Exhibit 10.1


 


EXECUTION COPY


 


REGISTRATION RIGHTS AGREEMENT



between



SEPRACOR INC.



as Issuer,



and


MORGAN STANLEY & CO.
INCORPORATED, 

as Initial Purchaser


 


Dated
as of September 22, 2004


 

















 


THIS REGISTRATION RIGHTS AGREEMENT dated as of September 22, 2004
between Sepracor Inc., a Delaware corporation (the “Company”), and Morgan Stanley & Co. Incorporated (the “Initial Purchaser”), is entered into
pursuant to the Purchase Agreement dated September 17, 2004 (the “Purchase Agreement”), between the Company
and the Initial Purchaser.  In order to
induce the Initial Purchaser 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 Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) 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 April 15 and October 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 September 22, 2004, between the Company and
JPMorgan Chase Bank, as trustee, pursuant to which the Notes are being issued.


 


“Initial Purchaser” means
Morgan Stanley & Co. Incorporated.


 


“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 Securityholder Notice and Questionnaire
attached as Annex A to the Offering Memorandum of the Company dated
September 17, 2004 relating to the Notes.


 


3

















 


“Notes” means the 0%
Convertible Subordinated Notes Due 2024 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 April 1
immediately preceding a Damages Payment Date occurring on a April 15, and
on the October 1 immediately preceding a Damages Payment Date occurring on
a October 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.


 


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


 


4

















 


“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 Purchaser (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”) ninety (90) days after the Issue Date, a Registration
Statement for an offering to be made on a delayed or continuous 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


 


5

















 


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 one hundred and eighty (180) 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 required by the Securities
Act or as reasonably requested by the Initial Purchaser 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.


 


6

















 


(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);


 


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


 


7

















 


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:


 


	
  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

  



 


8

















 


	
  Type of Event by

  Clause

  	
   

  	
  Beginning

  Date

  	
   

  	
  Ending

  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (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 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


 


9

















 


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
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


 


10

















 


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
Purchaser 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
Purchaser or the Special Counsel, if any, reasonably shall propose within three
(3) Business Days of the delivery of such copies to the Initial Purchaser 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 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 Purchaser 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


 


11

















 


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 Purchaser of the withdrawal of any such
order.


 


(e)                                  If reasonably
requested by the Initial Purchaser 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 Purchaser 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.


 


12

















 


(f)                                    As promptly as
practicable furnish to each Notice Holder, the Special Counsel and the Initial
Purchaser, 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 Purchaser, 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 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


 


13

















 


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 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


 


14

















 


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
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


 


15

















 


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 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


 


16

















 


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 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 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) 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


 


17

















 


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.


 


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


 


18

















 


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 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


 


19

















 


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 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


 


20

















 


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 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


 


21

















 


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 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,


 


22

















 


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 Purchaser,
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:


 


(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


 


Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 021091

Attention: Mark G. Borden, Esq.

Telecopy No.: (617) 526-5000


 


23

















 


(iii)       if to the Initial Purchaser, 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 Purchaser
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 Purchaser shall be deemed, for purposes of this Agreement, to
be an assignee of the Initial Purchaser. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of 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.


 


24

















 


(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 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.


 


25

















 


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


 


	
   

  	
  SEPRACOR INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Southwell

  	
   

  
	
   

  	
   

  	
  Name:  David P. Southwell

  	
   

  
	
   

  	
   

  	
  Title:  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Confirmed and accepted as of the date first
  above

  written:

  MORGAN STANLEY & CO. INCORPORATED

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Kenneth G. Potts

  	
   

  
	
   

  	
  Name:  Kenneth G. Potts

  
	
   

  	
  Title:  Managing Director

  
						



 


26