Exhibit 10.1

 

EXECUTION COPY

 

REGISTRATION RIGHTS AGREEMENT

 

among

 

SEPRACOR INC.

 

as Issuer,

 

and

 

MORGAN STANLEY & CO. INCORPORATED,

 

and

 

U.S. BANCORP PIPER JAFFRAY, INC.

 

and

 

CREDIT SUISSE FIRST BOSTON LLC

 

as Initial Purchasers

 

Dated as of December 12, 2003

 

--------------------------------------------------------------------------------

 

THIS REGISTRATION RIGHTS AGREEMENT dated as of December 12, 2003 among Sepracor
Inc., a Delaware corporation (the “Company”), and Morgan Stanley & Co.
Incorporated, U.S. Bancorp Piper Jaffray Inc. and Credit Suisse First Boston LLC
(the “Initial Purchasers”), is entered into pursuant to the Purchase Agreement
dated December 8, 2003 (the “Purchase Agreement”), among the Company and the
Initial Purchasers.  In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement.

 

The Company agrees with the Initial Purchasers, (i) for their benefit as Initial
Purchasers and (ii) for the benefit of the beneficial owners (including the
Initial Purchasers) from time to time of the Notes (as defined herein) and the
beneficial owners from time to time of the Underlying Common Stock (as defined
herein) issued upon conversion of the Notes (each of the foregoing a “Holder”
and together the “Holders”), as follows:

 

Section 1.  Definitions.  Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement.  As used in
this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any specified person, an “affiliate,” as
defined in Rule 144, of such person.

 

“Amendment Effectiveness Deadline Date” has the meaning set forth in
Section 2(d) hereof.

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

 

“Common Stock” means the shares of common stock, $.10 par value per share, of
the Company, and any other shares of common stock as may constitute “Common
Stock” for purposes of the Indenture, including the Underlying Common Stock.

 

“Conversion Price” means $1,000 divided by the then-applicable Conversion Rate.

 

“Conversion Rate” has the meaning assigned such term in the Indenture.

 

“Damages Accrual Period” has the meaning set forth in Section 2(e) hereof.

 

“Damages Payment Date” means each June 15 and December 15.

 

--------------------------------------------------------------------------------

 

“Deferral Notice” has the meaning set forth in Section 3(i) hereof.

 

“Deferral Period” has the meaning set forth in Section 3(i) hereof.

 

“Effectiveness Deadline Date” has the meaning set forth in Section 2(a) hereof.

 

“Effectiveness Period” means the period commencing on the date hereof and ending
on the earlier of (i) the date that there are no longer any Registrable
Securities outstanding and (ii) two years after the effective date of the Shelf
Registration Statement.

 

“Event” has the meaning set forth in Section 2(e) hereof.

 

“Event Date” has the meaning set forth in Section 2(e) hereof.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

 

“Filing Deadline Date” has the meaning set forth in Section 2(a) hereof.

 

“Holder” has the meaning set forth in the second paragraph of this Agreement.

 

“Indenture” means the Indenture, dated as of December 12, 2003, between the
Company and JPMorgan Chase Bank, as trustee, pursuant to which the Notes are
being issued.

 

“Initial Purchasers” means Morgan Stanley & Co. Incorporated, U.S. Bancorp Piper
Jaffray Inc. and Credit Suisse First Boston LLC.

 

“Initial Shelf Registration Statement” has the meaning set forth in Section 2(a)
hereof.

 

“Issue Date” means the first date of original issuance of the Notes.

 

“Liquidated Damages Amount” has the meaning set forth in Section 2(e) hereof.

 

“Losses” has the meaning set forth in Section 6 hereof.

 

“Material Event” has the meaning set forth in Section 3(i) hereof.

 

“Notice and Questionnaire” means a written notice delivered to the Company
containing substantially the information called for by the Selling

 

3

--------------------------------------------------------------------------------

 

Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated December 8, 2003 relating to the Notes.

 

“Notes” means the 0% Series A Convertible Subordinated Notes Due 2008 and the 0%
Series B Convertible Subordinated Notes Due 2010 of the Company to be purchased
pursuant to the Purchase Agreement.

 

“Notice Holder” means, on any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date.

 

“Purchase Agreement” has the meaning set forth in the preamble hereof.

 

“Prospectus” means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement thereto,
including post-effective amendments, and all materials incorporated by reference
or explicitly deemed to be incorporated by reference in such Prospectus.

 

“Record Holder” means, with respect to any Damages Payment Date relating to any
Notes or Underlying Common Stock as to which any Liquidated Damages Amount has
accrued, the registered holder of such Note or Underlying Common Stock on the
June 1 immediately preceding a Damages Payment Date occurring on a June 15, and
on the December 1 immediately preceding a Damages Payment Date occurring on a
December 15.

