Exhibit 10.15


 


SEPRACOR
INC.


 


Executive Retention
Agreement


 


THIS EXECUTIVE RETENTION AGREEMENT by and between Sepracor Inc., a
Delaware corporation (the “Company”), and (the “Executive”) is made as                 
(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) in the event the Executive’s
employment with the Company is terminated under the circumstances described
below subsequent to 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.


 


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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 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.


 


1.3           “Cause” means:


 


(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 Company; or


 


(c)           a material breach by the Executive of Section          
of the Employment Agreement between the Company and the Executive of even date
herewith (the “Employment Agreement”).


 


For purposes of this Section 1.3, 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.


 


1.4           “Good Reason” means the
occurrence, without the Executive’s written consent, of any of the events or
circumstances set forth in clauses (a) through (f) below. 
Notwithstanding the occurrence of any such event or circumstance, such
occurrence shall not be deemed to constitute Good Reason if, prior to the Date
of Termination specified in the Notice of Termination (each as defined in Section 3.2(a))
given by the Executive in respect thereof, such event or circumstance has been
fully corrected and the Executive has been reasonably compensated for any
losses or damages resulting therefrom (provided that such right of correction
by the Company shall only apply to the first Notice of Termination for Good
Reason given by the Executive).


 


(a)           the assignment to the Executive of duties inconsistent
in any material respect with the Executive’s position (including status,
offices, titles or reporting requirements), authority or responsibilities in
effect immediately prior to the earliest to occur of (i) the Change in
Control Date, (ii) the date of the execution by the Company of the initial
written agreement or instrument providing for the Change in Control or (iii) the
date of the


 


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adoption by the Board of Directors of a resolution
providing for the Change in Control (with the earliest to occur of such dates
referred to herein as the “Measurement Date”), or any other action or omission
by the Company which results in a material diminution in such position,
authority or responsibilities;


 


(b)           a reduction in the Executive’s annual base salary or
bonus eligibility as in effect on the Measurement Date or as the same was or
may be increased thereafter from time to time;


 


(c)           the failure by the Company to (i) continue in
effect any material compensation or benefit plan or program (including without
limitation any life insurance, medical, health and accident or disability plan
and any vacation or automobile program or policy) (a “Benefit Plan”) in which
the Executive participates or which is applicable to the Executive immediately
prior to the Measurement Date, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan
or program, (ii) continue the Executive’s participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable,
in terms of the amount of benefits provided, than the basis existing
immediately prior to the Measurement Date or (iii) award cash bonuses to
the Executive in amounts and in a manner substantially consistent with past
practice in light of the Company’s financial performance;


 


(d)           a change by the Company in the location at which the
Executive performs his principal duties for the Company to a new location that
increases the Executive’s daily commute by more than 40 miles (as measured
immediately prior to the Measurement Date); or a requirement by the Company
that the Executive travel on Company business to a substantially greater extent
than required immediately prior to the Measurement Date;


 


(e)           the failure of the Company to obtain the agreement
from any successor to the Company to assume and agree to perform this
Agreement, as required by Section 6.1; or


 


(f)            any failure of the Company
to pay or provide to the Executive any portion of the Executive’s compensation
or benefits due under any Benefit Plan within seven days of the date such
compensation or benefits are due, or any material breach by the Company of this
Agreement or any employment agreement with the Executive.


 


The Executive’s right to terminate his employment for Good Reason shall
not be affected by his incapacity due to physical or mental illness.


 


1.5           “Disability” means the
Executive’s absence from the full-time performance of the Executive’s duties
with the Company for 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.


 


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


 


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Term, (b) the
termination of the Executive’s employment with the Company prior to the Change
in Control Date, (c) the date 24 months after the Change in Control Date,
if the Executive is still employed by the Company as of such later date (unless
the Company has provided notice of termination of Executive’s employment within
such 24 month period in which case the Agreement shall expire on the
termination of the Executive’s employment with the Company), or (d) the
fulfillment by the Company of all of its obligations under Sections 4 and
5.2 and 5.3  if the Executive’s
employment with the Company terminates within 24 months (or after 24 months if
the Company provides notice to the Executive of termination of his employment
within such 24 month period) following the Change in Control Date.  “Term”
shall mean the period commencing as of the Effective Date and continuing in
effect through                ;
provided, however, that commencing on                
and each                
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; Termination
Following Change in Control.


 


3.1           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.


