Exhibit 10.3
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”), made this 6 th
day of November 2008, is entered into by Sepracor Inc., a
Delaware corporation with its principal place of business at 84
Waterford Drive, Marlborough, Massachusetts 01752-7231 (the
“Company”), and Mark Iwicki residing at 12 Bristol
Terrace, Long Valley, New Jersey 07853 (the
“Executive”).
The Company desires to employ the
Executive and the Executive desires to be employed by the Company,
and in connection therewith the Company and the Executive entered
into an Employment Agreement, dated October 15, 2007 (the
“Original Agreement”). The Company and the
Executive wish to amend and restate the Original Agreement as
provided for herein. In consideration of the mutual covenants
and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties agree that the
Original Agreement is amended and restated in its entirety as
follows:
1.
Term of Employment . The Company hereby agrees to
employ the Executive and the Executive hereby accepts employment
with the Company, upon the terms set forth in this Agreement, for
the period commencing on October 15, 2007 (the
“Commencement Date”) and ending on
October 15, 2012 (the “Term”) . Notwithstanding the
foregoing, the Term shall be extended automatically without further
action by either party by one (1) additional year (added to
the end of the Term) on each succeeding anniversary of
October 15, 2012, unless either party shall have served
written notice upon the other party at least sixty (60) days
preceding the date upon which such Term would end (such period, as
it may be extended, the “Employment Period”), unless
sooner terminated in accordance with the provisions of
Section 4.
2.
Title and Capacity . The Executive shall serve as
Executive Vice-President, Chief Commercial Officer of the
Company. Executive shall report directly to the Chief
Executive Officer of the Company and shall, except as permitted
hereby, devote all of his business time and services to the
business and affairs of the Company. Executive shall also
perform such other duties consistent with his position as Executive
Vice-President, Chief Commercial Officer as may be reasonably
assigned by the Chief Executive Officer and the Board of Directors
of the Company (the “Board”) from time to time.
The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and
any changes therein that may be adopted from time to time by the
Company.
Notwithstanding anything herein to
the contrary, Executive shall be entitled to engage in
(a) service on the board of directors of one company,
businesses or trade organization with prior Board approval,
(b) service on the board of directors of not-for-profit or
charitable organizations with prior Board approval, (c) other
charitable activities and community affairs and (d) managing
his personal investments and affairs, in each case to the extent
such activities do not materially interfere with the performance of
his duties and responsibilities to the Company.
3.
Compensation and Benefits .
3.1
Salary . During the term of this Agreement, the
Company agrees to pay to the Executive a base salary at the
annualized rate of $475,000 (“Base Salary”) commencing
on the Commencement Date. The Base Salary shall be subject to
annual review by the Board but shall not be reduced below $475,000
per annum. Such salary shall be payable to Executive in
bi-weekly installments and in accordance with the Company’s
normal payroll procedures.
3.2
Bonus . The Executive shall receive a one-time
“Sign On” bonus of $175,000 less applicable taxes and
withholdings to be paid within thirty (30) days of the
Commencement Date,
provided , however , if the Executive’s
employment is terminated, within twelve (12) months of the
Commencement Date, for Cause by the Company pursuant to
Section 4.2 or at the election of the Executive pursuant to
Section 4.5, the Executive will be required to repay the
portion of the Sign On bonus retained by Executive after the
payment of all taxes. In addition, the Executive shall be
eligible for a performance-based annual bonus for each fiscal year
of the Term (the “Annual Bonus”). The Annual Bonus
shall be based upon annual quantitative and qualitative performance
targets as established by the Board in its sole discretion in
accordance with the Company’s bonus plan; provided ,
that the Executive’s annual bonus level target shall be set
at sixty percent (60%) of Base Salary. For 2007, Executive
shall be entitled to a guaranteed bonus in the amount of $75,000
payable on or about February 2008. For 2008, Executive
shall be entitled to a guaranteed Annual Bonus in an amount equal
to sixty percent (60%) of his Base Salary. The Annual Bonus is not
earned until the close of business on the last business day of the
Company’s fiscal year. Any Annual Bonus payable
hereunder shall be payable, if at all, after the date of the
delivery of the audited financial statements for the applicable
fiscal year. The Company’s fiscal year currently ends
December 31.
