restricted Stock Agreement.  Please confirm your acceptance of this restricted stock award and of the terms and conditions of this Agreement by signing a copy of this Agreement where indicated below.

SEPRACOR INC.

 

 

 

By:

 

 

[insert name and title]

 

 

Accepted and Agreed:

 

 

 

 

 

 

[insert name of recipient]

 

 

 

 

 


SEPRACOR INC.

Restricted Stock Agreement

                The terms and conditions of the award of shares of restricted common stock of the Company (the “Restricted Shares”) made to the Recipient, as set forth on the cover page of this Agreement, are as follows:

1.             Issuance of Restricted Shares.

(a)           The Restricted Shares are issued to the Recipient, effective as of the Grant Date (as set forth on the cover page of this Agreement), in consideration of employment services rendered and to be rendered by the Recipient to the Company.

(b)           The Restricted Shares will initially be issued by the Company in book entry form only, in the name of the Recipient.  Following the vesting of any Restricted Shares pursuant to Section 2 below, the Company shall, if requested by the Recipient, issue and deliver to the Recipient a certificate representing the vested Restricted Shares.   The Recipient agrees that the Restricted Shares shall be subject to the forfeiture provisions set forth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

2.             Vesting.

(a)           Vesting Schedule.  Unless otherwise provided in this Agreement or the Plan, the Restricted Shares shall vest in accordance with the following vesting schedule:  [     % of the total number of Restricted Shares shall vest on the first anniversary of the Grant Date and      % of the total number of Restricted Shares shall vest on each successive anniversary thereafter, through and including the       anniversary of the Grant Date].  Any fractional number of Restricted Shares resulting from the application of the foregoing percentages shall be rounded down to the nearest whole number of Restricted Shares.

(b)           Acceleration of Vesting.  Notwithstanding the foregoing vesting schedule, as provided in the Plan, all unvested Restricted Shares shall vest effective immediately prior to a Change in Control Event (as defined in the Plan).   

3.             Forfeiture of Unvested Restricted Shares Upon Employment Termination.

                In the event that the Recipient ceases to be employed by, a director of, or a consultant or advisor to, the Company for any reason or no reason, with or without cause all of the Restricted Shares that are unvested as of the time of such employment termination shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Recipient, effective as of such termination of employment.  The Recipient shall have no further rights with respect to any Restricted Shares that are so forfeited.  If the Recipient is employed by a subsidiary of the Company, any references in this Agreement to employment with the Company shall instead be deemed to refer to employment with such subsidiary.

 


4.             Restrictions on Transfer.

                The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Restricted Shares, or any interest therein, until such Restricted Shares have vested, except that the Recipient may transfer such Restricted Shares as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation).  The Company shall not be required (i) to transfer on its books any of the Restricted Shares which have been transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Restricted Shares or to pay dividends to any transferee to whom such Restricted Shares have been transferred in violation of any of the provisions of this Agreement.

5.             Restrictive Legends.  

                The book entry account reflecting the issuance of the Restricted Shares in the name of the Recipient shall bear a legend or other notation upon substantially the following terms:

                “These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or his or her predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”  

6.             Rights as a Shareholder.

                Except as otherwise provided in this Agreement, for so long as the Recipient is the registered owner of the Restricted Shares, the Recipient shall have all rights as a shareholder with respect to the Restricted Shares, whether vested or unvested, including, without limitation, any rights to receive dividends and distributions with respect to the Restricted Shares and to vote the Restricted Shares and act in respect of the Restricted Shares at any meeting of shareholders.

7.             Provisions of the Plan.

                This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Recipient with this Agreement.  As provided in the Plan, upon the occurrence of a Reorganization Event (as defined in the Plan), the rights of the Company hereunder (including the right to receive forfeited Restricted Shares) shall inure to the benefit of the Company’s successor and, unless the Board determines otherwise, shall apply to the cash, securities or other property which the Restricted Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Restricted Shares under this Agreement.  

8.             Tax Matters.

(a)            Acknowledgments; Section 83(b) Election.  The Recipient acknowledges that he or she is responsible for obtaining the advice of the Recipient’s own tax advisors with respect to the acquisition of the Restricted Shares and the Recipient is relying solely on such advisors and not on any statements or representations of the Company or any of its agents with respect to the tax consequences relating to the Restricted Shares.  The Recipient understands that the Recipient (and not the Company) shall be responsible for the Recipient’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of the Restricted Shares.

 


The Recipient acknowledges that he or she has been informed of the availability of making an election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Shares and that the Recipient has decided not to file a Section 83(b) election.

(b)           Withholding. The Recipient acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Recipient any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the Restricted Shares.  On each date on which Restricted Shares vest, the Company shall deliver written notice to the Recipient of the amount of withholding taxes due with respect to the vesting of the Restricted Shares that vest on such date; provided, however, that the total tax withholding cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).  The Recipient shall satisfy such tax withholding obligations by making a cash payment to the Company on the date of vesting of the Restricted Shares, in the amount of the Company’s withholding obligation in connection with the vesting of such Restricted Shares.

9.             Miscellaneous.

(a)           No Right to Continued Employment.  The Recipient acknowledges and agrees that, notwithstanding the fact that the vesting of the Restricted Shares is contingent upon his or her continued employment by the Company, this Agreement does not constitute an express or implied promise of continued employment or confer upon the Recipient any rights with respect to continued employment by the Company.

(b)           Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws provisions.

 


SCHEDULE B
FORM OF STOCK OPTION AGREEMENTS

SEE ATTACHED AGREEMENT

 

 


SEPRACOR INC.

Form of Incentive Stock Option Agreement

Granted Under 2000 Stock Incentive Plan

1.             Grant of Option.

 

                This agreement evidences the grant by Sepracor Inc., a Delaware corporation (the “Company”), on the Grant Date indicated on the preceding Certificate of Stock Option Grant (the “Certificate”) to an employee, consultant, or director of the Company (the “Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2000 Stock Incentive Plan (the “Plan”), the number of shares (the “Shares”) of common stock, $.10 par value per share,  of the Company (“Common Stock”),indicated on the certificate at the price  per Share indicated on the Certificate. Unless earlier terminated, this option shall expire on the Grant Expiration Date indicated on the Certificate (“Grant Expiration Date”).

 

                It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

 

2.             Vesting Schedule.

 

                This option will become exercisable (“vest”) pursuant to the Vesting Schedule indicated on the Certificate (“Vesting Schedule”).

 

                The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Grant Expiration Date or the termination of this option under Section 3 hereof or the Plan.

 

3.             Exercise of Option.

 

(a)            Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share.

 

(b)           Continuous Relationship with the Company Required.  Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an [employee or officer of], or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 

   

 


(c)            Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Grant Expiration Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if, following the time the Participant has ceased to be an Eligible Participant, but prior to the Grant Expiration Date, the Participant materially breaches Section 6 or 7 of the Employment Agreement between the Participant and the Company dated March 1, 2007 (the “Employment Agreement”), the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

 

(d)           Exercise Period Upon Death or Disability.  If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Grant Expiration Date while he or she is an Eligible Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Grant Expiration Date.

 

(e)            Discharge for Cause.  If the Participant, prior to the Grant Expiration Date, is discharged by the Company for “cause” (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge.  “Cause” shall have the meaning set forth in the Employment Agreement.   

 

4.             Withholding.

 

                No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

 

5.             Nontransferability of Option.

 

                This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

 

6.             Disqualifying Disposition.

 

                If the Participant diposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.

 


7.             Provisions of the Plan.

 

                This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

 

 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed instrument.

 

 

SEPRACOR INC.

 

 

 

By:

 

 

PARTICIPANT’S ACCEPTANCE

 

                The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The  Participant hereby acknowledges receipt of a copy of the Company’s 2000 Stock Incentive Plan.

 

 

Name:

 

 

 

 

 


SEPRACOR INC.

Nonstatutory Stock Option Agreement
Granted Under 2000 Stock Incentive Plan

1.             Grant of Option.

This agreement evidences the grant by Sepracor Inc., a Delaware corporation (the “Company”), on the Grant Date indicated on the preceding Certificate of Stock Option Grant (the “Certificate”) to an employee, consultant, or director of the Company (the “Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2000 Stock Incentive Plan (the “Plan”), the number of shares (the “Shares”) of common stock, $.10 par value per share,  of the Company (“Common Stock”),indicated on the certificate at the price  per Share indicated on the Certificate. Unless earlier terminated, this option shall expire on the Grant Expiration Date indicated on the Certificate (“Grant Expiration Date”).

It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

2.             Vesting Schedule.

This option will become exercisable (“vest”) pursuant to the Vesting Schedule indicated on the Certificate (“Vesting Schedule”).

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Grant Expiration Date or the termination of this option under Section 3 hereof or the Plan.

3.             Exercise of Option.

(a)           Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share.

(b)           Continuous Relationship with the Company Required.  Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an [employee or officer of], or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 


 

(c)           Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Grant Expiration Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if, following the time the Participant has ceased to be an Eligible Participant, but prior to the Grant Expiration Date, the Participant materially breaches Section 6 or 7 of the Employment Agreement between the Participant and the Company dated March 1, 2007 (the “Employment Agreement”), the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

(d)           Exercise Period Upon Death or Disability.  If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Grant Expiration Date while he or she is an Eligible Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Grant Expiration Date.

(e)           Discharge for Cause.  If the Participant, prior to the Grant Expiration Date, is discharged by the Company for “cause” (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge.  “Cause” shall have the meaning set forth in the Employment Agreement.

4.             Withholding.

No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

5.             Nontransferability of Option.

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

6.             Provisions of the Plan.

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

 


 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed instrument.

 

SEPRACOR INC.

 

 

 

By:

 

 

PARTICIPANT’S ACCEPTANCE

The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The  Participant hereby acknowledges receipt of a copy of the Company’s 2000 Stock Incentive Plan.

 

 

Name:

 

 

 

 

 


SCHEDULE C
FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

SEE ATTACHED FORM

 


FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

In connection with your employment separation from Sepracor, Inc. (the “Company”) on [INSERT TERMINATION DATE], and in order to receive the benefits as set forth in Section 5 of the Employment agreement, this agreement must become binding between you and the Company.  By signing and returning this agreement, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 1.  Therefore, you are advised to consult with an attorney before signing this agreement and you have been given more than twenty-one (21) days to do so.  If you sign this agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it.  If you do not so revoke, this agreement will become a binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

The following numbered paragraphs set forth the terms and conditions which will apply if you timely sign and return this agreement and do not revoke it within the seven (7) day revocation period:

1.                                       Mutual Releases - In consideration of the payment of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, successors and assigns, agents and employees (each in their individual and corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature which you ever had or now have against the Released Parties, including, but not limited to, those claims arising out of your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., the Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, § 1 et seq., the Massachusetts Civil Rights Act, M.G.L. c. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93, § 102 and M.G.L. c. 214, § 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149, § 1 et seq., the Massachusetts Privacy Act, M.G.L. c. 214, § 1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock options; and any claim or damage arising out of your employment with or

 


separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that you acknowledge that you may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).  Notwithstanding the foregoing, the release set forth in this Section 1 shall not apply to (a) any claim to severance benefits under the Employment Agreement or your rights under this agreement or (b) any vested equity interest in the Company, including vested stock options.

The Company hereby fully, forever, irrevocably and unconditionally releases, remises and discharges you from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities and expenses (including attorney’s fees and costs), of every kind and nature that the Company ever had or now has against you as of the date of this agreement.

2.                                       Non-Disclosure, Non-Competition and Non-Solicitation ObligationsYou acknowledge and reaffirm your obligation to keep confidential and not to disclose any and all non-public information concerning the Company which you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects and financial condition, as is stated more fully in the [Name of the Non-Disclosure Agreement] you executed at the inception of your employment, which remains in full force and effect.  You further acknowledge and reaffirm your obligations under the [Name of the Non-Competition and/or Non-Solicitation Agreement(s)] you previously executed for the benefit of the Company at the inception of your employment, which also remain(s) in full force and effect.

3.                                       Return of Company Property - You confirm that you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles and any other Company-owned property in your possession or control and have left intact all electronic Company documents, including but not limited to, those that you developed or helped develop during your employment.  You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

4.                                       Business Expenses and Compensation - You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you.  You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company and that no other compensation is owed to you except as provided herein.

 


5.                                       Non-Disparagement - You understand and agree that, as a condition for payment to you of the consideration herein described, you shall not make any false, disparaging or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business affairs and financial condition; provided, however, that nothing herein shall prevent you from making truthful disclosures to any governmental entity or in any litigation or arbitration.

6.                                       Amendment - This agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto.  This agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

7.                                       Waiver of Rights - No delay or omission by the Company in exercising any right under this agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

8.                                       Validity - Should any provision of this agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this agreement.

9.                                       CooperationYou agree to cooperate with the Company in the investigation, defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company.  Your cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel to prepare for discovery or any mediation, arbitration, trial, administrative hearing or other proceeding or to act as a witness when reasonably requested by the Company at mutually agreeable times and at locations mutually convenient to you and the Company.  You also agree to cooperate with the Company in the transitioning of your work, and will be available to the Company for this purpose or any other purpose reasonably requested by the Company.