 

“Registrable Securities” means the Notes until such Notes have been converted
into Underlying Common Stock and, at all times subsequent to any such
conversion, the Underlying Common Stock and any securities into or for which
such Underlying Common Stock has been converted, and any security issued with
respect thereto upon any stock dividend, stock split or similar event until, in
the case of any such security, the earliest of (i) its resale in accordance with
the Registration Statement covering offers and sales by the Holders of such
security, (ii) expiration of the holding period for non-affiliates that would be
applicable thereto under Rule 144(k), (iii) its sale to the public pursuant to
Rule 144 (or any similar provision then in force, but not Rule 144A) under the
Securities Act, or (iv) such securities shall cease to be outstanding.

 

“Registration Statement” means any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.

 

4

--------------------------------------------------------------------------------

 

 

“Restricted Securities” means “Restricted Securities” as defined in Rule 144.

 

“Rule 144” means Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.

 

“Rule 144A” means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the SEC thereunder.

 

“Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof.

 

“Special Counsel” means Davis Polk & Wardwell or one such other successor
counsel as shall be specified by the Holders of a majority of the Registrable
Securities, but which may, with the written consent of the Initial Purchasers
(which shall not be unreasonably withheld), be another nationally recognized law
firm experienced in securities law matters designated by the Company, the
reasonable fees and expenses of which will be paid by the Company pursuant to
Section 5 hereof.  For purposes of determining the holders of a majority of the
Registrable Securities in this definition, Holders of Notes shall be deemed to
be the Holders of the number of shares of Underlying Common Stock into which
such Notes are or would be convertible as of the date the consent is requested.

 

“Subsequent Shelf Registration Statement” has the meaning set forth in
Section 2(b) hereof.

 

“TIA” means the Trust Indenture Act of 1939, as amended.

 

“Trustee” means, JPMorgan Chase Bank, the Trustee under the Indenture.

 

“Underlying Common Stock” means the Common Stock into which the Notes are
convertible or issued upon any such conversion.

 

Section 2.  Shelf Registration.  (a) The Company shall prepare and file or cause
to be prepared and filed with the SEC, on or before the date (the “Filing
Deadline Date”) one hundred twenty (120) days after the Issue Date, a
Registration Statement for an offering to be made on a delayed or continuous

 

5

--------------------------------------------------------------------------------

 

basis pursuant to Rule 415 of the Securities Act (a “Shelf Registration
Statement”) registering the resale from time to time by Holders thereof of all
of the Registrable Securities (the “Initial Shelf Registration Statement”).  The
Initial Shelf Registration Statement shall be on Form S-3 or another appropriate
form permitting registration of such Registrable Securities for resale by such
Holders in accordance with the methods of distribution elected by the Holders
and set forth in the Initial Shelf Registration Statement, subject to the
limitations set forth in Section 8(j).  The Company shall use its reasonable
best efforts to cause the Initial Shelf Registration Statement to be declared
effective under the Securities Act  on or before the date (the “Effectiveness
Deadline Date”) that is two hundred ten (210) days after the Issue Date, and to
keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until
the expiration of the Effectiveness Period.  At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date ten (10) Business Days prior to such time of
effectiveness shall be named as a selling securityholder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law.  None of the Company’s security holders
(other than the Holders of Registrable Securities) shall have the right to
include any of the Company’s securities in the Shelf Registration Statement.

 

(b)                                 If the Initial Shelf Registration Statement
or any Subsequent Shelf Registration Statement (as defined below) ceases to be
effective for any reason at any time during the Effectiveness Period (other than
because there are no longer any Registrable Securities outstanding or such
Registrable Securities shall have otherwise ceased to be Registrable
Securities), the Company shall use its reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within thirty (30) days of such cessation of effectiveness amend the
Shelf Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement covering all of the securities that as
of the date of such filing are Registrable Securities (a “Subsequent Shelf
Registration Statement”).  If a Subsequent Shelf Registration Statement is
filed, the Company shall use its reasonable best efforts to cause the Subsequent
Shelf Registration Statement to become effective as promptly as is practicable
after such filing and to keep such Registration Statement (or subsequent Shelf
Registration Statement) continuously effective until the end of the
Effectiveness Period.

 

(c)                                  The Company shall supplement and amend the
Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement, if

 

6

--------------------------------------------------------------------------------

 

required by the Securities Act or as reasonably requested by the Initial
Purchasers or by the Trustee on behalf of the Holders of the Registrable
Securities covered by such Shelf Registration Statement to correct any material
misstatements or omissions with respect to any Holder or as necessary to name a
Notice Holder as a selling securityholder in accordance with Section 2(d) below.

