**Exhibit 10.1**

 

**AMENDED AND RESTATEDTRANSITION AND SEVERANCE AGREEMENT**

 

ThisAmended and Restated Transition and Severance Agreement (the “Agreement”) is entered into as of September7, 2007 (the “Effective Date”), by and between Sepracor Inc. (“Sepracor” or the“Company”) and W. James O’Shea (“O’Shea”) (individually, a “Party,” andcollectively, the “Parties”) and amends and restates the Transition andSeverance Agreement between the Parties entered into as of March 1, 2007.

 

NOW, THEREFORE, for good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the Parties agree as follows:

 

# **1.****             Transition PeriodPosition and Responsibilities.**Effective as of March 1, 2007 (the “TransitionDate”), O’Shea shall resign from his positions as President and Chief OperatingOfficer of Sepracor. Beginning on the Transition Date and ending onAugust 31, 2007, or earlier if O’Shea voluntarily terminates hisemployment prior to August 31, 2007 (the “Transition Period”), O’Shea shall beemployed by Sepracor as its Vice Chairman, reporting to Timothy Barberich,Sepracor’s Executive Chairman. During the Transition Period, O’Shea shallperform such duties consistent with his position as are reasonably assigned tohim by Mr. Barberich. The Parties further agree that O’Shea shall performall work and provide all assistance hereunder at such times and locations asare reasonably determined by Mr. Barberich.

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# **2.****             Transition PeriodCompensation**. During the Transition Period, the Company shall compensate O’Sheaat the annual rate of $548,625, less applicable taxes and withholdings, (the “BaseSalary”) to be paid in accordance with the Company’s regular payroll practices.In addition, provided O’Shea has not voluntarily terminated his employmentprior to August 31, 2007, he shall be entitled to an annual bonus for calendaryear 2007 equal to $219,450, less applicable taxes and withholdings. The bonusshall be paid to O’Shea in a lump sum, on or prior to March 1, 2008. For theduration of the Transition Period, the Company shall also continue to provide O’Sheawith the benefits which he currently enjoys under the Company’s plans andpolicies, under the same terms that applied to him immediately prior to theEffective Date, subject to the terms of those plans and policies.

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# **3.****             Severance Period andCompensation**. Effective on August 31, 2007 (the “Separation Date”), O’Shea’semployment with the Company shall cease. Thereafter, provided O’Shea has notvoluntarily terminated his employment prior to August 31, 2007 and executes,delivers and does not revoke a release of claims for the benefit of the Companyin a form provided by the Company, the Company shall continue to pay O’Shea theBase Salary (the “Base Salary Severance”) for a period of 12 months (the “SeverancePeriod”), in accordance with its regular payroll practices. However, the firstpayment will not be made until March 1, 2008 and such first payment will beequal to those amounts to which O’Shea would otherwise have been entitled ifnot for the six month delay described above. For the remaining six (6) monthsof the Severance Period, O’Shea will be paid the balance of his Base SalarySeverance in equal bi-weekly installments.

 

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For the duration of the Severance Period, if allowedunder the Company’s life insurance policy, the Company further agrees toprovide O’Shea with life insurance in the same amount the Company currentlyprovides him, the full premium of which shall be paid by the Company.

 

Following the Separation Date, any entitlement O’Sheahas, might have, had, or might have had to compensation, bonuses, wages orparticipation in any benefit plan, policy, program, contract or practice of theCompany, shall terminate, except as required by federal or state law, byapplicable plan terms or stock option agreements, or by the express terms ofthis Agreement.

 

# **4.****             Stock Options and Restricted Stock**. The Parties acknowledge that O’Shea hasbeen awarded options to purchase 700,000 shares of the Company’s common stock,all of which options are fully vested, as well as options to purchase anadditional 25,700 shares of the Company’s stock which will vest prior to theSeparation Date. The grant dates and exercise prices of such options are setforth in Exhibit A hereto. O’Shea shall have the right to exercise any or allof his options for a period of ninety (90) days after the Separation Date. Theoptions shall terminate at the close of business on the ninetieth (90th)day following the Separation Date. In addition, the Parties acknowledge that O’Sheais the owner of certain shares of restricted stock of the Company. Of theseshares, a total 6,850 shares will no longer be subject to any restriction as ofMarch 16, 2007, and may be retained or sold by O’Shea after that date inhis discretion, subject to the Company’s insider trading policy, the terms ofthe incentive stock plan and restricted stock agreement under which such shareswere granted and the federal securities laws. Except where expressly modifiedby this Agreement, the options and shares of restricted stock set forth inExhibit A shall continue to be governed by the terms of the applicable stockoption agreements and restricted stock agreement executed by the Parties.