 


3.2           Termination of Employment.


 


(a)           If the Change in Control Date occurs during the
Term, any termination of the Executive’s employment by the Company or by the
Executive within 24 months following the Change in Control Date (other than due
to the death of the Executive) shall be communicated by a written notice to the
other party hereto (the “Notice of Termination”), given in accordance with Section 7. 
Any Notice of Termination shall: (i) indicate the specific termination
provision (if any) of this Agreement relied upon by the party giving such
notice, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) specify
the Date of Termination (as defined below).  The effective date of an employment
termination (the “Date of Termination”) shall be the close of business on the
date specified in the Notice of Termination (which date may not be less than 15
days or more than 45 days after the date of delivery of such Notice of
Termination), in the case of a termination other than one due to the Executive’s
death, or the date of the Executive’s death, as the case may be.  In the
event the Company fails to satisfy the requirements of Section 3.2(a) regarding
a Notice of Termination, the purported termination of the Executive’s
employment pursuant to such Notice of Termination shall not be effective for
purposes of this Agreement.


 


(b)           The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or


 


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preclude the Executive or the Company, respectively, from
asserting any such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.


 


(c)           Any Notice of Termination for Cause given by the
Company must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Cause.  Prior to any Notice
of Termination for Cause being given (and prior to any termination for Cause
being effective), the Executive shall be entitled to a hearing before the Board
of Directors of the Company at which he may, at his election, be represented by
counsel and at which he shall have a reasonable opportunity to be heard. 
Such hearing shall be held on not less than 15 days prior written notice to the
Executive stating the Board of Directors’ intention to terminate the Executive
for Cause and stating in detail the particular event(s) or circumstance(s) which
the Board of Directors believes constitutes Cause for termination.


 


(d)           Any Notice of Termination for Good Reason given by
the Executive must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Good Reason.


 


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) if the Executive’s employment is thereafter terminated
for any reason (other than by the Company for Cause), then each such option (or
any option into which such option is converted, exchanged or substituted in
connection with the Change in Control) shall continue to be exercisable by the
Executive (to the extent such option was exercisable on the Date of
Termination) for a period of six months following the Date of Termination,
notwithstanding any provision in any applicable option agreement to the
contrary; provided however that if stock options held generally by employees of
the Company under the stock option or stock incentive plan under which
Executive’s stock option was granted terminate or expire if not exercised upon,
immediately prior to or otherwise in connection with the Change in Control,
such stock option held by Executive shall likewise terminate or expire.


 


4.2           Compensation.  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, the
Executive shall be entitled to the following benefits:


 


(a)           Termination Without
Cause or for Good Reason.  If the Executive’s employment with the
Company is terminated by the Company (other than for Cause, Disability or
Death) or by the Executive for Good Reason within 24 months following the Change
in Control Date, then the Executive shall be entitled to the following
benefits:


 


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


 


(1)           the sum of (A) the Executive’s
base salary through the Date of Termination, (B) the product of (x) 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 (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365 and (C) 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 (A), (B), and (C) shall be hereinafter referred to as the “Accrued
Obligations”); and


 


(2)           the amount equal to (A) two
multiplied by (B) the sum of (x) the Executive’s highest annual base
salary during the five-year period prior to the Change in Control Date and (y) the
Executive’s highest annual bonus during the five-year period prior to the
Change in Control Date.


 


(ii)           for 24 months after the Date of Termination, 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 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 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 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


 


(iii)          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”).


 


(b)           Resignation without
Good Reason; Termination for Death or Disability.  If the Executive
voluntarily terminates his employment with the Company within 24 months
following the Change in Control Date, excluding a termination for Good Reason,
or if the Executive’s employment with the Company is terminated by reason of
the Executive’s death or Disability within 24 months following the Change in
Control Date, then the Company shall (i) pay the Executive (or his estate,
if applicable), in a lump sum in cash within 30 days after the Date of
Termination, the Accrued Obligations and (ii) timely pay or provide to the
Executive the Other Benefits.


 


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(c)           Termination for
Cause.  If the Company terminates the Executive’s employment with the
Company for Cause within 24 months following the Change in Control Date, then
the Company shall (i) pay the Executive, in a lump sum in cash within 30
days after the Date of Termination, the sum of (A) the Executive’s annual
base salary through the Date of Termination and (B) the amount of any
compensation previously deferred by the Executive, in each case to the extent
not previously paid, and (ii) timely pay or provide to the Executive 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 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.


 


(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.


