Exhibit 10.18
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”), made this 6
th day of November 2008 (the
“Effective Date”), 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 H. N. Corrigan, residing at 389
Marlborough Street, Boston, MA 02115 (the
“Executive”).
WHEREAS, on May 14, 2008, the
Company and the Executive entered into an Employment Agreement (the
“Original Agreement”); and
WHEREAS, the Company and the
Executive wish to amend and restate the Original Agreement as
provided for herein.
NOW THEREFORE, 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 continue to employ the Executive and the Executive hereby
agrees to continue to be employed by the Company, upon the terms
set forth in this Agreement, until the fifth anniversary of the
Effective Date (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 the
Effective Date, 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, Research and Development 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, Research and Development 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 two companies,
business or trade organizations 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 continue to pay
the Executive a base salary at the annualized rate of $545,000
(“Base Salary”). The Base Salary shall be subject
to annual review by the Board but shall not be reduced below
$545,000 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
be eligible for a performance-based annual bonus for each fiscal
year of the Term (the “Annual Bonus”). The Annual Bonus
shall be based
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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 fifty percent (50%) or more of 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.
3.3
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
A).
3.4
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 in connection with, or
related to, the performance of his duties, responsibilities or
services under this Agreement, upon presentation by the Executive
of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
3.5
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 made 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.
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3.6
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
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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,
following 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.
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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
April 17, 2003. “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”).
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
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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 B 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; and
(d) for 24 months following the date of his termination, allow
the Executive to participate in the Company’s executive
retiree health benefit program based on the same cost sharing
arrangement that applied immediately prior to the date of his
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 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
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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-
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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.
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(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
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(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.
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(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,
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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”).
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(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
foreig
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