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# **5.****             Cooperation.**Fromthe Effective Date forward, O’Shea agrees reasonably to cooperate with theCompany in the defense or prosecution of any threatened or actual claims oractions which may be brought by, against or on behalf of the Company, itspredecessors or any of its current or former partners, agents, employees,directors or affiliates and which relate to events or occurrences thattranspired or are alleged to have transpired during his employment with theCompany. Such cooperation shall include, without implication of limitation,being available to meet with the Company’s counsel to prepare for discovery ortrial and to testify truthfully as a witness when reasonably requested by theCompany at reasonable times and for reasonable time periods. In the event anysuch cooperation is required following the expiration of the Severance Periodand requires more than *de minimis* timeor effort, the Company agrees to compensate O’Shea at a reasonable hourly ratefor any cooperation provided under this section. Notwithstanding the foregoing,(i) the hourly rate expenses eligible for reimbursement may not affect theexpenses eligible for reimbursement in any other taxable year, (ii) suchreimbursement must be made on or before the last day of the year following theyear in which the expense was incurred, and (iii) the right to reimbursement isnot subject to liquidation or exchange for another benefit.

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# **6.****             Legal Fees.**Nothingcontained in this Agreement shall constitute a relinquishment or waiver by O’Sheaof his right to be indemnified by the Company pursuant to the terms of theCompany’s Restated Certificate of Incorporation, as amended (the “IndemnificationProvisions”) with respect to conduct or events occurring during, or relatingto, his employment by Sepracor, or of any right that he may have under, or withrespect to, the 

 

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# Company’s Directors and Officers liabilityinsurance policies. The Company agrees that to the full extent allowed byapplicable law and subject to the terms of the Indemnification Provisions andany applicable Director and Officer liability insurance policy, it willcontinue to pay O’Shea’s reasonable legal fees relating to any matter thatoccurred during, or that relates to O’Shea’s employment by the Company.Notwithstanding the foregoing, (i) the legal fee expenses eligible forreimbursement may not affect the expenses eligible for reimbursement in anyother taxable year, (ii) such reimbursement must be made on or before the lastday of the year following the year in which the expense was incurred, and (iii)the right to reimbursement is not subject to liquidation or exchange foranother benefit.

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# **7.****             Binding Nature ofAgreement.**This Agreement shall be binding upon and inure to the benefit ofthe Parties and their respective heirs, administrators, representatives,executors, successors and assigns.

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# **8.****             Use of the Agreementas Evidence.**This Agreement may not be used as evidence in any subsequentproceeding of any kind, except one in which either Party alleges a breach ofthe terms of this Agreement or elects to use this Agreement as a defense to anyclaim.

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# **9.****             Entire Agreement;Modifications.**With the exception of the stock option and restricted stockagreements applicable to the grants set forth in Exhibit A hereto, the Company’sstock option and incentive stock plan under which such equity incentives weregranted, the Invention, Non-Disclosure and Personal Conduct Agreement executedby O’Shea on October 1, 1999, and the Executive Retention Agreement datedFebruary 1, 2002, which will survive and remain in full force and effect, thisAgreement contains the entire agreement among the Parties hereto with respectto the matters covered hereby, and supersedes all prior and contemporaneouscommunications, e-mails, agreements, representations, understandings ornegotiations between O’Shea, the Company and/or their agents and attorneys,including but not limited to the offer letter signed by the Parties and bearingthe typed date September 10, 1999 and the Transition and Severance Agreemententered into between the parties on March 1, 2007, which this Agreement amendsand restates. This Agreement may be modified only by a written agreement signedby an authorized representative of each of the Parties hereto. No waiver ofthis Agreement or any provision hereof shall be binding upon the Party againstwhom enforcement of such waiver is sought unless it is made in writing andsigned by or on behalf of such Party.

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# **10.****         ****Section 409A**.      Notwithstanding anythingelse to the contrary in this Agreement, to the extent that any of the paymentsthat may be made hereunder constitute “nonqualified deferred compensation”,within the meaning of Section 409A and you are a “specified employee” upon yourseparation (as defined under Section 409A), the timing of any such paymentfollowing the Separation Date shall be modified if, absent such modification,such payment would otherwise be subject to penalty under Section 409A. In anyevent, the Company makes no representation or warranty and shall have noliability to you or to any other person if any provisions of this Agreement aredetermined to constitute “nonqualified deferred compensation” subject toSection 409A but do not satisfy the requirements of that section.