 

(d)                                 Each Holder agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i) of this Agreement.  Following the date that the Initial Shelf
Registration Statement is declared effective, each Holder wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
ten (10) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement.  From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as practicable after the date a Notice and Questionnaire is
delivered pursuant to Section 8(c), and in any event upon the later of (x)
fifteen (15) Business Days after such date or (y) fifteen (15) Business Days
after the expiration of any Deferral Period in effect when the Notice and
Questionnaire is delivered or put into effect within fifteen (15) Business Days
of such delivery date:

 

(i)                       if required by applicable law, file with the SEC a
post-effective amendment to the Shelf Registration Statement or prepare and, if
required by applicable law, file a supplement to the related Prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that the Holder delivering such Notice and
Questionnaire is named as a selling securityholder in the Shelf Registration
Statement and the related Prospectus in such a manner as to permit such Holder
to deliver such Prospectus to purchasers of the Registrable Securities in
accordance with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use its reasonable best efforts
to cause such post-effective amendment to be declared effective under the
Securities Act by the date (the “Amendment Effectiveness Deadline Date”) that is
sixty (60) days after the date such post-effective amendment is required by this
clause to be filed;

 

(ii)                    provide such Holder copies of any documents filed
pursuant to Section 2(d)(i); and

 

(iii)                 notify such Holder as promptly as practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 2(d)(i);

 

7

--------------------------------------------------------------------------------

 

provided, that if such Notice and Questionnaire is delivered during a Deferral
Period, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with
Section 3(i).  Notwithstanding anything contained herein to the contrary, (i)
the Company shall be under no obligation to name any Holder that is not a Notice
Holder as a selling securityholder in any Registration Statement or related
Prospectus and (ii) the Amendment Effectiveness Deadline Date shall be extended
by up to ten (10) Business Days from the expiration of a Deferral Period (and
the Company shall incur no obligation to pay Liquidated Damages during such
extension) if such Deferral Period shall be in effect on the Amendment
Effectiveness Deadline Date.

 

(e)                                  The parties hereto agree that the Holders
of Registrable Securities will suffer damages, and that it would not be feasible
to ascertain the extent of such damages with precision, if

 

(i)                       the Initial Shelf Registration Statement has not been
filed on or prior to the Filing Deadline Date,

 

(ii)                    the Initial Shelf Registration Statement has not been
declared effective under the Securities Act on or prior to the Effectiveness
Deadline Date; provided, that at least one Holder becomes a Notice Holder prior
to the Effectiveness Deadline Date,

 

(iii)                 the Company has failed to perform its obligations set
forth in Section 2(d)(i) within the time period required therein,

 

(iv)                any post-effective amendment to a Shelf Registration
Statement filed pursuant to Section 2(d)(i) has not become effective under the
Securities Act on or prior to the Amendment Effectiveness Deadline Date, or

 

(v)                   the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted in respect of such period pursuant to
Section 3(i) hereof.

 

Each event described in any of the foregoing clauses (i) through (v) is
individually referred to herein as an “Event.”  For purposes of this Agreement,
each Event set forth above shall begin and end on the dates set forth in the
table set forth below:

 

8

--------------------------------------------------------------------------------

 

Type of Event by
Clause

 

Beginning
Date

 

Ending
Date

(i)

 

Filing Deadline Date

 

the date the Initial Shelf Registration Statement is filed

 

 

 

 

 

(ii)

 

Effectiveness Deadline Date; provided, that at least one Holder becomes a Notice
Holder prior to the Effectiveness Deadline Date

 

the date the Initial Shelf Registration Statement becomes effective under the
Securities Act

 

 

 

 

 

(iii)

 

the date by which the Company is required to perform its obligations under
Section 2(d)(i)

 

the date the Company performs its obligations set forth in Section 2(d)(i)

 

 

 

 

 

(iv)

 

the Amendment Effectiveness Deadline Date

 

the date the applicable post-effective amendment to a Shelf Registration
Statement becomes effective under the Securities Act

 

 

 

 

 

(v)

 

the date on which the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted by Section 3(i)

 

termination of the Deferral Period that caused the limit on the aggregate
duration of Deferral Periods to be exceeded

 

Subject to Section 3(i), for purposes of this Agreement, Events shall begin on
the dates set forth in the table above and shall continue until the ending dates
set forth in the table above.

 

Commencing on (and including) any date that an Event has begun (the “Event
Date”) and ending on (but excluding) the next date on which there are no Events
that have occurred and are continuing (a “Damages Accrual Period”), the Company
shall pay, as liquidated damages and not as a penalty, to Record Holders of
Registrable Securities an amount (the “Liquidated Damages Amount”) accruing, for
each day in the Damages Accrual Period, (i) in respect of any Note that is a
Registrable Security, (x) for the first 90 days starting from (and including)
the Event Date, at a rate per annum equal to 0.25% of the aggregate

 

