Exhibit 10.5
TRANSITION AND SEVERANCE
AGREEMENT
This Transition and Severance
Agreement (the “Agreement”) is entered into as of March
1, 2007 (the “Effective Date”), by and between Sepracor
Inc. (“Sepracor” or the “Company”) and
W. James O’Shea (“O’Shea”)
(individually, a “Party,” and collectively, the
“Parties”).
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1.
Transition Period Position and
Responsibilities. Effective as of March
1, 2007 (the “Transition Date”), O’Shea shall
resign from his positions as President and Chief Operating Officer
of Sepracor. Beginning on the Transition Date and ending on
August 31, 2007, or earlier if O’Shea voluntarily
terminates his employment prior to August 31, 2007 (the
“Transition Period”), O’Shea shall be employed by
Sepracor as its Vice Chairman, reporting to Timothy Barberich,
Sepracor’s Chief Executive Officer. During the
Transition Period, O’Shea shall perform such duties
consistent with his position as are reasonably assigned to him by
Mr. Barberich. The Parties further agree that
O’Shea shall perform all work and provide all assistance
hereunder at such times and locations as are reasonably determined
by Mr. Barberich.
2.
Transition Period
Compensation . During the Transition
Period, the Company shall compensate O’Shea at the annual
rate of $548,625, less applicable taxes and withholdings, (the
“Base Salary”) to be paid in accordance with the
Company’s regular payroll practices. In addition,
provided O’Shea has not voluntarily terminated his employment
prior to August 31, 2007, he shall be entitled to an annual bonus
for calendar year 2007 equal to $219,450, less applicable taxes and
withholdings. The bonus shall be paid to O’Shea in a
lump sum, on or prior to March 1, 2008. For the duration of
the Transition Period, the Company shall also continue to provide
O’Shea with the benefits which he currently enjoys under the
Company’s plans and policies, under the same terms that
applied to him immediately prior to the Effective Date, subject to
the terms of those plans and policies.
3.
Severance Period and
Compensation . Effective on
August 31, 2007 (the “Separation Date”),
O’Shea’s employment with the Company shall cease.
Thereafter, provided O’Shea has not voluntarily terminated
his employment prior to August 31, 2007 and executes, delivers and
does not revoke a release of claims for the benefit of the Company
in a form provided by the Company, the Company shall continue to
pay O’Shea the Base Salary for a period of 12 months (the
“Severance Period”), in accordance with its regular
payroll practices.
For the duration of the Severance
Period, if allowed under the Company’s life insurance policy,
the Company further agrees to provide O’Shea with life
insurance in the same amount the Company currently provides him,
the full premium of which shall be paid by the Company.
Following the Separation Date, any
entitlement O’Shea has, might have, had, or might have had to
compensation, bonuses, wages or participation in any benefit plan,
policy, program, contract or practice of the Company, shall
terminate, except as required by federal or state law, by
applicable plan terms or stock option agreements, or by the express
terms of this Agreement.
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4.
Stock Options and Restricted
Stock . The Parties
acknowledge that O’Shea has been awarded options to purchase
700,000 shares of the Company’s common stock, all of which
options are fully vested, as well as options to purchase an
additional 25,700 shares of the Company’s stock which will
vest prior to the Separation Date. The grant dates and
exercise prices of such options are set forth in Exhibit A
hereto. O’Shea shall have the right to exercise any or
all of his options for a period of ninety (90) days after the
Separation Date. The options shall terminate at the close of
business on the ninetieth (90 th ) day following the
Separation Date. In addition, the Parties acknowledge that
O’Shea is the owner of certain shares of restricted stock of
the Company. Of these shares, a total 6,850 shares will no
longer be subject to any restriction as of March 16, 2007, and
may be retained or sold by O’Shea after that date in his
discretion, subject to the Company’s insider trading policy,
the terms of the incentive stock plan and restricted stock
agreement under which such shares were granted and the federal
securities laws. Except where expressly modified by this
Agreement, the options and shares of restricted stock set forth in
Exhibit A shall continue to be governed by the terms of the
applicable stock option agreements and restricted stock agreement
executed by the Parties.
5.
Cooperation.
From the
Effective Date forward, O’Shea agrees reasonably to cooperate
with the Company in the defense or prosecu
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