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# **11.****          Further Assurances.**TheParties agree to execute, acknowledge (if reasonably requested), and deliversuch documents, certificates or other instruments and take such other actionsas may be reasonably required from time to time to carry out the intents andpurposes of 

 

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# this Agreement, provided they do not imposeany material additional obligations upon either Party.

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# **12.****          Acknowledgments andOther Terms.**O’Shea agrees that he has carefully read and understands allof the provisions of this Agreement, that he has been advised to consult withand has consulted with an attorney, and that he is voluntarily entering thisAgreement. O’Shea further represents and acknowledges that in executing thisAgreement, he is not relying and has not relied upon any representation orstatement made by the Company with regard to the subject matter, basis oreffect of this Agreement.

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# **13.****          Interpretation.**Thelanguage of all parts of this Agreement shall in all cases be construed as awhole, according to its fair meaning, and not strictly for or against any ofthe Parties. This Agreement shall be interpreted in such a manner as to beeffective and valid under applicable law, but if any provision hereof shall beprohibited or invalid under any such law, such provision shall be ineffectiveto the extent of such prohibition or invalidity without invalidating ornullifying the remainder of such provision or any other provisions of thisAgreement. The captions of the sections of this Agreement are for convenienceof reference only, and in no way define, limit or affect the scope or substanceof any section of this Agreement.

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# **14.****          Counterparts.**ThisAgreement may be executed in any number of counterparts and may be delivered byfacsimile, each of which shall be deemed to be an original but all of whichtogether shall constitute one and the same instrument.

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# **15.****          Governing Law;Prevailing Party.**This Agreement shall take effect as an instrument underseal and shall be governed and construed in accordance with the laws ofMassachusetts, without regard to its conflicts of laws principles. In the eventeither Party retains legal counsel in connection with the enforcement of itsrights under this Agreement and the other Party is found by a court havingcompetent jurisdiction to have breached its obligations hereunder, theprevailing Party shall be entitled to recover all reasonable legal fees andrelated reasonable charges and disbursements incurred by it in connection withsuch enforcement action and any negotiations leading up to it.

 

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INWITNESS WHEREOF, the Parties hereto have executed this Agreement as aninstrument under seal as of the Effective Date.

 

 

**SEPRACORINC.**

 

 
| By:                       |                                  | /s/ Adrian Adams |   |
|---------------------------|---------------------------------------|------------------|--------|
|                      |                                  |             |
| Name  and Title:          | Mr. Adrian Adams, President & CEO |             |
|                      |                                  |             |
|                      |                                  |             |
|                      | /s/ W. James O’Shea              |             |
| **W.  JAMES O’SHEA** |                                  |             |
|                           |                                       |                  |        |  |  |

 

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**Exhibit A**

 

**O’SheaStock Option Grants as of March 1, 2007**

 
| ** **          | ** ** | ** **      | ** ** | ** ** | ** ** | ** **               | ** ** | **Total Vesting**   | ** ** |
|---------------------|------------|-----------------|------------|------------|------------|--------------------------|------------|--------------------------|------------|
| ** **          | ** ** | **Options**     | ** ** | ** ** | ** ** | **Total Currently** | ** ** | **Prior to**        | ** ** |
| **Grant Date** | ** ** | **Outstanding** | ** ** | **Price**  | ** ** | **Vested**               | ** ** | **Separation Date** | ** ** |
|                |       |            |       |       |       |                     |       |                     |       |
| 10/21/99            |       | 200,000         |       | $          | 35.75      |                     | 200,000    |                     | 200,000    |   |
| 10/21/99            |       | 11,814          |       | $          | 35.75      |                     | 11,184     |                     | 11,184     |   |
| 10/21/99            |       | 468,816         |       | $          | 35.75      |                     | 468,816    |                     | 468,816    |   |
| 2/24/05             |       | 7,750           |       | $          | 64.50      |                     | 1,550      |                     | 3,100      |   |
| 2/24/05             |       | 92,250          |       | $          | 64.50      |                     | 18,450     |                     | 36,900     |   |
| 3/16/06             |       | 1,800           |       | $          | 55.54      |                     | 0          |                     | 0          |   |
| 3/16/06             |       | 26,700          |       | $          | 55.54      |                     | 0          |                     | 5,700      |   |

 

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