3.3
Stock and Option Grant . At the first meeting of the
Compensation Committee of the Board of Directors following the
Executive’s first day of employment, the Company shall grant
to the Executive, under the Company’s 2000 Stock Incentive
Plan (the “Stock Plan”), 80,000 shares of restricted
stock and an option to purchase 150,000 shares of Company stock
(the “Initial Grant”). The terms and conditions
of the Initial Grant (other than the exercise price per share,
which shall be equal to the closing price of the Company’s
stock on the grant date) shall be set forth in the award agreements
attached hereto as Schedules A and B. The Initial Grant shall
vest in five equal installments on each of the first five
anniversaries of the
Commencement Date. The
Board, in its sole discretion, may grant further incentive
compensation awards to the Executive from time to time. The
Company represents and warrants to Executive that the Company has
full power and authority, subject to Compensation Committee
approval, and shares available under the Stock Plan to make the
Initial Grant.
3.4
Benefits . The Executive shall be entitled to
participate in all bonus and benefit programs that the Company
establishes and makes available to its employees, to the extent
that the Executive is eligible under (and subject to the provisions
of) the plan documents governing those programs. The
Executive shall be entitled to no less than four weeks paid
vacation per year, subject to the other terms of the
Company’s standard vacation policy (Schedule C).
3.5
Reimbursement of Expenses . The Company shall
reimburse the Executive for all reasonable travel (which shall be
deemed to include first class airfare), entertainment and other
expenses incurred or paid by the Executive during the one year
period beginning on this Commencement Date in connection with, or
related to, the performance of his duties, responsibilities or
services under this Agreement or in connection with
Executive’s commuting to and from his personal residence in
New Jersey and the Company’s offices, upon presentation by
the Executive of documentation, expense statements, vouchers and/or
such other supporting information as the Company may request.
All reimbursement payments made pursuant to this Section 3.5
shall be made on a fully tax grossed-up basis.
3.6
Housing Expenses . The Company understands that the
Executive intends to maintain his primary residence outside the
Massachusetts area for up to twelve (12) months and then intends to
relocate to the Massachusetts area. Until the third anniversary of
the Commencement Date, the Company agrees to provide the Executive
with a housing allowance of
$3,750 per month, which
payments shall be increased on a fully tax grossed-up basis.
The Company also will reimburse the Executive for reasonable
travel, meals and lodging expenses incurred by him for up to two
trips for the purpose of securing such house or apartment within a
suitable distance to the Company’s headquarters.
Executive shall be entitled to relocation benefits afforded by the
Company to other Company executives if and when Executive decides
to permanently relocate his primary residence to the Massachusetts
area.
3.7
Executive’s Legal Fees. The Company agrees to
pay the Executive’s reasonable legal costs and expenses in
connection with negotiating and drafting this Agreement up to a
maximum of $15,000.
3.8
Automobile. The Company agrees to provide the
Executive with an automobile allowance or a leased automobile with
a retail value of up to $60,000, which payments shall be increased
on a fully tax grossed-up basis. In addition, the Company
agrees to pay all insurance, maintenance, fuel and other customary
costs associated with operating the automobile.
3.9
Withholding . All salary, bonus and other compensation
payable to the Executive shall be subject to applicable withholding
taxes.
4.
Employment Termination . The employment of the
Executive under this Agreement shall terminate upon the occurrence
of any of the following:
4.1
On the expiration date of the Employment Period.
4.2
At the election of the Company, for Cause (as defined below),
immediately upon written notice by the Company to the Executive,
which notice shall identify the Cause upon which termination is
based. For the purposes of this Section 4.2, Cause for
termination shall mean: (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 of Section 6 or 7 of this Agreement by the
Executive. For purposes of this Section 4.2, 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.
4.3
Upon the death or disability of the Executive. As used in
this Agreement, the term “disability” shall mean the
Executive’s absence from the full-time performance of the
Executive’s duties with the Company for one hundred eighty
(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.
4.4
At the election of the Executive for Good Reason as defined
herein. The Executive may terminate his employment for Good
Reason at any time during the twenty-four (24) months following the
initial occurrence of the condition giving rise to Good Reason,
with 30-days prior written notice of such termination to the
Company. Such notice shall provide factual details of the
basis behind such termination and the Company shall have a thirty
(30) day period thereafter to cure such matter. As used
herein, the term “Good Reason” shall mean:
(a) a
material breach by the
Company of the terms of this Agreement, including the failure to
pay Base Salary or any Annual Bonus when due; or (b) any
material adverse change by the Company in Executive’s titles,
authorities, duties, responsibilities or lines of reporting
inconsistent with the terms hereof or the assignment to Executive
by the Company of titles, authorities, duties, responsibilities or
lines of reporting inconsistent with the terms hereof, or
(c) a relocation of the offices of the Company where the
Executive is working to an area more than forty (40) miles from the
location of such offices as of the date hereof.
