Exhibit
10.3


 


SEPRACOR
INC.


 


Executive Retention Agreement


 


THIS EXECUTIVE RETENTION AGREEMENT by and between
Sepracor Inc., a Delaware corporation (the “Company”), and Mark Iwicki (the “Executive”)
is made as of October 15, 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) 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 6 or 7 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 October 15, 2012; provided, however, that
commencing on October 15, 2012 and each October 15th 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.


 


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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]


 


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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/ Adrian Adams

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President &
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Mark Iwicki

  	
   

  
	
   

  	
  Mark Iwicki

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  
	
   

  	
   

  	
  12 Bristol
  Terrace

  	
   

  
	
   

  	
   

  	
  Long Valley, NJ
  07853

  	
   

  
	
   

  	
   

  	
   

  
					



 


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