10.                                 Tax ProvisionIn connection with the severance benefits provided to you pursuant to this agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law.  You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the severance benefits.

11.                                 Section 409A - No payments that may be made pursuant to this agreement that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code and the guidance issued thereunder (“Section 409A”) may be accelerated or deferred by the Company or by you.  Notwithstanding anything else to the

 


contrary in this agreement, to the extent that any of the payments that may be made hereunder constitute “nonqualified deferred compensation”, within the meaning of Section 409A and you are a “specified employee” upon your separation (as defined under Section 409A), any such payment shall be delayed following your separation date if, absent such delay, such payment would otherwise be subject to penalty under Section 409A.  In any event, the Company makes no representation or warranty and shall have no liability to you or to any other person if any provisions of this agreement are determined to constitute “nonqualified deferred compensation” subject to Section 409A but do not satisfy the requirements of that section.

12.                                 Nature of Agreement - You understand and agree that this agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

13.                                 Acknowledgments - You acknowledge that you have been given at least twenty-one (21) days to consider this agreement and that the Company advised you to consult with an attorney of your own choosing prior to signing this agreement.  You understand that you may revoke this agreement for a period of seven (7) days after you sign this agreement, and the agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.  You understand and agree that by entering into this agreement you are waiving any and all rights or claims you might have under The Age Discrimination in Employment Act, as amended by The Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled.

14.                                 Voluntary Assent - You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this agreement, and that you fully understand the meaning and intent of this agreement.  You state and represent that you have had an opportunity to fully discuss and review the terms of this agreement with an attorney.  You further state and represent that you have carefully read this agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

15.                                 Applicable Law  - This agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions.  You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this agreement or the subject matter hereof.

16.                                 Entire Agreement - This agreement contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, commitments and writings in connection therewith. Nothing in this paragraph, however, shall modify, cancel or supersede your obligations set forth in paragraph 2 herein.

 

 


 

SEPRACOR INC.

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

I hereby agree to the terms and conditions set forth above.  I have been given at least twenty-one (21) days to consider this agreement and I have chosen to execute this on the date below.  I intend that this agreement become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days by notifying                                                in writing.

 

 

Date

 

Employee Name:

 

 

 

 


 

EX-10.16 5 a2190020zex-10_16.htm EXHIBIT 10.16

Exhibit 10.16

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), made this 6th day of November 2008, is entered into by Sepracor Inc., a Delaware corporation with its principal place of business at 84 Waterford Drive, Marlborough, Massachusetts 01752-7231(the “Company”), and Adrian Adams, residing at 322 Winfield Road, Devon, Pennsylvania 19333 (the “Executive”).

 

The Company desires to employ the Executive and the Executive desires to be employed by the Company, and in connection therewith the Company and the Executive entered into an Employment Agreement, dated March 1, 2007 (the “Original Agreement”).  The Company and the Executive wish to amend and restate the Original Agreement as provided for herein.  In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree that the Original Agreement is amended and restated in its entirety as follows:

 

1.             Term of Employment.  The Company hereby agrees to employ the Executive and the Executive hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on March 1, 2007 (the “Commencement Date”) and ending on March 1, 2012 (the “Term”)Notwithstanding the foregoing, the Term shall be extended automatically without further action by either party by one (1) additional year (added to the end of the Term) on each succeeding anniversary of  March 1, 2012, unless either party shall have served written notice upon the other party at least sixty (60) days preceding the date upon which such Term would

 


 

end (such period, as it may be extended, the “Employment Period”), unless sooner terminated in accordance with the provisions of Section 4.

 

2.             Title and Capacity.  The Executive shall initially serve as President and Chief Operating Officer of the Company and in that capacity Executive shall report directly to the Chief Executive Officer of the Company and shall, except as permitted hereby, devote all of his business time and services to the business and affairs of the Company.  The Company acknowledges that it is the present expectation of the Board and the parties hereto that Executive will be elected to the position of Chief Executive Officer within six months of the Commencement Date.  At such time as the Executive is elected to the position of Chief Executive Officer, he shall report directly to the Board and shall assume the duties and responsibilities inherent in such position and such other duties and responsibilities as the Board shall from time to time reasonably assign to him.

 

Executive shall also perform such other duties consistent with his position at such time as may be reasonably assigned by the Chief Executive Officer (if Executive does not then hold such position) and/or the Board of Directors of the Company (the “Board”) from time to time.  Executive shall serve on the Board and may also serve as a director or officer of any of the Company’s operating subsidiaries if the Executive shall be elected to such position, for no additional compensation or benefits.  The Executive hereby accepts such service and agrees to undertake the duties and responsibilities inherent in such positions.  The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company.

 

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Notwithstanding anything herein to the contrary, Executive shall be entitled to engage in (a) service on the board of directors of a no more than three other companies, businesses or trade organizations, provided, that, the Executive shall provide the Company prior written notice of his intention to join any such board and provided further that he shall not serve on the board of any entity that competes with the Company, (b) service on the board of directors of not-for-profit or charitable organizations, (c) other charitable activities and community affairs and (d) managing his personal investments and affairs, in each case to the extent such activities do not materially interfere with the performance of his duties and responsibilities to the Company.

 

3.             Compensation and Benefits.

 

3.1           Salary.  During the term of this Agreement, the Company agrees to pay to the Executive a base salary at the annualized rate of $800,000 (“Base Salary”) commencing on the Commencement Date.  The Base Salary shall be subject to annual review by the Board but shall not be reduced below $800,000 per annum.  Such salary shall be payable to Executive in bi-weekly installments and in accordance with the Company’s normal payroll procedures.

 

3.2           Bonus.  The Executive shall be eligible for a performance-based annual bonus for each fiscal year of the Term (the “Annual Bonus”).  The Annual Bonus shall be based upon annual quantitative and qualitative performance targets as established by the Board in its sole discretion in accordance with the Company’s bonus plan; provided, that the Executive’s annual bonus level target shall be set at one hundred percent (100%) of Base Salary.  For fiscal year 2007, the Executive shall be entitled to a pro rata guaranteed bonus based on an Annual Bonus of one hundred percent (100%) of

 

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his Base Salary.  The Annual Bonus is not earned until the close of business on the last business day of the Company’s fiscal year.  Any Annual Bonus payable hereunder shall be payable, if at all, after the date of the delivery of the audited financial statements for the applicable fiscal year.

 

3.3           Stock and Option Grant.  At the first meeting of the Compensation Committee of the Board of Directors following the Executive’s first day of employment, the Company shall grant to the Executive, under the Company’s 2000 Stock Incentive Plan (the “Stock Plan”), 125,000 shares of restricted stock and an option to purchase 500,000 shares of Company stock (the “Initial Grant”).  The terms and conditions of the Initial Grant (other than the exercise price per share, which shall be equal to the closing price of the Company’s stock on the grant date) shall be set forth in the award agreements attached hereto as Schedules A and B.  The stock option portion of the Initial Grant shall vest in five equal installments on each of the first five anniversaries of the grant date, and the restricted stock award portion of the Initial Grant shall vest in three equal installments on each of the first three anniversaries of the grant date.  The Board, in its sole discretion, may grant further incentive compensation awards to the Executive from time to time.  The Company represents and warrants to Executive that the Company has full power and authority, subject to Compensation Committee approval, and shares available under the Stock Plan to make the Initial Grant.

 

3.4           Benefits.  The Executive shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to its employees, to the extent that the Executive is eligible under (and subject to the provisions of) the plan documents governing those programs.  The Executive shall be entitled to four (4) weeks

 

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paid vacation per year, accruing at a rate of 1.67 days per month during the Employment Period and to be taken at such times as may be reasonably determined by Executive consistent with his duties.

 

3.5           Reimbursement of Expenses.  The Company shall reimburse the Executive for all reasonable travel (which shall be deemed to include first class airfare or reimbursement or equivalent to a first class airfare ticket in the event Executive uses his personal time-share aircraft), entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement or in connection with Executive’s commuting to and from his personal residence in the Philadelphia area and the Company’s offices, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may request.

 

3.6           Housing Expenses.  The Company understands that the Executive intends to maintain his primary residence outside the Massachusetts area.  The Company agrees to provide the Executive with a housing allowance for reasonable housing and living expenses of $5,600 per month, related to the rental or purchase of a home, within suitable distance to the Company’s headquarters, which payment shall be made on a fully tax grossed-up basis.  The Company also will reimburse the Executive for (i) reasonable travel, meals and lodging expenses incurred by him for up to two trips for the purpose of securing such house or apartment within a suitable distance to the Company’s headquarters and (ii) reasonable moving expenses in relocating his belongings from his residence in Florida to such house or apartment.

 

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3.7           Executive’s Legal Fees.  The Company agrees to pay the Executive’s reasonable legal costs and expenses in connection with negotiating and drafting this Agreement up to a maximum of $15,000.

 

3.8           Automobile.  The Company agrees to provide the Executive with an automobile allowance or a leased automobile with a retail value of up to $75,000, which payments shall be made on a fully tax grossed-up basis.  In addition, the Company agrees to pay all insurance, maintenance, fuel and other customary costs associated with operating the automobile.

 

3.9           Withholding.  All salary, bonus and other compensation payable to the Executive shall be subject to applicable withholding taxes.

 

4.             Employment Termination.  This Agreement and the employment of the Executive under this Agreement shall terminate upon the occurrence of any of the following:

 

4.1           At the election of the Executive if the Company fails to name him Chief Executive Officer of the Company within six (6) months from the Commencement Date, on the date of such election.

 

4.2           On the expiration date of the Employment Period.

 

4.3           At the election of the Company, for Cause (as defined below), immediately upon written notice by the Company to the Executive, which notice shall identify the Cause upon which termination is based.  For the purposes of this Section 4.3, Cause for termination shall mean:  (a) the Executive’s willful and continued failure to substantially perform his reasonable assigned duties (other than any such failure resulting from incapacity due to physical or mental illness or any failure after the Executive gives

 

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notice of termination for Good Reason and Good Reason exists), which failure is not cured within 30 days after a written demand for substantial performance is received by the Executive from the Board of Directors of the Company which specifically identifies the manner in which the Board of Directors believes the Executive has not substantially performed the Executive’s duties; (b) the Executive’s willful engagement in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or (c) a material breach of Section 6 or 7 this Agreement by the Executive.  For purposes of this Section 4.3, no act or failure to act by the Executive shall be considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company.

 

4.4           Upon the death or disability of the Executive.  As used in this Agreement, the term “disability” shall mean the Executive’s absence from the full-time performance of the Executive’s duties with the Company for one hundred eighty (180) consecutive calendar days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

 

4.5           At the election of the Executive for Good Reason as defined herein.  The Executive may terminate his employment for Good Reason at any time, following 30-days prior written notice of such termination to the Company.  Such notice shall provide factual details of the basis behind such termination and the Company shall have a thirty (30) day period thereafter to cure such matter.  As used herein, the term “Good Reason” shall mean:  (a) a material breach by the Company of the terms of this

 

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Agreement, including the failure to pay Base Salary or any Annual Bonus when due; or (b) any material adverse change by the Company in Executive’s titles, authorities, duties, responsibilities or lines of reporting inconsistent with the terms hereof or the assignment to Executive by the Company of titles, authorities, duties, responsibilities or lines of reporting inconsistent with the terms hereof, or (c) a relocation of the offices of the Company where the Executive is working to an area more than forty (40) miles from the location of such offices as of the date hereof.

 

4.6           At the election of the Executive without Good Reason, upon not less than sixty (60) calendar days prior written notice of termination by the Executive to the Company; provided, however, that the Company may, in its sole discretion, determine that the termination of the Executive shall become effective immediately and in which case the termination shall still be considered at the election of the Executive without Good Reason.

 

4.7           At the election of the Company, without Cause, upon not less than sixty (60) days written notice to Executive.

 

4.8           At the election of the Company or the Executive in connection with a Change in Control of the Company as set forth in the Executive Retention Agreement between the Company and the Executive (the “ERA”), dated as of the date hereof.  For purposes of this Agreement, “Change in Control” shall have the meaning set forth in the ERA.

 

5.             Effect of Termination.

 

5.1           Termination For Failing To Name Executive CEO.  In the event the Company fails to name Executive to the position of Chief Executive Officer of the

 

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Company within six (6) months from the Commencement Date, and he elects to terminate his employment, provided the Executive executes and does not revoke a Separation Agreement and Release of Claims for the benefit of the Company substantially in the form set forth on Schedule C hereto (the “Separation Agreement”), the Company shall pay or cause to be paid to Executive, within thirty (30) days of the date of his termination: (1) a lump-sum payment of two million dollars ($2,000,000); and (2) the amount of any accrued but unpaid Base Salary, unused vacation and unreimbursed business, housing and automobile expenses and the Company thereafter shall have no further obligation to Executive under this Agreement, other than for payment of any other amounts or benefits accrued and vested under any applicable benefit plan or otherwise in accordance with applicable law.