4.5
At the election of the Executive without Good Reason, upon not less
than sixty (60) calendar days prior written notice of termination
by the Executive to the Company; provided , however ,
that the Company may, in its sole discretion, determine that the
termination of the Executive shall become effective immediately and
in which case the termination shall still be considered at the
election of the Executive without Good Reason.
4.6
At the election of the Company, without Cause, upon not less than
sixty (60) days written notice to Executive.
4.7
At the election of the Company or the Executive in connection with
a Change in Control, as set forth in the Executive Retention
Agreement between the Company and the Executive (the
“ERA”), dated as of the date hereof.
“Change in Control” shall have the meaning set forth in
the ERA.
5.
Effect of Termination .
5.1
Non-Renewal, Termination Without Good Reason By the Executive or
Termination For Cause By the Company . In the event the
Executive’s employment is terminated by non-renewal pursuant
to Section 4.1, for Cause by the Company pursuant to
Section 4.2, or at the election of the Executive pursuant to
Section 4.5, the Company shall pay to the Executive
the
compensation and benefits
otherwise payable to him under Section 3 through the last
calendar day of his actual employment by the Company.
5.2
Termination for Death or Disability . In the event the
Executive’s employment is terminated by death or because of
disability pursuant to Section 4.3, the Company shall pay to
the estate of the Executive or to the Executive, as the case may
be, (A) within thirty (30) days of the date of the
Executive’s death or determination of disability, the
compensation which would otherwise be payable to the Executive up
to the end of the month in which the termination of his employment
because of death or disability occurs; and (B) an annual
bonus, payable when bonuses are paid for that year, in an amount
equal to the total bonus he would be paid for such year, if any,
multiplied by a fraction, the numerator of which is the number of
days in the year that have elapsed since January 1 and the
denominator of which is 365 (a “Pro Rata Bonus”).
In addition, the Company shall permit Executive or
Executive’s estate or representative to exercise the vested
stock option portion of the Initial Grant for a period of no less
than one year after any such termination of employment.
5.3
Termination By the Executive With Good Reason or By the Company
Without “Cause”. In the event the
Executive’s employment is terminated by the Executive with
Good Reason pursuant to Section 4.4 or by the Company without
Cause pursuant to Section 4.6, the Company shall pay to the
Executive the compensation and benefits otherwise payable to him
under Section 3 through the last calendar day of his actual
employment by the Company. In addition, provided the
Executive executes and does not revoke a Separation Agreement and
Release of Claims for the benefit of the Company substantially in
the form set forth on Schedule D hereto, the Company shall
(a) continue to pay the
Executive the Base Salary for twenty four (24) months in accordance
with the Company’s regular payroll practices; (b) pay
the Executive a
Pro Rata Bonus; (c) pay
the Executive, in bi-weekly installments, over a twenty four-month
period, an amount equal in the aggregate to 1.5 times the
average Annual Bonus earned for the two years prior to the date of
his termination (in the event Executive has not been employed for a
sufficient period to earn two such bonuses, such calculation shall
be made assuming Executive earned a bonus for any such year at a
target level of performance (taking into account any minimum bonus
amount)); (d) provide to the Executive for 24 months following
the date of his termination payment of COBRA premiums for medical,
dental, and vision benefits pursuant to plans maintained by the
Company under which Executive and/or Executive’s family is
eligible to receive benefits; provided, however, that,
notwithstanding the foregoing, the benefits described in this
subsection may be discontinued prior the end of the period, but
only to the extent, that Executive receives substantially similar
benefits from a subsequent employer; and (e) permit Executive
to exercise the stock option portion of the Initial Grant for a
period of no less than six months after the date of
termination.
5.4
Termination Following a Change in Control . In the
event the Executive’s employment is terminated pursuant to
Section 4.7 by the Company or by the Executive within 24
months following the Change in Control Date as defined in the ERA,
the Executive will be entitled to the benefits set forth in the ERA
in accordance with the terms of the ERA.
5.5
Participation in Executive Retirement Health Benefit Program
. Following the date of the Executive’s termination,
for any reason whatsoever, and, if applicable, the twenty- four
(24) month period referred to in Section 5.3(d) or the
period referred to in Section 4.2(a)(ii) of the ERA, in
the event the Executive elects to participate in the
Company’s executive retiree health benefit program set forth
on Exhibit A hereto (the “Program”), he
will reimburse the Company with respect to his participation in the
Program at the lesser of (a) the actual cost to
the
Company of the
employee’s participation and (b) the rate applicable to
former employees of the Company to elect COBRA health
coverage.
5.6
Payments Subject to Section 409A .
