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

 

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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

 

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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:

 

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(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

 

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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

 

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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

 

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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

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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.

 

8

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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

 

 

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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”.

 

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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.”

 

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