 

5.2           Non-Renewal, Termination Without Good Reason By the Executive or Termination For Cause By the Company.  In the event the Executive’s employment is terminated by non-renewal pursuant to Section 4.2, for Cause by the Company pursuant to Section 4.3, or at the election of the Executive pursuant to Section 4.6, the Company shall pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last calendar day of his actual employment by the Company.

 

5.3           Termination for Death or Disability.  In the event the Executive’s employment is terminated by death or because of disability pursuant to Section 4.4, the Company shall pay to the estate of the Executive or to the Executive, as the case may be, (A) within thirty (30) days of the date of the Executive’s death or determination of disability, the compensation which would otherwise be payable to the Executive up to the

 

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end of the month in which the termination of his employment because of death or disability occurs; and (B) an annual bonus in an amount equal to the total bonus he would be paid for such year, if any, multiplied by a fraction, the numerator of which is the number of days in the year that have elapsed since January 1 and the denominator of which is 365, payable when bonuses are paid for that year (a “Pro Rata Bonus”).  In addition, the Company shall permit Executive or Executive’s estate or representative to exercise the vested stock option portion of the Initial Grant for a period of no less than one year after any such termination of employment.

 

5.4           Termination By the Executive With Good Reason or By the Company Without “Cause”.  In the event the Executive’s employment is terminated by the Executive with Good Reason pursuant to Section 4.5 or by the Company without Cause pursuant to Section 4.7, the Company shall pay to the Executive the compensation and benefits otherwise payable to him under Section 3 through the last calendar day of his actual employment by the Company.  In addition, provided the Executive executes and does not revoke the Separation Agreement, the Company shall: (1) continue to pay the Executive the Base Salary for twenty-four (24) months in accordance with the Company’s regular payroll practices; (2) pay the Executive a Pro Rata Bonus; (3) pay the Executive, in bi-weekly installments, over a twenty-four month period, an amount equal in the aggregate to two (2) times the average Annual Bonus earned for the two years prior to the date of his termination (in the event Executive has not been employed for a sufficient period to earn two such bonuses, such calculation shall be made assuming Executive earned a bonus for any such year at a target level of performance (taking into account any minimum bonus amount)); (4) provide to the Executive for two (2) years

 

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following the date of his termination, payment of COBRA premiums for medical, dental, and vision benefits pursuant to plans maintained by the Company under which Executive and/or Executive’s family is eligible to receive benefits; provided, however, that, notwithstanding the foregoing, the benefits described in this subsection may be discontinued prior the end of the period, but only to the extent, that Executive receives substantially similar benefits from a subsequent employer; and (5) permit Executive to exercise the stock option portion of the Initial Grant for a period of no less than six months after the date of termination.

 

5.5           Participation in Executive Retirement Health Benefit Program.  Following the date of the Executive’s termination, for any reason whatsoever, and, if applicable, the twenty-four (24) month period referred to in Section 5.4(4) or the period referred to in Section 4.2(b) of the ERA, in the event the Executive elects to participate in the Company’s executive retiree health benefit program set forth on Exhibit A hereto (the “Program”), he will reimburse the Company with respect to his participation in the Program at the lesser of (a) the actual cost to the Company of the employee’s participation and (b) the rate applicable to former employees of the Company to elect COBRA health coverage.

 

5.6           Termination Following a Change in Control.  In the event the Executive’s employment is terminated pursuant to Section 4.8 by the Company or by the Executive within 24 months following the Change in Control Date, as defined in the ERA, the Executive will be entitled to the benefits set forth in the ERA in accordance with the terms of the ERA.

 

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5.7           Payments Subject to Section 409A.

 

(a)           Subject to this Section 5.7, payments or benefits under Section 5  shall begin only upon the date of a “separation from service” of the Executive (determined as set forth below) which occurs on or after the termination of the Executive’s employment.  The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to the Executive under Section 5, as applicable:

 

(i)            It is intended that each installment of the payments and benefits provided under Section 5  shall be treated as a separate “payment” for purposes of Section 409A of the Code and the guidance issued thereunder (“Section 409A”).  Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

 

(ii)           If, as of the date of the “separation from service” of the Executive from the Company, the Executive is not a “specified employee” (within the meaning of Section 409A), then each installment of the payments and benefits shall be made on the dates and terms set forth in Section 5.

 

(iii)          If, as of the date of the “separation from service” of the Executive from the Company, the Executive is a “specified employee” (within the meaning of Section 409A), then:

 

(1)           Each installment of the payments and benefits due under Section 5 that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter defined) shall be treated as a short-term

 

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deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A.  For purposes of this Agreement, the “Short-Term Deferral Period” means the period ending on the later of the 15th day of the third month following the end of the Executive’s tax year in which the separation from service occurs and the 15th day of the third month following the end of the Company’s tax year in which the separation from service occurs; and
 
(2)           Each installment of the payments and benefits due under Section 5 that is not described in Section 5.7 (a)(iii)(1) and that would, absent this subsection, be paid within the six-month period following the “separation from service” of the Executive from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Executive’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Executive’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments and benefits if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s second taxable year following his taxable year in which the separation from service occurs.

 

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(b)           The determination of whether and when a separation from service of the Executive from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h).  Solely for purposes of this Section 5.6 (b), “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

(c)           All reimbursements and in-kind benefits provided under the Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A.

 

6.             Non-Competition and Non-Solicitation.

 

(a)           While the Executive is employed by the Company and for a period of twelve (12) months following the Executive’s termination or cessation of such employment for any reason, the Executive will not directly or indirectly:

 

(i)            Engage in any business or enterprise (whether as an owner, partner, officer, employee, director, investor, lender, consultant, independent contractor or otherwise, except as the holder of not more than 5% of the combined voting power of the outstanding stock of a publicly held company) that (A) is competitive with the Company’s business and (B) develops, designs, produces, markets, sells or renders any product or service competitive with any product or service developed, produced, marketed, sold or rendered by the Company while the Executive was employed by the Company;

 

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(ii)           Either alone or in association with others, recruit or solicit any person who was employed by the Company at any time during the period of the Executive’s employment with the Company, except for an individual whose employment with the Company has been terminated for a period of six months or longer; and

 

(iii)          Either alone or in association with others, solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company which were contacted, solicited or served by the Executive while he was employed by the Company.

 

(b)           If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

 

(c)           The Executive acknowledges that the restrictions contained in this Agreement are necessary for the protection of the business and goodwill of the Company and are considered by the Executive to be reasonable for such purpose.  The Executive agrees that any material breach of this Agreement will cause the Company substantial and irrevocable damage and therefore, in the event of any such material breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief without posting a bond.

 

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(d)           The geographic scope of this Section shall extend to anywhere the Company or any of its subsidiaries is doing business during the Term or has plans, during the Term, to do business.

 

(e)           The Executive agrees to provide a copy of this Agreement to all person and Entities with whom the Executive seeks to be hired or do business before accepting employment or engagement with any of them.

 

(f)            If the Executive violates the provisions of this Section, the Executive shall continue to be held by the restrictions set forth in this Section, until a period equal to the period of restriction has expired without any violation.

 

7.             Proprietary Information and Developments.

 

7.1           Proprietary Information.

 

(a)           The Executive agrees that all information, whether or not in writing, of a private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is and shall be the exclusive property of the Company.  By way of illustration, but not limitation, Proprietary Information may include discoveries, inventions, products, product improvements, product enhancements, processes, methods, techniques, formulas, compositions, compounds, negotiation strategies and positions, projects, developments, plans (including business and marketing plans), research data, clinical data, financial data (including sales, costs, profits and pricing methods), personnel data, computer programs (including software used pursuant to a license agreement), customer and supplier lists, and contacts at or knowledge of customers or prospective customers of the Company.  Except as required by applicable law, the Executive will not disclose any Proprietary

 

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Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without prior written approval from the Board of Directors or a designee of the Board of Directors, either during or after his employment with the Company, unless and until such Proprietary Information has become public knowledge without fault by the Executive.

 

(b)           The Executive agrees that all files, documents, letters, memoranda, reports, records, data, sketches, drawings, methods, laboratory notebooks, program listings, computer equipment or devices, computer programs or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Executive or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company and are to be used by the Executive only in the performance of his duties for the Company.  All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Executive shall be delivered to the Company upon the earlier of (i) a request by the Company or (ii) termination of his employment.  After such delivery, the Executive shall not retain any such materials or copies thereof or any such tangible property.

 

(c)           The Executive agrees that his obligation not to disclose or to use information and materials of the types set forth in subsections (a) and (b) above, and his obligation to return materials and tangible property set forth in subsection (b) above, also extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Executive.

 

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7.2           Developments.

 

(a)           The Executive will make full and prompt disclosure to the Company of all inventions, creations, improvements, discoveries, trade secrets, secret processes, technology, know-how, copyrightable materials, methods, developments, software, and works of authorship or other creative works, whether patentable or not, which are created, made, conceived or reduced to practice by him or under his direction or jointly with others during his employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Developments”).

 

(b)           The Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right, title and interest in and to all Developments and all related patents, patent applications, copyrights and copyright applications.   However, this subsection (b) shall not apply to Developments that do not relate to any business or research and development conducted or planned to be conducted by the Company at the time such Development is created, made, conceived or reduced to practice and that are made and conceived by the Executive not during normal working hours, not on the Company’s premises and not using the Company’s tools, devices, equipment or Proprietary Information.  The Executive understands that, to the extent this Agreement shall be construed in accordance with the laws of any state that precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this subsection (b) shall be interpreted not to apply to any invention that a court rules and/or the Company agrees falls within such

 

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classes.  The Executive also hereby waives all claims to moral rights in any Developments.

 

(c)           The Executive agrees to cooperate fully with the Company and to take such further actions as may be necessary or desirable, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Developments.  The Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights and powers of attorney, that the Company may deem necessary or desirable in order to protect its rights and interests in any Development.  The Executive further agrees that if the Company is unable, after reasonable effort, to secure the signature of the Executive on any such papers, the Executive Vice President of Research and Development or the General Counsel of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Executive, and the Executive hereby irrevocably designates and appoints the Executive Vice President of Research and Development or the General Counsel of the Company as his agent and attorney-in-fact to execute any such papers on his behalf and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development under the conditions described in this sentence.

 

7.3           United States Government Obligations.  The Executive acknowledges that the Company from time to time may have agreements with other parties or with the United States Government, or agencies thereof, which impose

 

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obligations or restrictions on the Company regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work.  The Executive agrees to be bound by all such obligations and restrictions that are made known to the Executive and to take all action necessary to discharge the obligations of the Company under such agreements.

 

7.4           Other Agreements.  The Executive hereby represents that, other than documents filed with the Securities and Exchange Commission, he is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or any other party.  The Executive further represents that his performance of all the terms of this Agreement and the performance of his duties as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company and that the Executive will not disclose to the Company or induce the Company to use any confidential or proprietary information, knowledge or material belonging to any previous employer or others.  The Executive further represents that his performance of all the terms of this Agreement and the performance of his duties as an employee of the Company does not and will not breach any agreement to refrain from (i) competing, directly or indirectly, with the business of any former employer or others or (ii) from soliciting employees, customers or suppliers of any former employer or others.

 

8.             Indemnification.  The Company shall indemnify the Executive in accordance with its Certificate of Incorporation and By-Laws.

 

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9.             Survival.  The provisions of Sections 6, 7 and 8 shall survive the termination of this Agreement for any reason.

 

10.           Notices.  Any notices delivered under this Agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto.  Either party may change the address to which notices are to be delivered by giving notice of such change to the other party in the manner set forth in this Section 10.

 

11.           Compliance with Code Section 409A.  This Agreement is intended to comply with the provisions of Section 409A and the Agreement shall, to the extent practicable, be construed in accordance therewith.  The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A and do not satisfy an exemption from, or the conditions of, Section 409A.

 

12.           Pronouns.  Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

13.           Entire Agreement.  This Agreement, together with the ERA, constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including, without limitation, the Original Agreement.

 

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14.           Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

 

15.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts (without reference to the conflict of laws provisions thereof).  Any action, suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within the Commonwealth of Massachusetts), and the Company and the Executive each consents to the jurisdiction of such a court.  The Company and the Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement or any other dealing between them relating to the subject matter of this transaction and the relationship that is being established.

 

16.           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall not be assigned by him.

 

17.           Acknowledgment.  The Executive states and represents that he has had an opportunity to fully discuss and review the terms of this Agreement with an attorney.  The Executive further states and represents that he has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs his name of his own free act.

 

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18.           Miscellaneous.

 

18.1         No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

18.2         The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

 

18.3         In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

 

 

Sepracor Inc.

 

 

 

 

 

By:

/s/ Timothy J. Barberich

 

Title:

Chairman of the Board

 

 

 

 

 

/s/ Adrian Adams

 

Adrian Adams

 

23


 

Exhibit A

 

Program Terms

 

The Executive shall be entitled to continued access to health benefits under, at the Executive’s election, the Company’s Blue Cross Blue Shield PPO Policy or BlueChoice Policy (the “Policies”), following the Executive’s retirement from the Company, for so long as (A) the Company continues to offer such Policy and (B) the Policy allows for such continued access; and, to the extent the Company no longer maintains at least one of the Policies, or access is no longer allowed under either of the Policies, the Company shall allow the Executive continued access to health benefits under a successor policy, or otherwise, for so long as it offers health benefits to its employees.