(a)
Subject to this Section 5.6, payments or benefits under
Section 5 shall begin only upon the date of a
“separation from service” of the Executive (determined
as set forth below) which occurs on or after the termination of the
Executive’s employment. The following rules shall
apply with respect to distribution of the payments and benefits, if
any, to be provided to the Executive under Section 5, as
applicable:
(i)
It is intended that each installment of the payments and benefits
provided under Section 5 shall be treated as a separate
“payment” for purposes of Section 409A of the Code
and the guidance issued thereunder
(“Section 409A”). Neither the Company nor
the Executive shall have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent
specifically permitted or required by
Section 409A.
(ii)
If, as of the date of the “separation from service” of
the Executive from the Company, the Executive is not a
“specified employee” (within the meaning of
Section 409A), then each installment of the payments and
benefits shall be made on the dates and terms set forth in
Section 5.
(iii)
If, as of the date of the “separation from service” of
the Executive from the Company, the Executive is a “specified
employee” (within the meaning of Section 409A),
then:
(1)
Each installment of the payments and benefits due under
Section 5 that, in accordance with the dates and terms set
forth herein, will in all circumstances, regardless of when the
separation from service occurs, be paid within the
Short-
Term Deferral Period (as
hereinafter defined) shall be treated as a short-term deferral
within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible
under Section 409A. For purposes of this Agreement, the
“Short-Term Deferral Period” means the period ending on
the later of the 15 th day of the third month following
the end of the Executive’s tax year in which the separation
from service occurs and the 15 th day of the third month
following the end of the Company’s tax year in which the
separation from service occurs; and
(2)
Each installment of the payments and benefits due under
Section 5 that is not described in Section 5.6
(a)(iii)(1) and that would, absent this subsection, be paid
within the six-month period following the “separation from
service” of the Executive from the Company shall not be paid
until the date that is six months and one day after such separation
from service (or, if earlier, the Executive’s death), with
any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on
the date that is six months and one day following the
Executive’s separation from service and any subsequent
installments, if any, being paid in accordance with the dates and
terms set forth herein; provided , however , that the
preceding provisions of this sentence shall not apply to any
installment of payments and benefits if and to the maximum extent
that that such installment is deemed to be paid under a separation
pay plan that does not provide for a deferral of compensation by
reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service). Any
installments that qualify for the exception under Treasury
Regulation Section 1.409A-1(b)(9)(iii) must be paid no
later than the last day of the Executive’s second taxable
year following his taxable year in which the separation from
service occurs.
(b)
The determination of whether and when a separation from service of
the Executive from the Company has occurred shall be made and in a
manner consistent with, and based on the presumptions set forth in,
Treasury Regulation Section 1.409A-1(h). Solely for
purposes of this Section 5.6 (b), “Company” shall
include all persons with whom the Company would be considered a
single employer under Section 414(b) and 414(c) of
the Code.
(c)
All reimbursements and in-kind benefits provided under the
Agreement shall be made or provided in accordance with the
requirements of Section 409A to the extent that such
reimbursements or in-kind benefits are subject to
Section 409A.
6.
Non-Competition and Non-Solicitation .
(a)
While the Executive is employed by the Company and for a period of
twelve (12) months following the Executive’s termination or
cessation of such employment for any reason, the Executive will not
directly or indirectly:
(i)
Engage in any business or enterprise (whether as an owner, partner,
officer, employee, director, investor, lender, consultant,
independent contractor or otherwise, except as the holder of not
more than 5% of the combined voting power of the outstanding stock
of a publicly held company) that (A) is competitive with the
Company’s business and (B) develops, designs, produces,
markets, sells or renders any product or service competitive with
any product developed, produced, marketed, sold or rendered by the
Company while the Executive was employed by the
Company;
(ii)
Either alone or in association with others, recruit or solicit, any
person who was employed by the Company at any time during the
period of the Executive’s employment with the Company, except
for an individual whose employment with the Company has been
terminated for a period of six months or longer; and
(iii)
Either alone or in association with others, solicit, divert or take
away, or attempt to divert or to take away, the business or
patronage of any of the clients, customers or accounts, or
prospective clients, customers or accounts, of the Company which
were contacted, solicited or served by the Executive while he was
employed by the Company.
(b)
If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range
of activities or geographic area as to which it may be
enforceable.
(c)
The Executive acknowledges that the restrictions contained in this
Agreement are necessary for the protection of the business and
goodwill of the Company and are considered by the Executive to be
reasonable for such purpose. The Executive agrees that any
breach of this Agreement will cause the Company substantial and
irrevocable damage and therefore, in the event of any such breach,
in addition to such other remedies which may be available, the
Company shall have the right to seek specific performance and
injunctive relief without posting a bond.
