Document:

Exhibit 10.5

SEPRACOR INC.

Executive Retention Agreement

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

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

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

NOW, THEREFORE, as
an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance
benefits set forth in this Agreement (including a certain “gross up” payment
originally authorized by the Board on February 25, 1999 and set forth in
Section 4.3 of this Agreement) 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 March 1, 2010; provided,
however, that commencing on March 1, 2010 and each March 1 thereafter, the Term
shall be automatically extended for one additional year unless, not later than
90 days prior to the scheduled expiration of the Term (or any extension
thereof), the Company shall have given the Executive written notice that the
Term will not be extended.

3.               Employment
Status; 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:

  	
   /s/ Timothy
  J. Barberich

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Andrew I. Koven

  	
   

  
	
   

  	
  Andrew I. Koven

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

 13Exhibit
10.5

TRANSITION
AND SEVERANCE AGREEMENT

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

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

1.                                      Transition
Period Position and Responsibilities. 
Effective as of March 1, 2007 (the “Transition Date”), O’Shea shall
resign from his positions as President and Chief Operating Officer of
Sepracor.  Beginning on the Transition
Date and ending on August 31, 2007, or earlier if O’Shea voluntarily
terminates his employment prior to August 31, 2007 (the “Transition Period”),
O’Shea shall be employed by Sepracor as its Vice Chairman, reporting to Timothy
Barberich, Sepracor’s Chief Executive Officer. 
During the Transition Period, O’Shea shall perform such duties
consistent with his position as are reasonably assigned to him by
Mr. Barberich.  The Parties further
agree that O’Shea shall perform all work and provide all assistance hereunder
at such times and locations as are reasonably determined by Mr. Barberich.

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

3.                                      Severance
Period and Compensation.  Effective
on August 31, 2007 (the “Separation Date”), O’Shea’s employment with the
Company shall cease.  Thereafter,
provided O’Shea has not voluntarily terminated his employment prior to August
31, 2007 and executes, delivers and does not revoke a release of claims for the
benefit of the Company in a form provided by the Company, the Company shall
continue to pay O’Shea the Base Salary for a period of 12 months (the
“Severance Period”), in accordance with its regular payroll practices.

For
the duration of the Severance Period, if allowed under the Company’s life
insurance policy, the Company further agrees to provide O’Shea with life
insurance in the same amount the Company currently provides him, the full
premium of which shall be paid by the Company.

Following
the Separation Date, any entitlement O’Shea has, might have, had, or might have
had to compensation, bonuses, wages or participation in any benefit plan,
policy, program, contract or practice of the Company, shall terminate, except
as required by federal or state law, by applicable plan terms or stock option
agreements, or by the express terms of this Agreement.

 1
 

4.                                      Stock
Options and Restricted Stock.  The
Parties acknowledge that O’Shea has been 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 an additional 25,700 shares of the Company’s stock
which will vest prior to the Separation Date. 
The grant dates and exercise prices of such options are set forth in
Exhibit A hereto.  O’Shea shall have the
right to exercise any or all of his options for a period of ninety (90) days
after the Separation Date.  The options
shall terminate at the close of business on the ninetieth (90th) day following the Separation Date.  In addition, the Parties acknowledge that
O’Shea is the owner of certain shares of restricted stock of the Company.  Of these shares, a total 6,850 shares will no
longer be subject to any restriction as of March 16, 2007, and may be
retained or sold by O’Shea after that date in his discretion, subject to the Company’s
insider trading policy, the terms of the incentive stock plan and restricted
stock agreement under which such shares were granted and the federal securities
laws.  Except where expressly modified by
this Agreement, the options and shares of restricted stock set forth in Exhibit
A shall continue to be governed by the terms of the applicable stock option
agreements and restricted stock agreement executed by the Parties.

5.                                      Cooperation.  From the Effective Date forward, O’Shea
agrees reasonably to cooperate with the Company in the defense or prosecution
of any threatened or actual claims or actions which may be brought by, against
or on behalf of the Company, its predecessors or any of its current or former
partners, agents, employees, directors or affiliates and which relate to events
or occurrences that transpired or are alleged to have transpired during his
employment with the Company.  Such
cooperation shall include, without implication of limitation, being available
to meet with the Company’s counsel to prepare for discovery or trial and to testify
truthfully as a witness when reasonably requested by the Company at reasonable
times and for reasonable time periods. 
In the event any such cooperation is required following the expiration
of the Severance Period and requires more than de minimis
time or effort, the Company agrees to compensate O’Shea at a reasonable hourly
rate for any cooperation provided under this section.