 


 

SCHEDULE A
FORM OF RESTRICTED STOCK AGREEMENT

 

SEE ATTACHED AGREEMENT

 


 

SEPRACOR INC.

 

Restricted Stock Agreement

 

Name of Recipient:

 

 

 

Number of shares of restricted common
stock awarded:

 

 

 

Grant Date:

 

 

Sepracor Inc. (the “Company”) has selected you to receive the restricted stock award described above, which is subject to the provisions of the Company’s 2000 Stock Incentive Plan (the “Plan”) and the terms and conditions contained in this Restricted Stock Agreement.  Please confirm your acceptance of this restricted stock award and of the terms and conditions of this Agreement by signing a copy of this Agreement where indicated below.

 

SEPRACOR INC.

 

 

 

By:

 

 

[insert name and title]

 

 

Accepted and Agreed:

 

 

 

 

 

 

[insert name of recipient]

 

 

 

 


 

SEPRACOR INC.

 

Restricted Stock Agreement

 

The terms and conditions of the award of shares of restricted common stock of the Company (the “Restricted Shares”) made to the Recipient, as set forth on the cover page of this Agreement, are as follows:

 

1.             Issuance of Restricted Shares.

 

(a)           The Restricted Shares are issued to the Recipient, effective as of the Grant Date (as set forth on the cover page of this Agreement), in consideration of employment services rendered and to be rendered by the Recipient to the Company.

 

(b)           The Restricted Shares will initially be issued by the Company in book entry form only, in the name of the Recipient.  Following the vesting of any Restricted Shares pursuant to Section 2 below, the Company shall, if requested by the Recipient, issue and deliver to the Recipient a certificate representing the vested Restricted Shares.   The Recipient agrees that the Restricted Shares shall be subject to the forfeiture provisions set forth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

 

2.             Vesting.

 

(a)           Vesting Schedule.  Unless otherwise provided in this Agreement or the Plan, the Restricted Shares shall vest in accordance with the following vesting schedule:  [     % of the total number of Restricted Shares shall vest on the first anniversary of the Grant Date and      % of the total number of Restricted Shares shall vest on each successive anniversary thereafter, through and including the       anniversary of the Grant Date].  Any fractional number of Restricted Shares resulting from the application of the foregoing percentages shall be rounded down to the nearest whole number of Restricted Shares.

 

(b)           Acceleration of Vesting.  Notwithstanding the foregoing vesting schedule, as provided in the Plan, all unvested Restricted Shares shall vest effective immediately prior to a Change in Control Event (as defined in the Plan).

 

3.             Forfeiture of Unvested Restricted Shares Upon Employment Termination.

 

In the event that the Recipient ceases to be employed by, a director of, or a consultant or advisor to, the Company for any reason or no reason, with or without cause all of the Restricted Shares that are unvested as of the time of such employment termination shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Recipient, effective as of such termination of employment.  The Recipient shall have no further rights with respect to any Restricted Shares that are so forfeited.  If the Recipient is employed by a subsidiary of the Company, any references in this Agreement to employment with the Company shall instead be deemed to refer to employment with such subsidiary.

 


 

4.             Restrictions on Transfer.

 

                The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Restricted Shares, or any interest therein, until such Restricted Shares have vested, except that the Recipient may transfer such Restricted Shares as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation).  The Company shall not be required (i) to transfer on its books any of the Restricted Shares which have been transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Restricted Shares or to pay dividends to any transferee to whom such Restricted Shares have been transferred in violation of any of the provisions of this Agreement.

 

5.             Restrictive Legends.

 

                The book entry account reflecting the issuance of the Restricted Shares in the name of the Recipient shall bear a legend or other notation upon substantially the following terms:

 

                “These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or his or her predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

 

6.             Rights as a Shareholder.

 

                Except as otherwise provided in this Agreement, for so long as the Recipient is the registered owner of the Restricted Shares, the Recipient shall have all rights as a shareholder with respect to the Restricted Shares, whether vested or unvested, including, without limitation, any rights to receive dividends and distributions with respect to the Restricted Shares and to vote the Restricted Shares and act in respect of the Restricted Shares at any meeting of shareholders.

 

7.             Provisions of the Plan.

 

                This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Recipient with this Agreement.  As provided in the Plan, upon the occurrence of a Reorganization Event (as defined in the Plan), the rights of the Company hereunder (including the right to receive forfeited Restricted Shares) shall inure to the benefit of the Company’s successor and, unless the Board determines otherwise, shall apply to the cash, securities or other property which the Restricted Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Restricted Shares under this Agreement.

 

8.             Tax Matters.

 

(a)            Acknowledgments; Section 83(b) Election.  The Recipient acknowledges that he or she is responsible for obtaining the advice of the Recipient’s own tax advisors with respect to the acquisition of the Restricted Shares and the Recipient is relying solely on such advisors and not on any statements or representations of the Company or any of its agents with respect to the tax consequences relating to the Restricted Shares.  The Recipient understands that the Recipient (and not the Company) shall be responsible for the Recipient’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of the Restricted Shares.

 


 

The Recipient acknowledges that he or she has been informed of the availability of making an election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Shares and that the Recipient has decided not to file a Section 83(b) election.

 

(b)           Withholding. The Recipient acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Recipient any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the Restricted Shares.  On each date on which Restricted Shares vest, the Company shall deliver written notice to the Recipient of the amount of withholding taxes due with respect to the vesting of the Restricted Shares that vest on such date; provided, however, that the total tax withholding cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).  The Recipient shall satisfy such tax withholding obligations by making a cash payment to the Company on the date of vesting of the Restricted Shares, in the amount of the Company’s withholding obligation in connection with the vesting of such Restricted Shares.

 

9.             Miscellaneous.

 

(a)           No Right to Continued Employment.  The Recipient acknowledges and agrees that, notwithstanding the fact that the vesting of the Restricted Shares is contingent upon his or her continued employment by the Company, this Agreement does not constitute an express or implied promise of continued employment or confer upon the Recipient any rights with respect to continued employment by the Company.

 

(b)           Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws provisions.

 


 

SCHEDULE B
FORM OF STOCK OPTION AGREEMENTS

 

SEE ATTACHED AGREEMENT

 


 

SEPRACOR INC.

 

Form of Incentive Stock Option Agreement

Granted Under 2000 Stock Incentive Plan

 

1.             Grant of Option.

 

                This agreement evidences the grant by Sepracor Inc., a Delaware corporation (the “Company”), on the Grant Date indicated on the preceding Certificate of Stock Option Grant (the “Certificate”) to an employee, consultant, or director of the Company (the “Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2000 Stock Incentive Plan (the “Plan”), the number of shares (the “Shares”) of common stock, $.10 par value per share,  of the Company (“Common Stock”),indicated on the certificate at the price per Share indicated on the Certificate. Unless earlier terminated, this option shall expire on the Grant Expiration Date indicated on the Certificate (“Grant Expiration Date”).

 

                It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

 

2.             Vesting Schedule.

 

                This option will become exercisable (“vest”) pursuant to the Vesting Schedule indicated on the Certificate (“Vesting Schedule”).

 

                The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Grant Expiration Date or the termination of this option under Section 3 hereof or the Plan.

 

3.             Exercise of Option.

 

(a)            Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share.

 

(b)           Continuous Relationship with the Company Required.  Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an [employee or officer of], or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 


 

(c)            Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Grant Expiration Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if, following the time the Participant has ceased to be an Eligible Participant, but prior to the Grant Expiration Date, the Participant materially breaches Section 6 or 7 of the Employment Agreement between the Participant and the Company dated March 1, 2007 (the “Employment Agreement”), the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

 

(d)           Exercise Period Upon Death or Disability.  If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Grant Expiration Date while he or she is an Eligible Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Grant Expiration Date.

 

(e)            Discharge for Cause.  If the Participant, prior to the Grant Expiration Date, is discharged by the Company for “cause” (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge.  “Cause” shall have the meaning set forth in the Employment Agreement.

 

4.             Withholding.

 

                No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

 

5.             Nontransferability of Option.

 

                This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

 

6.             Disqualifying Disposition.

 

                If the Participant diposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.

 


 

7.             Provisions of the Plan.

 

                This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed instrument.

 

SEPRACOR INC.

 

 

 

By:

 

 

PARTICIPANT’S ACCEPTANCE

 

                The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The Participant hereby acknowledges receipt of a copy of the Company’s 2000 Stock Incentive Plan.

 

 

 

Name:

 


 

SEPRACOR INC.

 

Nonstatutory Stock Option Agreement
Granted Under 2000 Stock Incentive Plan

 

1.             Grant of Option.

 

This agreement evidences the grant by Sepracor Inc., a Delaware corporation (the “Company”), on the Grant Date indicated on the preceding Certificate of Stock Option Grant (the “Certificate”) to an employee, consultant, or director of the Company (the “Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2000 Stock Incentive Plan (the “Plan”), the number of shares (the “Shares”) of common stock, $.10 par value per share,  of the Company (“Common Stock”),indicated on the certificate at the price per Share indicated on the Certificate. Unless earlier terminated, this option shall expire on the Grant Expiration Date indicated on the Certificate (“Grant Expiration Date”).

 

It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

 

2.             Vesting Schedule.

 

This option will become exercisable (“vest”) pursuant to the Vesting Schedule indicated on the Certificate (“Vesting Schedule”).

 

The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Grant Expiration Date or the termination of this option under Section 3 hereof or the Plan.

 

3.             Exercise of Option.

 

(a)           Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share.

 

(b)           Continuous Relationship with the Company Required.  Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an [employee or officer of], or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 


 

(c)           Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Grant Expiration Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if, following the time the Participant has ceased to be an Eligible Participant, but prior to the Grant Expiration Date, the Participant materially breaches Section 6 or 7 of the Employment Agreement between the Participant and the Company dated March 1, 2007 (the “Employment Agreement”), the right to exercise this option shall terminate immediately upon written notice to the Participant from the Company describing such violation.

 

(d)           Exercise Period Upon Death or Disability.  If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Grant Expiration Date while he or she is an Eligible Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Grant Expiration Date.

 

(e)           Discharge for Cause.  If the Participant, prior to the Grant Expiration Date, is discharged by the Company for “cause” (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge.  “Cause” shall have the meaning set forth in the Employment Agreement.

 

4.             Withholding.

 

No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

 

5.             Nontransferability of Option.

 

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.

 

6.             Provisions of the Plan.

 

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.

 


 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed instrument.

 

SEPRACOR INC.

 

 

 

By:

 

 

 

PARTICIPANT’S ACCEPTANCE

 

The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The Participant hereby acknowledges receipt of a copy of the Company’s 2000 Stock Incentive Plan.

 

 

 

Name:

 


 

SCHEDULE C
FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

 

SEE ATTACHED FORM

 


 

FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

In connection with your employment separation from Sepracor, Inc. (the “Company”) on [INSERT TERMINATION DATE], and in order to receive the benefits as set forth in Section 5 of the Employment agreement, this agreement must become binding between you and the Company.  By signing and returning this agreement, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 1.  Therefore, you are advised to consult with an attorney before signing this agreement and you have been given more than twenty-one (21) days to do so.  If you sign this agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it.  If you do not so revoke, this agreement will become a binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

 

The following numbered paragraphs set forth the terms and conditions which will apply if you timely sign and return this agreement and do not revoke it within the seven (7) day revocation period:

 

1.                                       Mutual Releases - In consideration of the payment of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, successors and assigns, agents and employees (each in their individual and corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature which you ever had or now have against the Released Parties, including, but not limited to, those claims arising out of your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., the Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, § 1 et seq., the Massachusetts Civil Rights Act, M.G.L. c. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93, § 102 and M.G.L. c. 214, § 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149, § 1 et seq., the Massachusetts Privacy Act, M.G.L. c. 214, § 1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock options; and any claim or damage arising out of your employment with or

 


 

separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that you acknowledge that you may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).  Notwithstanding the foregoing, the release set forth in this Section 1 shall not apply to (a) any claim to severance benefits under the Employment Agreement or your rights under this agreement or (b) any vested equity interest in the Company, including vested stock options.

 

The Company hereby fully, forever, irrevocably and unconditionally releases, remises and discharges you from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities and expenses (including attorney’s fees and costs), of every kind and nature that the Company ever had or now has against you as of the date of this agreement.

 

2.                                       Non-Disclosure, Non-Competition and Non-Solicitation Obligations – You acknowledge and reaffirm your obligation to keep confidential and not to disclose any and all non-public information concerning the Company which you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects and financial condition, as is stated more fully in the [Name of the Non-Disclosure Agreement] you executed at the inception of your employment, which remains in full force and effect.  You further acknowledge and reaffirm your obligations under the [Name of the Non-Competition and/or Non-Solicitation Agreement(s)] you previously executed for the benefit of the Company at the inception of your employment, which also remain(s) in full force and effect.