9

--------------------------------------------------------------------------------

 

principal amount of such Note outstanding on the Event Date, and (y) from (and
including) the date immediately following 90 days from (and including) the Event
Date, at a rate per annum equal to 0.5% of the aggregate principal amount of
such Note outstanding on such date, and (ii) in respect of each share of
Underlying Common Stock that has been issued upon conversion of a Note, (x) for
the first 90 days starting from (and including) the Event Date, at a rate per
annum equal to 0.25% of the Conversion Price on the Event Date, and (y) from
(and including) the date immediately following 90 days from (and including) the
Event Date, at a rate per annum equal to 0.5% of the Conversion Price on such
date; provided that in the case of a Damages Accrual Period that is in effect
solely as a result of an Event of the type described in clause  (iii) or (iv) of
the preceding paragraph, such Liquidated Damages Amount shall be paid only to
the Holders (as set forth in the succeeding paragraph) that have delivered
Notices and Questionnaires that caused the Company to incur the obligations set
forth in Section 2(d) the non-performance of which is the basis of such Event. 
In calculating the Liquidated Damages Amount on any date on which no Notes are
outstanding, the Conversion Price and the Liquidated Damages Amount shall be
calculated as if the Notes were still outstanding.  Notwithstanding the
foregoing, no Liquidated Damages Amount shall accrue as to any Registrable
Security from and after the earlier of (x) the date such security is no longer a
Registrable Security and (y) expiration of the Effectiveness Period.  The rate
of accrual of the Liquidated Damages Amount with respect to any period shall not
exceed the rate provided for in this paragraph notwithstanding the occurrence of
multiple concurrent Events.

 

The Liquidated Damages Amount shall accrue from the first day of the applicable
Damages Accrual Period, and shall be payable on each Damages Payment Date during
the Damage Accrual Period (and on the Damages Payment Date next succeeding the
end of the Damages Accrual Period if the Damage Accrual Period does not end on a
Damages Payment Date) to the Record Holders of the Registrable Securities
entitled thereto; provided that any Liquidated Damages Amount accrued with
respect to any Note or portion thereof redeemed by the Company on a redemption
date or converted into Underlying Common Stock on a conversion date prior to the
Damages Payment Date, shall, in any such event, be paid instead to the Holder
who submitted such Note or portion thereof for redemption or conversion on the
applicable redemption date or conversion date, as the case may be, on such date
(or promptly following the conversion date, in the case of conversion); provided
further, that, in the case of an Event of the type described in clause (iii) or
(iv) of the first paragraph of this Section 2(e), such Liquidated Damages Amount
shall be paid only to the Holders entitled thereto pursuant to such first
paragraph by check mailed to the address set forth in the Notice and
Questionnaire delivered by such Holder.

 

The Trustee shall be entitled, on behalf of registered holders of Notes or
Underlying Common Stock, to seek any available remedy for the enforcement of

 

10

--------------------------------------------------------------------------------

 

this Agreement, including for the payment of such Liquidated Damages Amount. 
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude any Holder from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.

 

All of the Company’s obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).

 

The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.

 

Section 3.  Registration Procedures.  In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:

 

(a)                                  Prepare and file with the SEC a
Registration Statement or Registration Statements on any appropriate form under
the Securities Act available for the sale of the Registrable Securities by the
Holders thereof in accordance with the intended method or methods of
distribution thereof, as specified in writing by the Holders of Registrable
Securities, and use its reasonable best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided
that before filing any Registration Statement or Prospectus or any amendments or
supplements thereto with the SEC, the Company shall furnish to the Initial
Purchasers and the Special Counsel of such offering, if any, copies of all such
documents proposed to be filed and use its reasonable efforts to reflect in each
such document when so filed with the SEC such comments as the Initial Purchasers
or the Special Counsel, if any, reasonably shall propose within three (3)
Business Days of the delivery of such copies to the Initial Purchasers and the
Special Counsel.

 

(b)                                 Prepare and file with the SEC such
amendments and post-effective amendments to each Registration Statement as may
be necessary to keep such Registration Statement continuously effective for the
applicable period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and use its reasonable best efforts to comply with the
provisions of the Securities Act

 

11

--------------------------------------------------------------------------------

 

applicable to it with respect to the disposition of all securities covered by
such Registration Statement during the Effectiveness Period in accordance with
the intended methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or such Prospectus as so supplemented.

 

(c)                                  As promptly as practicable give notice to
the Notice Holders, the Initial Purchasers and the Special Counsel, (i) when any
Prospectus, prospectus supplement, Registration Statement or post-effective
amendment to a Registration Statement has been filed with the SEC and, with
respect to a Registration Statement or any post-effective amendment, when the
same has been declared effective, (ii) of any request, following the
effectiveness of the Initial Shelf Registration Statement under the Securities
Act, by the SEC or any other federal or state governmental authority for
amendments or supplements to any Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of any Registration Statement or the initiation or threatening of
any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) upon becoming aware of the occurrence of (but not the nature or
details concerning) a Material Event (provided, that no notice by the Company
shall be required to be given pursuant to this clause (v) in the event that the
Company either promptly files a prospectus supplement to update the Prospectus
or a Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Shelf Registration Statement, which, in either case, contains
the requisite information with respect to such Material Event that results in
such Shelf Registration Statement no longer containing any untrue statement of
material fact or omitting to state a material fact necessary to make the
statements contained therein not misleading) and (vi) of the determination by
the Company that a post-effective amendment to a Registration Statement will be
filed with the SEC, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Deferral Notice,
in which event the provisions of Section 3(i) shall apply.

 

(d)                                 Use its reasonable best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness of a
Registration Statement or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction in which they have been qualified for sale, in either case as
promptly as practicable, and provide prompt notice to each Notice Holder and the
Initial Purchasers of the withdrawal of any such order.

