Exhibit 10.15
SEPRACOR INC.
Executive Retention
Agreement
THIS EXECUTIVE RETENTION AGREEMENT
by and between Sepracor Inc., a Delaware corporation (the
“Company”), and (the “Executive”) is made
as
(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
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
;
provided , however, that commencing on
and each
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)&n
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