 

3.                                       Return of Company Property - You confirm that you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles and any other Company-owned property in your possession or control and have left intact all electronic Company documents, including but not limited to, those that you developed or helped develop during your employment.  You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

 

4.                                       Business Expenses and Compensation - You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you.  You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company and that no other compensation is owed to you except as provided herein.

 


 

5.                                       Non-Disparagement - You understand and agree that, as a condition for payment to you of the consideration herein described, you shall not make any false, disparaging or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business affairs and financial condition; provided, however, that nothing herein shall prevent you from making truthful disclosures to any governmental entity or in any litigation or arbitration.

 

6.                                       Amendment - This agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto.  This agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

 

7.                                       Waiver of Rights - No delay or omission by the Company in exercising any right under this agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

 

8.                                       Validity - Should any provision of this agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this agreement.

 

9.                                       Cooperation – You agree to cooperate with the Company in the investigation, defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company.  Your cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel to prepare for discovery or any mediation, arbitration, trial, administrative hearing or other proceeding or to act as a witness when reasonably requested by the Company at mutually agreeable times and at locations mutually convenient to you and the Company.  You also agree to cooperate with the Company in the transitioning of your work, and will be available to the Company for this purpose or any other purpose reasonably requested by the Company.

 

10.                                 Tax Provision – In connection with the severance benefits provided to you pursuant to this agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law.  You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the severance benefits.

 

11.                                 Section 409A - No payments that may be made pursuant to this agreement that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code and the guidance issued thereunder (“Section 409A”) may be accelerated or deferred by the Company or by you.  Notwithstanding anything else to the

 


 

contrary in this agreement, to the extent that any of the payments that may be made hereunder constitute “nonqualified deferred compensation”, within the meaning of Section 409A and you are a “specified employee” upon your separation (as defined under Section 409A), any such payment shall be delayed following your separation date if, absent such delay, such payment would otherwise be subject to penalty under Section 409A.  In any event, the Company makes no representation or warranty and shall have no liability to you or to any other person if any provisions of this agreement are determined to constitute “nonqualified deferred compensation” subject to Section 409A but do not satisfy the requirements of that section.

 

12.                                 Nature of Agreement - You understand and agree that this agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

 

13.                                 Acknowledgments - You acknowledge that you have been given at least twenty-one (21) days to consider this agreement and that the Company advised you to consult with an attorney of your own choosing prior to signing this agreement.  You understand that you may revoke this agreement for a period of seven (7) days after you sign this agreement, and the agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.  You understand and agree that by entering into this agreement you are waiving any and all rights or claims you might have under The Age Discrimination in Employment Act, as amended by The Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled.

 

14.                                 Voluntary Assent - You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this agreement, and that you fully understand the meaning and intent of this agreement.  You state and represent that you have had an opportunity to fully discuss and review the terms of this agreement with an attorney.  You further state and represent that you have carefully read this agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

 

15.                                 Applicable Law - This agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions.  You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this agreement or the subject matter hereof.

 

16.                                 Entire Agreement - This agreement contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, commitments and writings in connection therewith. Nothing in this paragraph, however, shall modify, cancel or supersede your obligations set forth in paragraph 2 herein.

 


 

SEPRACOR INC.

 

 

 

By:

 

 

 

Name:

 

Title:

 

I hereby agree to the terms and conditions set forth above.  I have been given at least twenty-one (21) days to consider this agreement and I have chosen to execute this on the date below.  I intend that this agreement become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days by notifying                                                in writing.

 

 

 

Date

 

Employee Name:

 

 

 


 

SEPRACOR INC.

 

 

December 23, 2008

 

Adrian Adams

322 Winfield Road

Devon, Pennsylvania  19333

 

Dear Adrian:

 

In order to ensure compliance with Section 409A of the Internal Revenue Code of 1986, as amended, Sepracor Inc., a Delaware corporation (the “Company”), and you hereby agree to amend the Executive Retention Agreement dated as of March 1, 2007  by and between the Company and you (the “Retention Agreement”), as set forth on Exhibit A hereto, and to further amend the Amended and Restated Employment Agreement dated as of November 6, 2008 by and between the Company and you (the “Employment Agreement”), as set forth on Exhibit B hereto.

 

Except as modified by this letter, all other terms and conditions of the Retention Agreement and Employment Agreement shall remain in full force and effect.  This letter may be executed in counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document.

 

 

Very truly yours,

 

 

 

 

 

SEPRACOR INC.

 

 

 

 

 

By:

/s/ Timothy J. Barberich

 

 

Name: Timothy J. Barberich

 

 

Title: Chairman of the Board

 

Acknowledged and agreed:

 

 

 

 

 

 

 

 

/s/ Adrian Adams

 

 

Adrian Adams

 

 

 


 

Exhibit A

 

Retention Agreement

 

1.               Section 4.1 of the Retention Agreement be and hereby is deleted in its entirety and the following is inserted in lieu thereof:

 

4.1         Stock Acceleration.  If the Change in Control Date occurs during the Term, then, effective upon the Change in Control Date, (a) each outstanding option to purchase shares of Common Stock of the Company held by the Executive shall vest and become immediately exercisable in full and shares of Common Stock of the Company received upon exercise of any options will no longer be subject to a right of repurchase by the Company, (b) each outstanding restricted stock award shall be deemed to be fully vested and will no longer be subject to a right of repurchase by the Company and (c) notwithstanding any provision in any applicable option agreement to the contrary, if Executive’s employment is terminated in connection with, in anticipation of, or within six months after a Change in Control, each such option shall continue to be exercisable by the Executive (to the extent such option was exercisable on the Change in Control Date) for a period of six months following the date of termination of such employment but not later than the expiration date of such option.”

 

2.               Section 4.3(a) of the Retention Agreement be and hereby is amended by deleting the last sentence in its entirety and inserting the following in lieu thereof:

 

Within 90 days after the due date of each Contingent Compensation Payment to the Executive but no later than the end of the year following the year in which the Executive paid the Excise Tax, the Company shall pay to the Executive, in cash, the Gross-Up Payment with respect to such Contingent Compensation Payment, in the amount determined pursuant to this Section 4.3(a).”

 

3.               Section 5.3 of the Retention Agreement by and hereby is amended by adding the following at the end of the paragraph:

 

Notwithstanding the foregoing, if the continued payment of base salary and/or continued provision of benefits to Executive pending resolution of any dispute would cause the Executive to become subject to penalties, interest or other adverse tax consequences under Section 409A, then (i) the Executive shall be entitled to the payments and benefits at the time and in the manner set forth in Section 4 hereof and (ii) following the resolution of the dispute if the payments made and/or benefits provided to the Executive under clause (i) exceed the amount that the Executive is entitled to receive pursuant to Section 4, the excess of such amount shall be repaid (with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code) by the Executive to the Company within 60 days of the resolution of the dispute.”

 

4.               Section 7 of the Retention Agreement be and hereby is amended by deleting “111 Locke Drive” and replacing it with “84 Waterford Drive”.

 


 

Exhibit B

 

Employment Agreement

 

1.               Any Annual Bonus or Pro Rata Bonus payable to you under the Employment Agreement will be paid to you no later than March 15th of the calendar year following the year in which you earned such bonus.

 

2.               Section 5.3 of the Employment Agreement be and hereby is amended by deleting the last sentence in its entirety and inserting the following in lieu thereof:

 

In addition, the Company shall permit Executive or Executive’s estate or representative to exercise the vested stock option portion of the Initial Grant for a period of no less than one year after any such termination of employment but not later than the expiration date of such option.”

 

3.               Section 5.4 of the Employment Agreement be and hereby is amended by deleting the second sentence in its entirety and inserting the following in lieu thereof:

 

In addition, provided the Executive executes the Separation Agreement and any applicable revocation period with respect to the Separation Agreement has expired on or before the 60th day following the date of Executive’s termination of employment (the “Payment Commencement Date”), the Company shall (1) continue to pay the Executive the Base Salary for twenty four (24) months in accordance with the Company’s regular payroll practices, commencing on the Payment Commencement Date (provided, however, that if the Separation Agreement has been signed, and any applicable revocation period has expired, on or before the 30th day following the date of the Executive’s termination of employment, then the payments may commence on such 30th day, unless the Payment Commencement Date occurs in the calendar year following the year in which the Executive’s employment is terminated, in which case the payments shall commence no earlier than January 1 of such subsequent year); (2) pay the Executive a Pro Rata Bonus; (3) pay the Executive, in bi-weekly installments, over a twenty four month period, commencing on the Payment Commencement Date (provided, however, that if the Separation Agreement has been signed, and any applicable revocation period has expired, on or before the 30th day following the date of the Executive’s termination of employment, then the payments may commence on such 30th day, unless the Payment Commencement Date occurs in the calendar year following the year in which the Executive’s employment is terminated, in which case the payments shall commence no earlier than January 1 of such subsequent year), an amount equal in the aggregate to two (2) times the average Annual Bonus earned for the two years prior to the date of his termination (in the event Executive has not been employed for a sufficient period to earn two such bonuses, such calculation shall be made assuming Executive earned a bonus for any such year at a target level of performance (taking into account any minimum bonus amount)); (4) provide to the Executive for two (2) years following the date of his termination payment of COBRA premiums for medical, dental, and vision benefits pursuant to plans maintained by the Company under which Executive and/or Executive’s family is eligible to receive benefits; provided, however, that, notwithstanding the foregoing, the benefits described in this subsection may be discontinued prior the end of the period, but only to the extent, that Executive receives substantially similar benefits from a subsequent employer; and (5) permit Executive to exercise the stock option portion of the Initial Grant for a period of no less than six months after the date of termination but not later than the expiration date of such option.”

 



EX-10.17 6 a2190020zex-10_17.htm EXHIBIT 10.17

Exhibit 10.17

 

SEPRACOR INC.

 

Executive Retention Agreement

 

THIS EXECUTIVE RETENTION AGREEMENT by and between Sepracor Inc., a Delaware corporation (the “Company”), and Adrian Adams (the “Executive”) is made as of March 1, 2007 (the “Effective Date”).

 

WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a change in control of the Company exists and that such possibility, and the uncertainty and questions which it may raise among key personnel, may result in the departure or distraction of key personnel to the detriment of the Company and its stockholders, and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Company’s key personnel without distraction from the possibility of a change in control of the Company and related events and circumstances.

 

NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement (including a certain “gross up” payment originally authorized by the Board on February 25, 1999 and set forth in Section 4.3 of this Agreement) upon the occurrence of a Change in Control (as defined in Section 1.1).

 

1.             Key Definitions.

 

As used herein, the following terms shall have the following respective meanings:

 

1.1           “Change in Control” means an event or occurrence set forth in any one or more of subsections (a) through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection):

 

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

 


 

Company or an underwriter or agent of the Company), (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (c) of this Section 1.1; or

 

(b)           such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the  Board (i) who was a member of the Board on the date of the execution of this Agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (ii) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

 

(c)           the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (i) the beneficial owners of all or substantially all of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

 

(d)           approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

1.2           “Change in Control Date” means the first date during the Term (as defined in Section 2) on which a Change in Control occurs.  Anything in this Agreement to the contrary notwithstanding, if (a) a Change in Control occurs, (b)  the Executive’s employment with the

 

2


 

Company is terminated prior to the date on which the Change in Control occurs, and (c) either (i) such termination of employment (x) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (y) otherwise arose in connection with or in anticipation of a Change in Control, or (ii) such termination of employment occurs following the execution of a definitive agreement for such Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment.

 

2.             Term of Agreement.  This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of (a) the expiration of the Term (as defined below) if a Change in Control has not occurred during the Term, (b) the termination of the Executive’s employment with the Company prior to the Change in Control Date, or (c) if a Change in Control has occurred during the Term, the fulfillment by the Company of all of its obligations under Sections 4 and 5.2 and 5.3.  “Term” shall mean the period commencing as of the Effective Date and continuing in effect through March 1, 2010; provided, however, that commencing on March 1, 2010 and each March 1 thereafter, the Term shall be automatically extended for one additional year unless, not later than 90 days prior to the scheduled expiration of the Term (or any extension thereof), the Company shall have given the Executive written notice that the Term will not be extended.

 

3.             Employment Status; Not an Employment Contract.  The Executive acknowledges that this Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Executive from terminating employment at any time.  If the Executive’s employment with the Company terminates for any reason and subsequently a Change in Control shall occur, the Executive shall not be entitled to any benefits hereunder except as otherwise provided pursuant to Section 1.2.

 

4.             Benefits to Executive.

 

4.1           Stock Acceleration.  If the Change in Control Date occurs during the Term, then, effective upon the Change in Control Date, (a) each outstanding option to purchase shares of Common Stock of the Company held by the Executive shall vest and become immediately exercisable in full and shares of Common Stock of the Company received upon exercise of any options will no longer be subject to a right of repurchase by the Company, (b) each outstanding restricted stock award shall be deemed to be fully vested and will no longer be subject to a right of repurchase by the Company and (c) notwithstanding any provision in any applicable option agreement to the contrary, if Executive’s employment is terminated in connection with, in anticipation of, or within six months after a Change in Control, each such option shall continue to be exercisable by the Executive (to the extent such option was exercisable on the Change in Control Date) for a period of six months following the date of termination of such employment.