 

12

--------------------------------------------------------------------------------

 

(e)                                  If reasonably requested by the Initial
Purchasers or any Notice Holder, as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment to a Registration Statement
such information as the Initial Purchasers and the Special Counsel, or such
Notice Holder, shall on the basis of a written opinion of nationally-recognized
counsel experienced in such matters, determine to be required to be included
therein by applicable law and make any required filings of such prospectus
supplement or post-effective amendment; provided, that the Company shall not be
required to take any actions under this Section 3(e) that are not, in the
reasonable written opinion of nationally recognized counsel for the Company
experienced in such matters, in compliance with applicable law.

 

(f)                                    As promptly as practicable furnish to
each Notice Holder, the Special Counsel and the Initial Purchasers, without
charge, at least one (1) conformed copy of the Registration Statement and any
amendment thereto, including exhibits and, if requested, all documents
incorporated or deemed to be incorporated therein by reference.

 

(g)                                 During the Effectiveness Period, deliver to
each Notice Holder, the Special Counsel, if any, and the Initial Purchasers, in
connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such Notice Holder may reasonably
request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.

 

(h)                                 Prior to any public offering of the
Registrable Securities pursuant to a Registration Statement, use its reasonable
best efforts to register or qualify or cooperate with the Notice Holders and the
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Notice Holder reasonably requests
in writing (which request may be included in the Notice and Questionnaire);
prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, use its reasonable best efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period in connection with such Notice Holder’s offer and sale of
Registrable Securities pursuant to such registration or qualification (or
exemption therefrom) and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of such
Registrable

 

13

--------------------------------------------------------------------------------

 

Securities in the manner set forth in the relevant Registration Statement and
the related Prospectus; provided that the Company will not be required to (i)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Agreement or (ii) take any action that would subject it to general service of
process in suits or to taxation in any such jurisdiction where it is not then so
subject.

 

(i)                                     Upon the Company becoming aware of (A)
the issuance by the SEC of a stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of proceedings with respect to
the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities
Act, (B) the occurrence of any event or the existence of any fact (a “Material
Event”) as a result of which any Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (C) the occurrence or existence of any pending or
prospective corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus:

 

(i)                       in the case of clause (B) above, subject to the next
sentence, as promptly as practicable prepare and file, if necessary pursuant to
applicable law, a post-effective amendment to such Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document that would be incorporated by
reference into such Registration Statement and Prospectus so that such
Registration Statement does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and such Prospectus does not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, and, in the case of a post-effective amendment to a Registration
Statement, subject to the next sentence, use its reasonable best efforts to
cause it to be declared effective as promptly as is practicable, and

 

(ii)                    give notice to the Notice Holders, and the Special
Counsel, if any, that the availability of the Shelf Registration Statement is
suspended (a “Deferral Notice”) and, upon receipt of any Deferral Notice, each
Notice Holder agrees not to sell any Registrable Securities pursuant

 

14

--------------------------------------------------------------------------------

 

to the Registration Statement until such Notice Holder (i) shall have received
copies of the supplemented or amended Prospectus provided for in clause (i)
above, and, if so directed by the Company, such Holder shall deliver to the
Company (at the Company’s expense) all copies, other than permanent file copies,
then in such Holder’s possession of the Prospectus covering such Registrable
Securities at the time of receipt of such notice, or (ii) is advised in writing
by the Company that the Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such Prospectus.

 

The Company will use its reasonable best efforts to ensure that the use of the
Prospectus may be resumed (x) in the case of clause (A) above, as promptly as is
practicable, (y) in the case of clause (B) above, as soon as, in the sole
judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to
avoid unreasonable burden or expense, as soon as practicable thereafter and (z)
in the case of clause (C) above, as soon as in the reasonable discretion of the
Company, such suspension is no longer appropriate.  The Company shall be
entitled to exercise its right under this Section 3(i) to suspend the
availability of the Shelf Registration Statement or any Prospectus, without
incurring or accruing any obligation to pay liquidated damages pursuant to
Section 2(e), for a period not to exceed 45 days (a “Deferral Period”); provided
that the aggregate duration of any Deferral Periods shall not exceed 45 days in
any three month period (or 60 days in any three month period in the event of a
Material Event pursuant to which the Company has delivered a second notice as
permitted below) or an aggregate of 90 days for all periods in any twelve (12)
month period; provided further that in the case of a Material Event relating to
an acquisition or a probable acquisition or financing, recapitalization,
business combination or other similar transaction, the Company may, without
incurring any obligation to pay liquidated damages pursuant to Section 2(e),
deliver to Notice Holders a second notice to the effect set forth above, which
shall have the effect of extending the Deferral Period by up to an additional 15
days, or such shorter period of time as is specified in such second notice.

