Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”), made this 15th day of October 2007, 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. 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 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
principal offices of the Company 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
eighteen (18) 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 an
eighteen-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 18 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
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(a)(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 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 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.
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 necessary or desirable in
order to protect its rights and interests in any Development under
the conditions described in this sentence.
7.3
United States Government Obligations . The Executive
acknowledges that the Company from time to time may have agreements
with other parties or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the
Company regarding inventions made during the course of work under
such agreements or regarding the confidential nature of such work.
The Executive agrees to be bound by all such obligations and
restrictions that are mad
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