 

4.2           Compensation.  If the Change in Control Date occurs during the Term:

 

(a)           the Company shall pay to the Executive in a lump sum in cash within 30 days after the Change in Control Date the aggregate of the following amounts:

 

3


 

(i)            the sum of (1) the Executive’s base salary through the Change in Control Date, (2) the product of (A) the annual bonus paid or payable (including any bonus or portion thereof which has been earned but deferred) for the most recently completed fiscal year and (B) a fraction, the numerator of which is the number of days in the current fiscal year through the Change in Control Date, and the denominator of which is 365 and (3) the amount of any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not previously paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”); and
 
(ii)           the amount equal to (1) three multiplied by (2) the sum of (A) the Executive’s highest annual base salary during the five-year period prior to the Change in Control Date and (B) the Executive’s highest annual bonus during the five-year period prior to the Change in Control Date.
 

(b)           for 24 months after the Change in Control Date, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide benefits to the Executive and the Executive’s family at least equal to those provided to them immediately prior to the Change in Control Date, in accordance with the applicable Benefit Plans in effect on the Measurement Date or, if more favorable to the Executive and his family, in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies; provided, however, that if the Executive’s employment is terminated during this period and the Executive becomes reemployed with another employer and is eligible to receive a particular type of benefits (e.g., health insurance benefits) from such employer on terms at least as favorable to the Executive and his family as those being provided by the Company, then the Company shall no longer be required to provide those particular benefits to the Executive and his family; and

 

(c)           if the Executive’s employment is terminated during the 24-month period following the Change in Control Date, to the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive following the Executive’s termination of employment under any plan, program, policy, practice, contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

 

4.3           Taxes.

 

(a)           In the event that the Company undergoes a  “Change in Ownership or Control” (as defined below), the Company shall, within 30 days after each date on which the Executive becomes entitled to receive (whether or not then due) a Contingent Compensation Payment (as defined below) relating to such Change in Ownership or Control, determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (i) which of the payments or benefits due to the Executive (under this Agreement or otherwise) following such Change in Ownership or Control constitute Contingent Compensation Payments, (ii) the amount, if any, of the excise tax (the “Excise Tax”) payable pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), by the Executive with respect to such

 

4


 

Contingent Compensation Payment and (iii) the amount of the Gross-Up Payment (as defined below) due to the Executive with respect to such Contingent Compensation Payment.  Within 30 days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that he agrees with the Company’s determination pursuant to the preceding sentence or (B) that he disagrees with such determination, in which case he shall indicate which payment and/or benefits should be characterized as a Contingent Compensation Payment, the amount of the Excise Tax with respect to such Contingent Compensation Payment and the amount of the Gross-Up Payment due to the Executive with respect to such Contingent Compensation Payment.  The amount and characterization of any item in the Executive Response shall be final; provided, however, that in the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final.  Within 90 days after the due date of each Contingent Compensation Payment to the Executive, the Company shall pay to the Executive, in cash, the Gross-Up Payment with respect to such Contingent Compensation Payment, in the amount determined pursuant to this Section 4.3(a).

 

(b)           For purposes of this Section 4.3, the following terms shall have the following respective meanings:

 

(i)            “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.
 
(ii)           “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.
 
(iii)          “Gross-Up Payment” shall mean an amount equal to the sum of (i) the amount of the Excise Tax payable with respect to a Contingent Compensation Payment and (ii) the amount necessary to pay all additional taxes imposed on (or economically borne by) the Executive (including the Excise Taxes, state and federal income taxes and all applicable employment taxes) attributable to the receipt of such Gross-Up Payment.  For purposes of the preceding sentence, all taxes attributable to the receipt of the Gross-Up Payment shall be computed assuming the application of the maximum tax rates provided by law.
 

4.4           Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefits provided for in this Section 4. Further, except as provided in Section 4.2(b), the amount of any payment or benefits provided for in this Section 4 shall not be reduced by any compensation earned by the Executive as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company or otherwise.

 

4.5           Outplacement Services.  In the event of the termination of the Executive’s employment in connection with, in anticipation of, or within six months after a Change in Control, the Company shall provide outplacement services through one or more outside firms of

 

5


 

the Executive’s choosing up to an aggregate amount equal to 15 percent of the Executive’s annual base salary, with such services to extend until the earlier of (i) 12 months following the termination of Executive’s employment or (ii) the date the Executive secures full time employment.

 

4.6           Six Month Delay.  If any payment, compensation or other benefit provided to the Executive in connection with his employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is a specified employee as defined in Section 409A(2)(B)(i), no part of such payments shall be paid before the day that is six (6) months plus one (1) day after the date of his termination (the “New Payment Date”).  In the case of welfare benefit continuation, the Company shall use its best efforts to enable Executive to obtain such benefits at Executive’s expense prior to the New Payment Date.  The aggregate of any payments that otherwise would have been paid to the Executive (or on Executive’s behalf) during the period between the date of his termination and the New Payment Date shall be paid to the Executive in a lump sum on such New Payment Date.  Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.

 

5.             Disputes.

 

5.1           Settlement of Disputes; Arbitration.  All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board of Directors of the Company and shall be in writing.  Any denial by the Board of Directors of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The Board of Directors shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim.  Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

 

5.2           Expenses.  The Company agrees to pay as incurred, to the full extent permitted by law, all legal, accounting and other fees and expenses which the Executive may reasonably incur as a result of any claim or contest by the Company or others, or any bona fide claim or contest by the Executive, regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive regarding the amount of any payment or benefits pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code, provided that the Executive shall reimburse any fees and expenses to the extent any such claim or contest is not resolved in favor of the Executive.

 

5.3           Compensation During a Dispute.  If the Change in Control Date occurs during the Term and the Executive’s employment with the Company terminates within 24 months following the Change in Control Date, and the right of the Executive to receive benefits under Section 4 (or the amount or nature of the benefits to which he is entitled to receive) are the

 

6


 

subject of a dispute between the Company and the Executive, the Company shall continue (a) to pay to the Executive his base salary in effect as of the Measurement Date and (b) to provide benefits to the Executive and the Executive’s family at least equal to those which would have been provided to them, if the Executive’s employment had not been terminated, in accordance with the applicable Benefit Plans in effect on the Measurement Date, until such dispute is resolved either by mutual written agreement of the parties or by an arbitrator’s award pursuant to Section 5.1.  Following the resolution of such dispute, the sum of the payments made to the Executive under this Section 5.3 shall be deducted from any cash payment which the Executive is entitled to receive pursuant to Section 4; and if such sum exceeds the amount of the cash payment which the Executive is entitled to receive pursuant to Section 4, the excess of such sum over the amount of such payment shall be repaid (with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code) by the Executive to the Company within 60 days of the resolution of such dispute.

 

6.             Successors.

 

6.1           Successor to Company.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement.  As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business or assets as aforesaid which assumes and agrees to perform this Agreement, by operation of law or otherwise.

 

6.2           Successor to Executive.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to the Executive or his family hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

 

7.             Notice.  All notices, instructions and other communications given hereunder or in connection herewith shall be in writing.  Any such notice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to the Company, at 111 Locke Drive, Marlborough, MA  01752, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith).  Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be

 

7


 

deemed to have been duly delivered unless and until it actually is received by the party for whom it is intended.

 

8.             Miscellaneous.

 

8.1           Employment by Subsidiary.  For purposes of this Agreement, the Executive’s employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of the Company.

 

8.2           Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

8.3           Injunctive Relief.  The Company and the Executive agree that any breach of this Agreement by the Company is likely to cause the Executive substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such other remedies which may be available, the Executive shall have the right to specific performance and injunctive relief.

 

8.4           Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles.

 

8.5           Waivers.  No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time.

 

8.6           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

 

8.7           Tax Withholding.  Any payments provided for hereunder shall be paid net of any applicable tax withholding required under federal, state or local law.

 

8.8           Entire Agreement.  This Agreement, together with the Employment Agreement by and between the Company and the Executive of even date herewith, sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of the subject matter contained herein. For the avoidance of doubt, except as specifically described herein in Section 4.1, the stock options and restricted stock awards held by Executive shall continue to be governed by the applicable stock option or stock incentive plan under which they were granted or issued (or any successor plan thereto) and any related stock option or restricted stock agreement, as the same may be amended or modified.

 

8.9           Amendments.  This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

 

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8.10         Executive’s Acknowledgements.  The Executive acknowledges that he: (a) has read this Agreement; (b) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; (c) understands the terms and consequences of this Agreement; and (d) understands that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the Company in connection with the transactions contemplated by this Agreement, and is not acting as counsel for the Executive.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set forth above.

 

SEPRACOR INC.

 

 

 

By:

/s/ Timothy J. Barberich

 

 

 

Title:

Chairman and CEO

 

 

 

 

 

/s/ Adrian Adams

 

Adrian Adams

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

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SEPRACOR INC.

 

December 23, 2008

 

Adrian Adams

322 Winfield Road

Devon, Pennsylvania  19333

 

Dear Adrian:

 

In order to ensure compliance with Section 409A of the Internal Revenue Code of 1986, as amended, Sepracor Inc., a Delaware corporation (the “Company”), and you hereby agree to amend the Executive Retention Agreement dated as of March 1, 2007  by and between the Company and you (the “Retention Agreement”), as set forth on Exhibit A hereto, and to further amend the Amended and Restated Employment Agreement dated as of November 6, 2008 by and between the Company and you (the “Employment Agreement”), as set forth on Exhibit B hereto.

 

Except as modified by this letter, all other terms and conditions of the Retention Agreement and Employment Agreement shall remain in full force and effect.  This letter may be executed in counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document.

 

 

Very truly yours,

 

 

 

SEPRACOR INC.

 

 

 

 

 

By:

/s/ Timothy J. Barberich

 

 

 

Name: Timothy J. Barberich

 

 

 

Title: Chairman of the Board

 

 

Acknowledged and agreed:

 

 

 

 

 

/s/ Adrian Adams

 

 

Adrian Adams

 

 


 

Exhibit A

 

Retention Agreement

 

1.               Section 4.1 of the Retention Agreement be and hereby is deleted in its entirety and the following is inserted in lieu thereof:

 

4.1                           Stock Acceleration.  If the Change in Control Date occurs during the Term, then, effective upon the Change in Control Date, (a) each outstanding option to purchase shares of Common Stock of the Company held by the Executive shall vest and become immediately exercisable in full and shares of Common Stock of the Company received upon exercise of any options will no longer be subject to a right of repurchase by the Company, (b) each outstanding restricted stock award shall be deemed to be fully vested and will no longer be subject to a right of repurchase by the Company and (c) notwithstanding any provision in any applicable option agreement to the contrary, if Executive’s employment is terminated in connection with, in anticipation of, or within six months after a Change in Control, each such option shall continue to be exercisable by the Executive (to the extent such option was exercisable on the Change in Control Date) for a period of six months following the date of termination of such employment but not later than the expiration date of such option.”

 

2.               Section 4.3(a) of the Retention Agreement be and hereby is amended by deleting the last sentence in its entirety and inserting the following in lieu thereof:

 

Within 90 days after the due date of each Contingent Compensation Payment to the Executive but no later than the end of the year following the year in which the Executive paid the Excise Tax, the Company shall pay to the Executive, in cash, the Gross-Up Payment with respect to such Contingent Compensation Payment, in the amount determined pursuant to this Section 4.3(a).”

 

3.               Section 5.3 of the Retention Agreement by and hereby is amended by adding the following at the end of the paragraph:

 

Notwithstanding the foregoing, if the continued payment of base salary and/or continued provision of benefits to Executive pending resolution of any dispute would cause the Executive to become subject to penalties, interest or other adverse tax consequences under Section 409A, then (i) the Executive shall be entitled to the payments and benefits at the time and in the manner set forth in Section 4 hereof and (ii) following the resolution of the dispute if the payments made and/or benefits provided to the Executive under clause (i) exceed the amount that the Executive is entitled to receive pursuant to Section 4, the excess of such amount shall be repaid (with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code) by the Executive to the Company within 60 days of the resolution of the dispute.”

 

4.               Section 7 of the Retention Agreement be and hereby is amended by deleting “111 Locke Drive” and replacing it with “84 Waterford Drive”.

 


 

Exhibit B

 

Employment Agreement

 

1.               Any Annual Bonus or Pro Rata Bonus payable to you under the Employment Agreement will be paid to you no later than March 15th of the calendar year following the year in which you earned such bonus.

 

2.               Section 5.3 of the Employment Agreement be and hereby is amended by deleting the last sentence in its entirety and inserting the following in lieu thereof:

 

In addition, the Company shall permit Executive or Executive’s estate or representative to exercise the vested stock option portion of the Initial Grant for a period of no less than one year after any such termination of employment but not later than the expiration date of such option.”