 


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(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 by seeking other employment or otherwise.
Further, except as provided in Section 4.2(a)(ii), 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
the Executive is terminated by the Company (other than for Cause, Disability or
Death), or the Executive terminates employment for Good Reason, within 24
months following the Change in Control Date, the Company shall provide
outplacement services through one or more outside firms of 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


 


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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, provided further
that notwithstanding the forgoing, the Executive shall not be required to
reimburse any fees and expenses if such claim or contest relates to termination
by the Executive for Good Reason


 


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
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
clause (a) of 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 and shall constitute Good Reason if the
Executive elects to terminate employment, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.  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.


 


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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 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.


 


11

















 


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 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.


 


8.10         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.


 


[Remainder of Page Intentionally Left Blank]


 


12

















 


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


 


	
   

  	
  SEPRACOR
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Executive]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
				



 


13














 


SEPRACOR INC.


 


December 23, 2008


 


[Name]


[Address]


 


Dear [Name]:


 


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 [                 ] 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/ Adrian Adams

  
	
   

  	
   

  	
   

  	
  Name:
  Adrian Adams

  
	
   

  	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
  Acknowledged and agreed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Name]

  	
   

  	
   

  	
   

  



 

















 


Exhibit A


 


Retention Agreement


 


1.               Section 1.1. of the Retention Agreement
be and hereby is amended by deleting the first paragraph in its entirety and
inserting the following in lieu thereof:


 


 “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),
provided that such event constitutes a “change in control event” within the
meaning of Section 409A (as defined below):”


 


2.               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) if
the Executive’s employment is thereafter terminated for any reason (other than
by the Company for Cause), then each such option (or any option into which such
option is converted, exchanged or substituted in connection with the Change in
Control) shall continue to be exercisable by the Executive (to the extent such
option was exercisable on the Date of Termination) for a period of six months
following the Date of Termination, notwithstanding any provision in any
applicable option agreement to the contrary but not later than the expiration
date of the option; provided however that if stock options held generally by
employees of the Company under the stock option or stock incentive plan under
which Executive’s stock option was granted terminate or expire if not exercised
upon, immediately prior to or otherwise in connection with the Change in
Control, such stock option held by Executive shall likewise terminate or
expire.”


 


3.               Section 4.2(a)(i)(2) of the
Retention Agreement be and hereby is deleted in its entirety and the following
is inserted in lieu thereof:


 


“(2)                            the amount equal to (A) two multiplied
by (B) the sum of (x) the Executive’s highest annual base salary
during the five-year period prior to the Change in Control Date and (y) the
Executive’s highest annual bonus during the five-year period prior to the
Change in Control Date, provided, however, that if the Executive is terminated
prior to the Closing of the Change in Control and the Executive is entitled to
these payments solely pursuant to the second sentence of Section 1.2
hereof, then the amount payable pursuant to this subsection shall be paid over
the 24-month period commencing 30 days following the date of termination in
accordance with the Company’s regular payroll practices.”


 


4.               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.”


 


5.               Section 4.6 of the Retention Agreement
be and hereby is deleted in its entirety and the following is inserted in lieu
thereof:


 


“4.6                           Payments Subject
to Section 409A.  Any
severance payments or benefits under Section 4 of the
Agreement shall begin only upon
the date of Executive’s “separation from service” (determined as set
forth below) which occurs on or after the
date of termination of employment. 
The following rules shall apply with respect to distribution of the
payments and benefits, if any, to be
provided to Executive under Section 4 of the Agreement:


 


(a)                                  It is intended that each installment of the
severance payments and benefits provided under the Agreement shall be treated as a separate “payment”
for purposes of Section 409A of the Internal Revenue 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.


 


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


 


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


 


(i)                                     Each installment of the severance payments
and benefits due under the Agreement 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 defined under Section 409A) 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


 


(ii)                                  Each installment of the severance payments
and benefits due under the Agreement that is not described in paragraph (c)(i) above
and that would, absent this subparagraph, be paid within the six-month period
following Executive’s “separation from service” 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, 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
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 severance 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 Executive’s second taxable year following
the taxable year in which the separation from service occurs.


 

















 


(d)                                 The determination of whether and when
Executive’s separation from service 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 paragraph (d), “Company” shall include all
persons with whom the Company would be considered a single employer as
determined under Treasury Regulation Section 1.409A-1(h)(3).


 


(e)                                  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,
including, where applicable, the requirements that (A) any reimbursement
is for expenses incurred during Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (B) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (C) the
reimbursement of an eligible expense will be made on or before the last day of
the calendar year following the year in which the expense is incurred and (D) the
right to reimbursement is not subject to set off or liquidation or exchange for
any other benefit.”


 


6.               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.”


 


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