6.                                      Legal
Fees.  Nothing contained in this
Agreement shall constitute a relinquishment or waiver by O’Shea of his right to
be indemnified by the Company pursuant to the terms of the Company’s Restated
Certificate of Incorporation, as amended (the “Indemnification Provisions”)
with respect to conduct or events occurring during, or relating to, his
employment by Sepracor, or of any right that he may have under, or with respect
to, the Company’s Directors and Officers liability insurance policies.  The Company agrees that to the full extent
allowed by applicable law and subject to the terms of the Indemnification
Provisions and any applicable Director and Officer liability insurance policy,
it will continue to pay O’Shea’s reasonable legal fees relating to any matter
that occurred during, or that relates to O’Shea’s employment by the Company.

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

8.                                      Use
of the Agreement as Evidence.  This
Agreement may not be used as evidence in any subsequent proceeding of any kind,
except one in which either Party alleges a breach of the terms of this
Agreement or elects to use this Agreement as a defense to any claim.

 2
 

9.                                      Entire
Agreement; Modifications.  With the
exception of the stock option and restricted stock agreements applicable to the
grants set forth in Exhibit A hereto, the Company’s stock option and incentive
stock plan under which such equity incentives were granted, the Invention,
Non-Disclosure and Personal Conduct Agreement executed by O’Shea on
October 1, 1999, and the Executive Retention Agreement dated February 1,
2002, which will survive and remain in full force and effect, this Agreement
contains the entire agreement among the Parties hereto with respect to the
matters covered hereby, and supersedes all prior and contemporaneous
communications, e-mails, agreements, representations, understandings or
negotiations between O’Shea, the Company and/or their agents and attorneys,
including but not limited to the offer letter signed by the Parties and bearing
the typed date September 10, 1999. 
This Agreement may be modified only by a written agreement signed by an
authorized representative of each of the Parties hereto.  No waiver of this Agreement or any provision
hereof shall be binding upon the Party against whom enforcement of such waiver
is sought unless it is made in writing and signed by or on behalf of such
Party.

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

11.                               Further
Assurances.  The Parties agree to
execute, acknowledge (if reasonably requested), and deliver such documents,
certificates or other instruments and take such other actions as may be
reasonably required from time to time to carry out the intents and purposes of
this Agreement, provided they do not impose any material additional obligations
upon either Party.

12.                               Acknowledgments
and Other Terms.  O’Shea agrees that
he has carefully read and understands all of the provisions of this Agreement,
that he has been advised to consult with and has consulted with an attorney,
and that he is voluntarily entering this Agreement.  O’Shea further represents and acknowledges
that in executing this Agreement, he is not relying and has not relied upon any
representation or statement made by the Company with regard to the subject
matter, basis or effect of this Agreement.

13.                               Interpretation.  The language of all parts of this
Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against any of the Parties.  This Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof shall be prohibited or invalid under any such law, such provision shall
be ineffective to the extent of such prohibition or invalidity without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement.  The
captions of the sections of this Agreement are for convenience of reference
only, and in no way define, limit or affect the scope or substance of any
section of this Agreement.

 3
 

14.                               Counterparts.  This Agreement may be executed in any
number of counterparts and may be delivered by facsimile, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same instrument.

15.                               Governing
Law; Prevailing Party.  This
Agreement shall take effect as an instrument under seal and shall be governed
and construed in accordance with the laws of Massachusetts, without regard to
its conflicts of laws principles.  In the
event either Party retains legal counsel in connection with the enforcement of
its rights under this Agreement and the other Party is found by a court having
competent jurisdiction to have breached its obligations hereunder, the
prevailing Party shall be entitled to recover all reasonable legal fees and
related reasonable charges and disbursements incurred by it in connection with
such enforcement action and any negotiations leading up to it.

 4
 

IN WITNESS
WHEREOF, the Parties hereto have executed this Agreement as an instrument under
seal as of the Effective Date.

SEPRACOR
INC.

	
  By:

  	
   /s/ Timothy J. Barberich

  	
   

  
	
   

  	
   

  	
   

  
	
  Name and Title:

  	
  Timothy J.
  Barberich, Chairman and CEO

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  /s/ W. James
  O’Shea

  	
   

  
	
  W.
  JAMES O’SHEA

  	
   

  
					

 

 5
 

Exhibit
A

O’Shea
Stock Option Grants

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  

 

 6

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