(d)
The geographic scope of this Section shall extend to anywhere
the Company or any of its subsidiaries is doing business during the
Term or has plans, during the Term, to do business.
(e)
The Executive agrees to provide a copy of this Agreement to all
person and Entities with whom the Executive seeks to be hired or do
business before accepting employment or engagement with any of
them.
(f)
If the Executive violates the provisions of this Section, the
Executive shall continue to be held by the restrictions set forth
in this Section, until a period equal to the period of restriction
has expired without any violation.
7.
Proprietary Information and Developments .
7.1
Proprietary Information .
(a)
The Executive agrees that all information, whether or not in
writing, of a private, secret or confidential nature concerning the
Company’s business, business relationships or financial
affairs (collectively, “Proprietary Information”) is
and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may
include discoveries, inventions, products, product improvements,
product enhancements, processes, methods, techniques, formulas,
compositions, compounds, negotiation strategies and positions,
projects, developments, plans (including business and marketing
plans), research data, clinical data, financial data (including
sales, costs, profits and pricing methods), personnel data,
computer programs (including software used pursuant to a license
agreement), customer and supplier lists, and contacts at or
knowledge of customers or prospective customers of the
Company. Except as required by applicable law, the Executive
will not disclose any Proprietary Information to any person or
entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an
employee of the Company) without prior written approval from the
Chief Executive Officer, either during or after his employment with
the Company, unless and until such Proprietary Information has
become public knowledge without fault by the Executive.
(b)
The Executive agrees that all files, documents, letters, memoranda,
reports, records, data, sketches, drawings, methods, laboratory
notebooks, program listings,
computer equipment or
devices, computer programs or other written, photographic, or other
tangible material containing Proprietary Information, whether
created by the Executive or others, which shall come into his
custody or possession, shall be and are the exclusive property of
the Company and are to be used by the Executive only in the
performance of his duties for the Company. All such materials
or copies thereof and all tangible property of the Company in the
custody or possession of the Executive shall be delivered to the
Company upon the earlier of (i) a request by the Company or
(ii) termination of his employment. After such delivery,
the Executive shall not retain any such materials or copies thereof
or any such tangible property.
(c)
The Executive agrees that his obligation not to disclose or to use
information and materials of the types set forth in subsections
(a) and (b) above, and his obligation to return materials
and tangible property set forth in subsection (b) above, also
extends to such types of information, materials and tangible
property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to
the Company or to the Executive.
7.2
Developments.
(a)
The Executive will make full and prompt disclosure to the Company
of all inventions, creations, improvements, discoveries, trade
secrets, secret processes, technology, know-how, copyrightable
materials, methods, developments, software, and works of authorship
or other creative works, whether patentable or not, which are
created, made, conceived or reduced to practice by him or under his
direction or jointly with others during his employment by the
Company, whether or not during normal working hours or on the
premises of the Company (all of which are collectively referred to
in this Agreement as “Developments”).
(b)
The Executive agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his
right, title and interest in and to all Developments and all
related patents, patent applications, copyrights and copyright
applications. However, this subsection (b) shall not
apply to Developments that do not relate to any business or
research and development conducted or planned to be conducted by
the Company at the time such Development is created, made,
conceived or reduced to practice and that are made and conceived by
the Executive not during normal working hours, not on the
Company’s premises and not using the Company’s tools,
devices, equipment or Proprietary Information. The Executive
understands that, to the extent this Agreement shall be construed
in accordance with the laws of any state that precludes a
requirement in an employee agreement to assign certain classes of
inventions made by an employee, this subsection (b) shall be
interpreted not to apply to any invention that a court
rules and/or the Company agrees falls within such
classes. The Executive also hereby waives all claims to moral
rights in any Developments.
(c)
The Executive agrees to cooperate fully with the Company and to
take such further actions as may be necessary or desirable, both
during and after his employment with the Company, with respect to
the procurement, maintenance and enforcement of copyrights, patents
and other intellectual property rights (both in the United States
and foreign countries) relating to Developments. The
Executive shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of
attorney, that the Company may deem necessary or desirable in order
to protect its rights and interests in any Development. The
Executive further agrees that if the Company is unable, after
reasonable effort, to secure the signature of the Executive on any
such papers, the Chief Executive Officer of the Company shall be
entitled to execute any such
papers as the agent and the
attorney-in-fact of the Executive, and the Executive hereby
irrevocably designates and appoints the Chief Executive Officer of
the Company as his agent and attorney-in-fact to execute any such
papers on his behalf and to take any and all actions as the Company
may deem
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