 

3.               Section 5.4 of the Employment Agreement be and hereby is amended by deleting the second sentence in its entirety and inserting the following in lieu thereof:

 

In addition, provided the Executive executes the Separation Agreement and any applicable revocation period with respect to the Separation Agreement has expired on or before the 60th day following the date of Executive’s termination of employment (the “Payment Commencement Date”), the Company shall (1) continue to pay the Executive the Base Salary for twenty four (24) months in accordance with the Company’s regular payroll practices, commencing on the Payment Commencement Date (provided, however, that if the Separation Agreement has been signed, and any applicable revocation period has expired, on or before the 30th day following the date of the Executive’s termination of employment, then the payments may commence on such 30th day, unless the Payment Commencement Date occurs in the calendar year following the year in which the Executive’s employment is terminated, in which case the payments shall commence no earlier than January 1 of such subsequent year); (2) pay the Executive a Pro Rata Bonus; (3) pay the Executive, in bi-weekly installments, over a twenty four month period, commencing on the Payment Commencement Date (provided, however, that if the Separation Agreement has been signed, and any applicable revocation period has expired, on or before the 30th day following the date of the Executive’s termination of employment, then the payments may commence on such 30th day, unless the Payment Commencement Date occurs in the calendar year following the year in which the Executive’s employment is terminated, in which case the payments shall commence no earlier than January 1 of such subsequent year), an amount equal in the aggregate to two (2) times the average Annual Bonus earned for the two years prior to the date of his termination (in the event Executive has not been employed for a sufficient period to earn two such bonuses, such calculation shall be made assuming Executive earned a bonus for any such year at a target level of performance (taking into account any minimum bonus amount)); (4) provide to the Executive for two (2) years following the date of his termination payment of COBRA premiums for medical, dental, and vision benefits pursuant to plans maintained by the Company under which Executive and/or Executive’s family is eligible to receive benefits; provided, however, that, notwithstanding the foregoing, the benefits described in this subsection may be discontinued prior the end of the period, but only to the extent, that Executive receives substantially similar benefits from a subsequent employer; and (5) permit Executive to exercise the stock option portion of the Initial Grant for a period of no less than six months after the date of termination but not later than the expiration date of such option.”

 



EX-10.9 2 a2190020zex-10_9.htm EXHIBIT 10.9

Exhibit 10.9

 

 

SEPRACOR INC.

 

CORPORATE POLICIES

 

SUBJECT/TITLE:

Sepracor Severance Benefit Program

 


POLICY: No. 2.03

 

 

 

Supersedes:

 

Approval

 

 

Date Issued:

 

Page: 1 of 13

Policy dated

 

Signature:

/s/ Adrian Adams

 

December 10, 2008

 

 

4.10.06

 

 

 

 

 

 

 

 

Purpose:

 

To provide assistance to Employees (as defined below) as they transition out of the Company (as hereinafter defined) and to encourage Employees to remain with Sepracor Inc., its subsidiaries, affiliates and or any successor entity (collectively “Sepracor” or “Company”) as long as needed in the event of a Change in Control (as defined below) of Sepracor.

 

Scope:

 

Sepracor agrees to provide severance benefits to regular full time and part time Employees in the event that: 1) the Company elects to terminate employment of an Employee without Cause (as defined below), or 2) a Change in Control occurs and the Company elects to terminate the employment of an employee without Cause or an Employee resigns for Good Reason (as defined below) on or prior to the twelve (12) month anniversary of a Change in Control.

 

This Policy is intended to be a welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, or ERISA.

 

Eligibility:

 

A.                       Any Employee whose employment is terminated by the Company without Cause is eligible to receive severance benefits under this Policy, as set forth below.

 

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B.                        Any Employee whose employment is terminated without Cause or for Good Reason on or prior to the twelve-month anniversary of a Change in Control will be eligible to receive the benefits described below. Notwithstanding the foregoing, if (i) an Employee resigns within twelve months after the Change in Control and designates his or her resignation as one with Good Reason or (ii) the Employee’s employment is terminated without Cause, and, in either case, within 20 days after such resignation or termination Sepracor determines that the Employee’s conduct prior to his or her resignation or termination warranted a discharge for Cause, such resignation or termination will be deemed a discharge for Cause. If Sepracor determines that the Employee’s conduct warranted a discharge for Cause, Sepracor may require that benefits, if any, paid after resignation or termination of employment pursuant to this Policy must be repaid to Sepracor, including by means of a valid setoff.

 

C.                        Notwithstanding anything to the contrary contained herein, payment of any and all severance benefits under this Policy are subject to the Employee’s binding execution of a Severance Agreement (as defined below).

 

D.                       For clarification, no Employee who (i) voluntarily quits, (ii) is terminated for Cause, (iii) retires, or (iv) refuses to accept other Suitable Employment (as defined below) offered by Sepracor, is eligible for the severance benefits provided by this Policy, unless otherwise agreed to in writing between Sepracor and such Employee.

 

Terms:

 

A.                      “Cause” is determined by Sepracor in its sole discretion and may include, but is not limited to, the willful failure to perform reasonable assigned duties (other than any such failure resulting from incapacity due to physical or mental illness) willful engagement in illegal or immoral conduct or misconduct, and/or violation(s) of corporate policies, which is/are materially injurious to Sepracor.

 

B.                        “Change in Control” or “CIC” is defined as:  (i) the acquisition by a party or a group of more than 50% of the outstanding stock of the Company; (ii) a change, without approval of the Company’s Board of Directors (the “Board of Directors”), of a majority of the Board of Directors; or (iii) the acquisition of the Company by means of a reorganization, merger, consolidation or asset sale; provided in each case that such event constitutes a “change in control event” within the meaning of Section 409A of the Internal Revenue Code, as amended, and the guidance issued thereunder (the “Code”).

 

C.                        “Employee” means any employee of Sepracor, other than an employee who (i) is an executive officer of Sepracor (e.g. Executive Vice President and President and Chief Executive Officer) or (ii) has entered into an agreement with Sepracor, that is still in effect at the date of his or her termination, specifically providing for severance benefits upon termination of employment.

 

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D.                       “Suitable Employment” means any position of a comparable or higher base salary and Target Bonus (as defined below) that is located within 50 miles of the facility where the Employee performed his or her principal duties for Sepracor immediately prior to termination.

 

E.                         “Good Reason” means, except as noted below: 1) a material reduction in the Employee’s Salary as in effect on the date of the relevant Change in Control; 2) a requirement that Employee work at any facility that is more than 50 miles from the facility where the Employee performed his or her principal duties for Sepracor immediately prior to the Change in Control or, in the case of a field sales professional, 50 miles from such sales professional’s primary residence; or 3) a significant diminution of the Employee’s overall authority or responsibilities from those assigned to him or her immediately prior to the Change in Control.

 

A resignation with Good Reason shall be tendered in writing, describing in reasonable detail the event or events giving rise to the termination within 90 days of the initial existence of such event or events. However, any event described above will not be deemed to constitute Good Reason if, within 30 days of the Employee’s written resignation notice, such event has been corrected. Any termination of the Employee’s employment for Good Reason will not be effective until the date 31 days after the Employee’s delivery to Sepracor of the written notice of Good Reason described above.

 

Severance Benefits:

 

Any Employee entitled to severance benefits under this Policy shall be entitled to the following continuation of payments, based upon title/role as determined by the Company in its sole discretion. Payments will be made in equal installments on dates consistent with Sepracor’s normal payroll practices then in effect.

 

Role

 

Non – CIC Severance

 

CIC Severance

Sr VP

 

1.25 x Salary and Target Bonus (65 weeks)

 

1.5 x Salary and Target Bonus + Pro-Rated Bonus (78 weeks)

VP and AVP

 

1. 0 x Salary (52 weeks)

 

Same as Non – CIC

Directors and Regional Directors

 

.75 x Salary (39 wks)

 

Same as Non – CIC

Managers and District Managers

 

.50 x Salary (26 wks)

 

Same as Non – CIC

Professionals & Admin

 

.34 x Salary (18 wks)

 

Same as Non – CIC

Sales Rep

 

.34 x Salary (18 wks)

 

Same as Non – CIC

 

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Other Information:

 

A.                      Salary:  is defined as base salary only and does not include overtime, bonuses, income or gains attributable to stock options, restricted stock or other similar equity-based compensation or commissions.

 

B.                        Pro Rated Bonus: is defined as an amount equal to the product of (A) the Employee’s Target Bonus for the year in which termination of employment is effective and (B) a fraction, the numerator of which is the number of days in the current fiscal year through the effective date of such termination of employment, and the denominator of which is 365. The only level eligible for a pro-rated bonus award is a Senior Vice President. A pro-rated bonus is only paid in the event of a change in control.

 

C.                        Target Bonus:  is defined as the annual bonus paid after year end results are evaluated, defined as a percentage of Salary. The only level eligible for a Target Bonus award is a Senior Vice President.

 

D.                       Severance Period: is defined as the number of weeks an employee is entitled to severance benefits, as set forth in the table above.

 

E.                         Tax Implications:  Federal, state and local taxes will be withheld from the severance payment.

 

F.                         Equity Award Acceleration:  Employees will be entitled to receive acceleration of vesting of any equity awards under Sepracor’s equity incentive plans in accordance with the terms of such plans. Nothing in this Policy is intended to modify or supersede the terms of Sepracor’s equity incentive plans; provided, however, that any such acceleration would be covered by the provisions of Section G below (Tax Gross-Up).

 

G.                        Tax Gross-Up:  In accordance with the policy adopted by the Board of Directors on February 25, 1999, to the extent payments received hereunder constitute “parachute payments” under Section 280G of the Code, and are therefore subject to the excise tax imposed by Section 4999 of the Code, the Employee will be entitled to an additional gross-up payment so that the Employee will be placed in the same after-tax financial position he would have been in if he had not incurred any excise tax liability under Section 4999 of the Code.

 

In addition, to the extent any other excise tax liability (including any tax liability incurred under Section 409A of the Code) is imposed as a result of payments received hereunder, the Employee will be entitled to an additional gross-up payment so that the Employee will be placed in the same after-tax financial position he would have been in if he had not incurred any such excise tax liability. Any such gross-up payments shall be made by the end of the tax year following the year in which the Employee pays the applicable excise tax.

 

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Insurance Benefits:

 

Employees entitled to severance benefits under this Policy shall also be entitled to the following benefits.

 

A.                       Medical and Dental Insurance:  During the Severance Period, the Company will continue to provide medical, dental and employee assistance program benefits to the Employee and the Employee’s spouse and dependents (in each case, as provided in the applicable plan) at levels substantially similar to the benefits provided by the Company immediately prior to the Employee’s date of termination. If the Employee signs and does not revoke the Severance Agreement, Sepracor will pay the employer portion of the premiums for medical and dental coverage during the Severance Period. Employees will be responsible for payment of the employee portion. If you find new employment and are eligible for health and/or dental insurance you shall promptly notify Sepracor and Sepracor’s obligation to provide such coverage during the Severance Period shall immediately cease.

 

B.                         Vision and FLEX Account Coverage:  Employees will be offered continuation of vision and health care spending account coverage (i.e FLEX spending account) through COBRA (as defined below) at the Employee’s expense.

 

C.                         Life and Disability Insurance:  Each Employee will be eligible for conversion of their group life and long-term disability insurance to non-group life and long-term disability insurance, provided that the respective policy permits such conversion. The Employee will be responsible for payment of all premiums for non-group life and long-term disability insurance.

 

D.                        COBRA Benefits: Nothing in this Policy shall operate to reduce, or be construed as reducing, the Employee’s benefit continuation rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), in any manner. Federal law defines the duration of continuation of medical and dental benefits through COBRA.

 

Outplacement Benefits:

 

For any Employee entitled to benefits under this Policy, Sepracor will, at the request of the Employee, arrange for reasonable outplacement benefits. The benefit provided will be determined in Sepracor’s sole discretion and will vary based on the Employee’s role within the organization. No outplacement benefits will be paid after the second year following the year of termination. Sepracor will arrange and pay for the reasonable outplacement services.

 

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Severance Agreement and Release:

 

As a condition to receipt of severance benefits under this Policy, eligible Employees shall be required to timely sign and return and not revoke a severance agreement and release in a form prepared by, and satisfactory to, Sepracor (the “Severance Agreement”), and to abide by the provisions of the Severance Agreement. Among other things, the Severance Agreement shall contain a release and waiver of any claims the Employee or his/her representatives may have against the Company, its successors, affiliates and/or representatives, and shall release those entities and persons from any liability for such claims. Employees are entitled and advised to consult an attorney of their own choosing prior to signing the Severance Agreement. The severance payments will commence 60 days following the date of the Employee’s termination (the “Payment Commencement Date”), provided that the Severance Agreement has been properly executed and any applicable revocation period has expired as of such date, or, if the Severance Agreement has been properly executed and any applicable revocation period has expired prior to the 30th day following the Employee’s termination, then the severance payments may commence on the 30th day following the Employee’s termination, unless the Payment Commencement Date occurs in the calendar year following the termination of the Employee’s employment, in which case the payments may commence no earlier than January 1 of such subsequent calendar year. Notwithstanding the foregoing, if all of the severance payments will be made within the short-term deferral period (as defined below) and otherwise satisfy the requirements for the short-term deferral exception to Section 409A of the Code, or the severance payments are otherwise exempt from Section 409A of the Code, then the payments may commence earlier than the Payment Commencement Date, as determined by Sepracor in its sole discretion

 

Severance Pay:

 

Final paychecks will include accrued but unused vacation time as indicated in the policy Accrued Vacation Policy.