 

(j)                       No more than twice in any 12 month period, if
requested in writing in connection with a disposition of Registrable Securities
pursuant to a Registration Statement, make reasonably available for inspection
during normal business hours by a representative for the Notice Holders of such
Registrable Securities, any broker-dealers, attorneys and accountants retained
by such Notice Holders, and any attorneys or other agents retained by a
broker-dealer engaged by such Notice Holders, such relevant financial records,
corporate documents and other information as may be reasonably requested by such
representative for the Notice Holders, or any such broker-dealers, attorneys or
accountants, in

 

15

--------------------------------------------------------------------------------

 

connection with such disposition as part of a customary “due diligence”
examination and is material to an understanding of the Company and its
subsidiaries taken as a whole; provided that such persons shall first agree in
writing with the Company that any information that is reasonably and in good
faith designated by the Company as confidential at the time of delivery of such
information shall be kept confidential by such persons and shall be used solely
for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement, and provided further that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Notice Holders and the other parties entitled thereto by Special
Counsel.  Any person legally compelled to disclose any such confidential
information made available for inspection shall provide the Company with prompt
prior written notice of such requirement so that the Company may seek a
protective order or other appropriate remedy.

 

(k)                                  Comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) for a 12-month period commencing on the
first day of the first fiscal quarter of the Company commencing after the
effective date of a Registration Statement, which statements shall be made
available no later than 45 days after the end of the 12-month period or 90 days
if the 12-month period coincides with the fiscal year of the Company.

 

(l)                                     Cooperate with each Notice Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities sold or to be sold pursuant to a Registration Statement,
which certificates shall not bear any restrictive legends, and cause such
Registrable Securities to be in such denominations as are permitted by the
Indenture and registered in such names as such Notice Holder may request in
writing at least one (1) Business Day prior to any sale of such Registrable
Securities.

 

(m)                               Provide a CUSIP number for all Registrable
Securities covered by each Registration Statement not later than the effective
date of such Registration Statement and provide the Trustee and the transfer
agent for the Common Stock

 

16

--------------------------------------------------------------------------------

 

with printed certificates for the Registrable Securities that are in a form
eligible for deposit with The Depository Trust Company.

 

(n)                                 Cooperate and assist in any filings required
to be made with the National Association of Securities Dealers, Inc and the
American Stock Exchange in connection with the sale of the Registrable
Securities pursuant to the Shelf Registration Statement.

 

(o)                                 Upon (i) the filing of the Initial Shelf
Registration Statement and (ii) the effectiveness of the Initial Shelf
Registration Statement, issue a press release announcing the same, in each case
by release to Reuters Economic Services and Bloomberg Business News or other
reasonable means of distribution.

 

Section 4.  Holder’s Obligations.  Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder shall be entitled to sell any of such
Registrable Securities pursuant to the Shelf Registration Statement or to
receive a Prospectus relating thereto, unless such Holder has furnished the
Company with a Notice and Questionnaire as required pursuant to Section 2(d)
hereof (including the information required to be included in such Notice and
Questionnaire) and the information set forth in the next sentence.  Each Notice
Holder agrees promptly to furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Notice Holder not misleading and any other information regarding such
Notice Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request.  Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with
such disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to or provided by such
Holder or its plan of distribution and that such Prospectus does not as of the
time of such sale omit to state any material fact relating to or provided by
such Holder or its plan of distribution necessary to make the statements in such
Prospectus, in the light of the circumstances under which they were made, not
misleading.  Each Holder further agrees not to sell any Registrable Securities
pursuant to the Shelf Registration Statement without delivering, or causing to
be delivered, a Prospectus to the purchaser thereof and, following termination
of the Effectiveness Period, to notify the Company, within ten (10) Business
Days of a request by the Company, of the amount of Registrable Securities sold
pursuant to the Shelf Registration Statement and, in the absence of a response,
the Company may assume that all of the Holder’s Registrable Securities were so
sold.  Each Holder of Registrable Securities agrees that upon receipt of any
Deferral Notice from the Company, such Holder shall forthwith discontinue (and
cause any placement or sales agent or underwriters acting on their behalf to
discontinue) the disposition of Registrable Securities pursuant to

 

17

--------------------------------------------------------------------------------

 

the registration statement applicable to such Registrable Securities until such
Holder (i) shall have received copies of such amended or supplemented Prospectus
and, if so directed by the Company, such Holder shall delivery to the Company
(at the Company’s expense) all copies, other than permanent file copies, then in
such Holder’s possession of the Prospectus covering such Registrable Securities
at the time of receipt of such notice or (ii) shall have received notice from
the Company that the disposition of Registrable Securities pursuant to the Shelf
Registration Statement may continue.