 

Section 409A Compliance:

 

Subject to the provisions in this section, any severance payments or benefits under this plan shall begin only upon the date of the Employee’s “separation from service” (determined as set forth below) which occurs on or after the date of termination of his or her employment. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided under the plan.

 

A.           It is intended that each installment of the severance payments and benefits provided under the plan shall be treated as a separate “payment” for purposes of Section 409A of the Code. Neither the Employee nor Sepracor shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

 

B.             If, as of the date of the Employee’s “separation from service” from Sepracor, he or she is not a “specified employee” (within the meaning of Section 409A of the Code), then each installment of the severance payments and benefits shall be

 

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made on the dates and terms set forth in the plan.

 

C.             If, as of the date of the Employee’s “separation from service” from Sepracor, he or she is a “specified employee” (within the meaning of Section 409A of the Code), then:

 

1.                                       Each installment of the severance payments and benefits due under the plan that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the short-term deferral period (within the meaning of Section 409A of the Code) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A; and

 

2.                                       Each installment of the severance payments and benefits due under the plan that is not described in subsection C.1. above and that would, absent this subsection, be paid within the six-month period following the Employee’s “separation from service” from Sepracor shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Employee’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Employee’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of severance payments and benefits if and to the maximum extent that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the second taxable year following the taxable year in which the separation from service occurs.

 

D.            The determination of whether and when the Employee’s separation from service from Sepracor has occurred shall be made in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h).  Solely for purposes of this section D, “Sepracor” shall include all persons with whom Sepracor would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

Policy Administration:

 

A.                       Policy Administrator. This Policy will be administered by Sepracor. The Policy administrator will be one or more individuals appointed by Sepracor or, if no individual is so appointed, Sepracor will be the Policy administrator. The general

 

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administration of the Policy and the responsibility for carrying out its provisions will be vested in the Policy administrator.  The Policy administrator will be the “administrator” within the meaning of Section 3(16) of ERISA and will have all the responsibilities and duties contained therein.

 

The Policy administrator can be contacted at the following address:

 

Sepracor Inc.

84 Waterford Drive

Marlborough, MA  01752

Attn: Executive Vice President, Human Resources and Administration

 

B.                        Decisions, Powers and Duties.  The Policy administrator’s decisions and determinations (including determinations of the meaning and reference of terms used in the Policy) will be binding on all persons.  The Policy administrator will be the named fiduciary for purposes of ERISA.  The Policy administrator will have such powers and discretion as are necessary to discharge its duties, including, but not limited to, interpretation and construction of the Policy, the determination of all questions of eligibility, participation and benefits and all other related or incidental matters, and such duties and powers of Policy administration which are not assumed from time to time by any other appropriate entity, individual or institution.  The Policy administrator will decide all such questions in its discretion and in accordance with the terms of the controlling legal documents and applicable law, and its good faith decision will be binding on the Employee, the Employee’s spouse or other dependents or beneficiaries and all other interested parties.

 

The Policy administrator will discharge its duties with respect to the Policy solely in the interest of the Employees and their beneficiaries, with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like objectives.

 

The Policy administrator may adopt rules and regulations of uniform applicability in its interpretation and implementation of this Policy.

 

C.                         Proof of Information. The Policy administrator may require that each Employee or other person submit, in such form as it will deem reasonable and acceptable, proof of any information that the Policy administrator finds necessary or desirable for the proper administration of this Policy.

 

D.                        Records and Disclosures.  The Policy administrator will maintain such records as are necessary to carry out the provisions of the Policy.  The Policy administrator also will make all disclosures that are required by ERISA and any subsequent amendments to ERISA.

 

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E.                          Mistakes.  If there has been a mistake in the amount of an Employee’s benefits paid under this Policy, the mistake may be corrected by the Policy administrator or its designee when the mistake is discovered.  The mistake may be corrected in any reasonable manner authorized by the Policy administrator (for example, by offset against payments remaining to be paid or by payments between the Employee and us).  In appropriate circumstances (for example, where a mistake is not timely discovered), the Policy administrator may waive the making of any correction.

 

F.                          Expenses.  All costs and expenses incurred by Sepracor in administering this Policy, including the expenses of the Policy administrator, will be borne by Sepracor.

 

G.                        Indemnification.  To the extent permitted by law, the Policy administrator and all Employees, officers, directors, agents and representatives of the Policy administrator will be indemnified by Sepracor and held harmless against any claims and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of this Policy except to the extent that such claims arise from gross negligence, willful neglect, or willful misconduct.

 

H.                        Integration with Statutory Pay or Benefits Requirements.  To the extent that any federal, state or local law, including so called “plant closing” laws, requires that Sepracor give advance notice or make a payment of any kind to an Employee because of that Employee’s involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, or similar event, the benefits provided under this Policy or the other arrangement will either be reduced or eliminated to avoid any duplication of payment. Sepracor intends for the benefits provided under this Policy to satisfy any and all statutory obligations that may arise out of an Employee’s involuntary termination for the foregoing reasons, and the Policy administrator will so construe and implement the terms of this Policy.  The Policy administrator will determine how to apply this provision, and may override other provisions of this Policy in doing so.

 

I.                             Policy Name and Type.  The name of the severance and retention program is the Sepracor Severance Benefit Program.  The program is intended to constitute an “Employee Welfare Benefits Plan” under Department of Labor Regulation Section 2510.3-2(b) and other applicable regulations and statutes.  Accordingly, benefits under this Policy will not be contingent on retirement, will not exceed twice the annual compensation of the Employee participating in the program, and will be completed within twenty-four (24) months of termination of employment.  The program will be construed and interpreted in a manner consistent with this intent.

 

J.                            Funding.  Benefits will be paid from the general assets of Sepracor and will not be funded by trust or otherwise.  Nothing herein will be deemed to create a trust of any kind.

 

K.                       Effective Date.  This Policy is effective as of December 10, 2008.

 

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L.                          Name and Address of Employer.  This Policy is sponsored by:

 

Sepracor Inc.

84 Waterford Drive

Marlborough, Massachusetts 01752

 

M.                     Claims Procedure.  Any Employee who believes he or she is entitled to severance or retention benefits under this Policy which are not being paid may submit a written claim for payment to the Policy administrator.  Any Employee otherwise entitled to benefits under this Policy must make such claim within sixty (60) days of termination of employment in order to be eligible for benefits. Any claim for benefits shall be in writing, addressed to the Policy administrator and must be sufficient to notify the Policy administrator of the benefit claimed.  If the claim of an Employee is denied, the Policy administrator will within a reasonable period of time provide a written notice of denial to the Employee.  The notice will include the specific reasons for denial, the provisions of this Policy on which the denial is based, and the procedure for a review of the denied claim.  Where appropriate, it will also include a description of any additional material or information necessary to complete or perfect the claim and an explanation of why that material or information is necessary.  The Employee may request in writing a review of a claim denied by the Policy administrator and may review pertinent documents and submit issues and comments in writing to the administrator.  The Policy administrator will provide to the Employee a written decision upon such request for review of a denied claim.  The decision of the Policy administrator upon such review will be final.

 

N.                        Drafting Errors.  If, due to errors in drafting, any Policy provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Policy administrator in its sole and exclusive judgment, the provision will be considered ambiguous and will be interpreted by the Policy administrator and all Policy fiduciaries in a fashion consistent with its intent, as determined in the sole and exclusive judgment of the Policy administrator.  The Policy administrator will amend the Policy retroactively to cure any such ambiguity.

 

Miscellaneous Provisions:

 

A.                       No Employment Rights.

Nothing in this Policy will be construed to provide any Employee with a guarantee   of employment and does not supersede Sepracor’s policy of at will employment.

 

B.                        Governing Law.  This Policy and the rights of all persons under this Policy will be construed in accordance with and under applicable provisions of ERISA, and the regulations there under, and the laws of the Commonwealth of Massachusetts

 

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(without regard to conflict of laws provisions) to the extent not preempted by federal law.

 

C.                         No Limitation Upon Rights of Sepracor.  This Policy will not affect in any way Sepracor’s right or power to make adjustments, reclassifications or changes of Sepracor’s capital or business structure; to merge or consolidate; to dissolve or liquidate; or to sell or transfer all or any part of Sepracor’s business or assets.

 

D.                        Entire Agreement.  This Policy is a consolidation, amendment, and restatement of, and supersedes any and all severance plans or separation policies applying to Employees that may have been in effect throughout Sepracor prior to the effective date of this Policy, with the exception of the 280G Gross-Up Policy adopted by the Board of Directors on February 25, 1999 and any retention or other written agreements applicable to executive officers. Notwithstanding the foregoing, the acceleration of stock options and other stock awards granted under the Sepracor equity incentive plans will continue to be in full force and effect and will not be amended or modified by this Policy, and any such acceleration would be covered by the provisions of Section B of “Stock Options” above.

 

E.                          Successor and Assigns.  Sepracor will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Sepracor to expressly assume and agree to perform Sepracor’s obligations under this Policy in the same manner and to the same extent that Sepracor would be required to perform it if no such succession had taken place.

 

F.                          Severability.  In case any one or more of the provisions of this Policy (or part of any provision) will be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect the other provisions of this Policy, and this Policy will be construed as if such invalid, illegal or unenforceable provisions (or part of any provision) never had been contained herein.

 

G.                         Non Assignability.  No right or interest of any Employee will be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge or bankruptcy, provided, however, that this provision will not be applicable in the case of obligations of an Employee to us.

 

H.                        Amendment or Termination.  Sepracor reserves the right to modify, amend or terminate this Policy in whole or in part at any time in the manner and subject to the limitations described below.  Any amendment, modification or termination must be effected by a written instrument executed by an authorized officer of Sepracor.  No modification, amendment or termination will be effective as to an Employee during the two year period following a Change in Control without the prior consent of the Employee.  In no event will an amendment, modification or termination reduce or diminish any severance or retention benefits owing under this Policy for

 

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terminations of employment prior to the date of the amendment or termination without the consent of the Employee to whom the benefits are owed.

 

I.                             Section 409A.  This Policy is intended to comply with Section 409A and shall be interpreted consistently therewith.

 

Statement of ERISA Rights:

 

The following statement is required by federal law and regulations.  ERISA provides that all program participants shall be entitled to:

 

A.                       Examine, without charge at the Policy administrator’s office and at other specified locations, such as work sites, all documents constituting the Policy, and copies of all documents filed with the U.S. Department of Labor, such as detailed annual reports and program descriptions.

 

B.                        Obtain copies of all documents and the Policy information upon written request to the Policy administrator.  The Policy administrator may make a reasonable charge for copies.

 

C.                        Receive a copy of a summary of the annual financial report for the Policy.  The Policy administrator is required by law to furnish each participant with a copy of this Summary Annual Report.

 

D.                       Obtain a statement advising the Employee whether he or she has a right to receive benefits under the Policy and what benefits the Employee may receive.  This statement must be requested in writing and is not required to be given more than once a year.  The Policy administrator must provide the statement free of charge.

 

E.                         In addition to creating rights for participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit Policy.  The people who operate the Policy, called “fiduciaries” of the program, have a duty to do so prudently and in the interest of participants and beneficiaries.  Employers nor any other person may fire an Employee or otherwise discriminate against an Employee in any way to prevent an Employee from obtaining a benefit under the Policy or exercising the Employee’s rights under ERISA.

 

F.                          If an Employee’s claim for a benefit is denied in whole or in part, the Employee must receive a written explanation of the reason for the denial.  The Employee has the right to have the Policy administrator review and reconsider the Employee’s claim.  Under ERISA, there are steps an Employee can take to enforce the above rights.  For instance, if the Employee requests materials from the Policy administrator and does not receive them within thirty (30) days, the Employee may file suit in a federal court.  In such a case, the court may require the Policy administrator to provide the materials and pay the Employee up to $110 per day

 

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until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Policy administrator.

 

G.                        If an Employee’s claim for benefits is denied or ignored, in whole or in part, the Employee may file suit in a state or federal court.  If the fiduciaries misuse Policy funds, or if an Employee is discriminated against for asserting his or her rights, the Employee may seek assistance from the U.S. Department of Labor, or may file suit in a federal court.  The court will decide who should pay court costs and legal fees.

 

H.                       If an Employee is successful, the court may order the person sued to pay costs and fees.  If the Employee loses, the court may order the Employee to pay these fees (for example, if the claim is frivolous).

 

I.                            Employees should contact the Policy administrator concerning questions about this Policy.  Employees who have any questions about this statement or rights under ERISA should contact the nearest area office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. Participants may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

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