 

Section 5.  Registration Expenses.  The Company shall bear all fees and expenses
incurred in connection with the performance by the Company of its obligations
under Sections 2 and 3 of this Agreement whether or not any Registration
Statement is declared effective.  Such fees and expenses shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (x) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and the American Stock Exchange
and (y) of compliance with federal and state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of the Special
Counsel in connection with Blue Sky qualifications of the Registrable Securities
under the laws of such jurisdictions as Notice Holders of a majority of the
Registrable Securities being sold pursuant to a Registration Statement may
designate), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company), (iii) duplication expenses relating to
copies of any Registration Statement or Prospectus delivered to any Holders
hereunder, (iv) fees and disbursements of counsel for the Company and the
Special Counsel in connection with the Shelf Registration Statement, (v)
reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock and (vi) any Securities Act
liability insurance obtained by the Company in its sole discretion.  In
addition, the Company shall pay the internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing by the Company of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.  Notwithstanding the foregoing, the
Holders of the Registrable Securities being registered shall pay all placement
agent fees and commissions and underwriting discounts and commissions
attributable to the sale of such Registrable Securities and the fees and
disbursements of any counsel or other advisors or experts retained by such
Holders (severally or jointly), other than the counsel and experts specifically
referred to above.

 

18

--------------------------------------------------------------------------------

 

Section 6.  Indemnification And Contribution.

 

(a)                                  The Company agrees to indemnify and hold
harmless each Notice Holder, each person, if any, who controls any Notice Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each affiliate of any Notice Holder within the meaning of
Rule 405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, “Losses”) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except insofar
as such Losses are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Notice
Holder furnished to the Company in writing by or on behalf of such Notice Holder
expressly for use therein; provided, however, that the foregoing indemnity with
respect to any Registration Statement shall not inure to the benefit of any
Notice Holder from whom the person asserting any such Losses, or any person
controlling or who is an affiliate of such Notice Holder, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Notice Holder to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Registrable Security
to such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such Losses, unless such failure is the result
of noncompliance by the Company with Section 2(d) hereof.

 

(b)                                 Indemnification by Notice Holders.  Each
Notice Holder agrees severally and not jointly to indemnify and hold harmless
the Company, the directors of the Company, the officers of the Company who sign
the Registration Statement, and each person, if any, who controls the Company
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) or any other Notice Holder, to the same extent as the
foregoing indemnity from the Company to such Notice Holder, but only with
reference to information relating to such Notice Holder furnished to the Company
in writing by or on behalf of such Notice Holder expressly for use in such
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto..

 

(c)                                  Conduct of Indemnification Proceedings.  In
case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to Section 6(a) or

 

19

--------------------------------------------------------------------------------

 

6(b) hereof, such person (the “indemnified party”) shall promptly notify the
person against whom such indemnity may be sought (the “indemnifying party”) in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding.  In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred.  Such firm shall be designated in writing by, in the case of parties
indemnified pursuant to Section 6(a), the Notice Holders of a majority (with
Notice Holders of Notes deemed to be the Notice Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Notes are or would be convertible as of the date on which such
designation is made) of the Registrable Securities covered by the Registration
Statement held by Notice Holders that are indemnified parties pursuant to
Section 6(a), and in the case of parties indemnified pursuant to Section 6(b),
by the Company.  The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement (other than reimbursement for fees and expenses that the indemnifying
party is contesting in good faith). No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such

 

20

--------------------------------------------------------------------------------

 

indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

 

(d)                                 Contribution.  To the extent that the
indemnification provided for in Section 6(a) or 6(b) is unavailable to an
indemnified party or insufficient in respect of any Losses referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable
considerations.  The relative benefits received by the Company shall be deemed
to be equal to the total net proceeds from the initial placement pursuant to the
Purchase Agreement (before deducting expenses) of the Registrable Securities to
which such Losses relate.  The relative benefits received by any Notice Holder
shall be deemed to be equal to the value of receiving the Registrable Securities
that are registered under the Securities Act.  The relative fault of the Notice
Holders on the one hand and the Company on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Notice Holders or by the Company, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.  The Notice Holders’ respective
obligations to contribute pursuant to this Section 6 are several in proportion
to the respective number of Registrable Securities they have sold pursuant to a
Registration Statement, and not joint.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  The amount
paid or payable by an indemnified party as a result of the Losses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding this Section 6, no indemnifying party that is
a selling Notice Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities sold by
it and

 

21

--------------------------------------------------------------------------------

 

distributed to the public exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.  No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.  The remedies provided for in this
Section 6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

 

(e)                                  The indemnity, contribution and expense
reimbursement obligations of the parties hereunder shall be in addition to any
liability any indemnified party may otherwise have hereunder, under the Purchase
Agreement or otherwise.

 

(f)                                    The indemnity and contribution provisions
contained in this Section 6 shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Notice Holder, any person controlling any Notice Holder
or any affiliate of any Notice Holder or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) the sale
of any Registrable Securities by any Notice Holder.

 

Section 7.  Information Requirements.  The Company covenants that, if at any
time before the end of the Effectiveness Period the Company is not subject to
the reporting requirements of the Exchange Act, it will cooperate with any
Holder and take such further reasonable action as any Holder may reasonably
request in writing (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A under the Securities Act and
customarily taken in connection with sales pursuant to such exemptions.  Upon
the written request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements,
unless such a statement has been included in the Company’s most recent report
filed pursuant to Section 13 or Section 15(d) of Exchange Act.  Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Company
to register any of its securities (other than the Underlying Common Stock) under
any section of the Exchange Act.

 

Section 8.  Miscellaneous.

 

(a)                                  No Conflicting Agreements.  The Company is
not, as of the date hereof, a party to, nor shall it, on or after the date of
this Agreement, enter into, any agreement with respect to its securities that
conflicts with the rights granted to the Holders in this Agreement.  The Company
represents and warrants that the

 

22

--------------------------------------------------------------------------------

 

rights granted to the Holders hereunder do not in any way conflict with the
rights granted to the holders of the Company’s securities under any other
agreements.

 

(b)                                 Amendments and Waivers.  The provisions of
this Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of Holders of a majority of the then outstanding Underlying Common Stock
constituting Registrable Securities (with Holders of Notes deemed to be the
Holders, for purposes of this Section, of the number of outstanding shares of
Underlying Common Stock into which such Notes are or would be convertible as of
the date on which such consent is requested).  Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.  Notwithstanding the
foregoing two sentences, this Agreement may be amended by written agreement
signed by the Company and the Initial Purchasers, without the consent of the
Holders of Registrable Securities, to cure any ambiguity or to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provision contained herein, or to make such other provisions in
regard to matters or questions arising under this Agreement that shall not
adversely affect the interests of the Holders of Registrable Securities.  Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

 

(c)                                  Notices.  All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand delivery, by telecopier, by courier guaranteeing overnight delivery or by
first-class mail, return receipt requested, and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
(iii) one (1) Business Day after being deposited with such courier, if made by a
recognized overnight courier, or (iv) on the date indicated on the notice of
receipt, if made by first-class mail, to the parties as follows:

 

23

--------------------------------------------------------------------------------

 

(i)                       if to a Holder, at the most current address given by
such Holder to the Company in a Notice and Questionnaire or any amendment
thereto;

 

(ii)                    if to the Company, to:

 

Sepracor Inc.
84 Waterford Drive
Marlborough, MA 01752
Attention: Robert Scumaci
Telecopy No.: (508) 357-7494

 

and

 

Hale and Dorr LLP
60 State Street
Boston, MA 021091
Attention: Marc G. Borden, Esq.
Telecopy No.: (617) 526-5000

 

(iii)                 if to the Initial Purchasers, to:

 

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Global Capital Markets
Telecopy No.: (212) 761-0538

 

or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.

 

(d)                                 Approval of Holders.  Whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) (other than the
Initial Purchasers or subsequent Holders if such subsequent Holders are deemed
to be such affiliates solely by reason of their holdings of such Registrable
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

 

(e)                                  Successors and Assigns.  Any person who
purchases any Registrable Securities from the Initial Purchasers shall be
deemed, for purposes of this Agreement, to be an assignee of the Initial
Purchasers.  This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of

 

24

--------------------------------------------------------------------------------

 

the parties and shall inure to the benefit of and be binding upon each Holder of
any Registrable Securities, provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Indenture.  If any transferee of any Holder
shall acquire Registrable Securities, in any manner, whether by operation of law
or otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities,
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement and such person shall
be entitled to receive the benefits hereof.

 

(f)                                    Counterparts.  This Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be original and
all of which taken together shall constitute one and the same agreement.

 

(g)                                 Headings.  The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.

 

(h)                                 Governing Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(i)                                     Severability.  If any term provision,
covenant or restriction of this Agreement is held to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.

 

(j)                                     Entire Agreement.  This Agreement is
intended by the parties as a final expression of their agreement and is intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities.  Except as provided in the Purchase Agreement, there are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to the Registrable Securities.  This Agreement supersedes
all prior agreements and undertakings among the parties with respect to such
registration rights.  No party hereto shall have any rights, duties or
obligations other than those specifically set forth in this

 

25

--------------------------------------------------------------------------------

 

Agreement.  In no event will such methods of distribution take the form of an
underwritten offering of the Registrable Securities without the prior written
agreement of the Company.

 

(k)                                  Termination.  This Agreement and the
obligations of the parties hereunder shall terminate upon the end of the
Effectiveness Period, except for any liabilities or obligations under Section 4,
5 or 6 hereof and the obligations to make payments of and provide for liquidated
damages under Section 2(e) hereof to the extent such damages accrue prior to the
end of the Effectiveness Period, each of which shall remain in effect in
accordance with its terms.

 

26

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

 

SEPRACOR INC.

 

 

 

 

 

By:

 /s/ Robert F. Scumaci

 

 

 

Name:

 

 

Title:

 

 

Confirmed and accepted as of
the date first above written:

 

MORGAN STANLEY & CO. INCORPORATED
U.S. BANCORP PIPER JAFFRAY INC.
CREDIT SUISSE FIRST BOSTON LLC

 

By: Morgan Stanley & Co. Incorporated
on behalf of itself and the other

Initial Purchasers set forth herein

 

By:

 /s/ Kenneth G. Pott

 

 

Name: Kenneth G. Pott

 

Title: Managing Director

 

27

--------------------------------------------------------------------------------