Exhibit 10.1


 


EXECUTION COPY


 


SEPRACOR INC.


 


0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE
2024


 


 


PURCHASE AGREEMENT


 


 


September 17, 2004


 

















 


September 17,
2004


 


 


Morgan Stanley & Co.
Incorporated

1585 Broadway

New York, New York 10036


 


Dear Sirs and Mesdames:


 


Sepracor Inc.,
a Delaware corporation (the “Company”), proposes to issue and sell to
Morgan Stanley & Co. Incorporated (the “Initial Purchaser”)
$500,000,000 aggregate principal amount of its 0% Convertible Senior
Subordinated Notes Due 2024 (the “Firm Securities”) to be issued pursuant to
the provisions of an Indenture dated as of September 22, 2004 (the “Indenture”)
between the Company and JPMorgan Chase Bank, as Trustee (the “Trustee”).  The Company also proposes to issue and sell
to the Initial Purchaser not more than an additional $100,000,000 aggregate
principal amount of its 0% Convertible Senior Subordinated Notes Due 2024 (the
“Additional
Securities”) if and to the extent that the Initial Purchaser shall
have determined to exercise the right to purchase such 0% Convertible Senior
Subordinated Notes Due 2024 granted to the Initial Purchaser in Section 2
hereof.  The Firm Securities and the
Additional Securities are hereinafter collectively referred to as the “Securities”.  The Securities will be convertible into
shares of common stock, par value $.10 per share, of the Company (the “Underlying
Securities”).


 


The Securities
and the Underlying Securities will be offered without being registered under
the Securities Act of 1933, as amended (the “Securities Act”), only to
qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act.


 


The Initial
Purchaser and its direct and indirect transferees will be entitled to the
benefits of a Registration Rights Agreement to be dated as of the Closing Date
(as defined in Section 4) between the Company and the Initial Purchaser (the “Registration
Rights Agreement”).


 


In connection
with the sale of the Securities, the Company has prepared a preliminary
offering memorandum (the “Preliminary Memorandum”) and will prepare a
final offering memorandum (the “Final Memorandum” and, with the Preliminary
Memorandum, each a “Memorandum”) including or incorporating by
reference a description of the terms of the Securities and the Underlying
Securities, the terms of the offering and a description of the Company.  As used herein, the term “Memorandum”
shall include in each case the documents


 

















 


incorporated by reference
therein. The terms “supplement”, “amendment” and “amend”
as used herein with respect to a Memorandum shall include all documents deemed
to be incorporated by reference in the Preliminary Memorandum or Final
Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).


 


1.                             Representations
and Warranties. The Company represents and warrants to, and agrees
with, you that:


 


(a)                    (i) Each document, if any, filed or
to be filed pursuant to the Exchange Act and incorporated by reference in
either Memorandum complied or will comply when so filed, as the case may be, in
all material respects with the applicable requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii) the
Preliminary Memorandum does not contain and the Final Memorandum, in the form
used by the Initial Purchaser to confirm sales and on the Closing Date (as
defined in Section 4), will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in either Memorandum based
upon information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein.


 


(b)                   The Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its property and to conduct its business as
described in each Memorandum and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.


 


(c)                    Each subsidiary of the Company
listed on Schedule I hereto (each, a “Significant Subsidiary” and collectively,
the “Significant Subsidiaries”) has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property


 


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and to conduct its business as described in each Memorandum and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; all of
the issued shares of capital stock of each Significant Subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.


 


(d)                   This Agreement has been duly
authorized, executed and delivered by the Company.


 


(e)                    The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in
the Final Memorandum under the caption “Description of Capital Stock”.


 


(f)                      The shares of common stock
outstanding prior to the issuance of the Securities have been duly authorized
and are validly issued, fully paid and non-assessable and not subject to any
preemptive or similar rights.


 


(g)                   The Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, equitable principles of general
applicability, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity), and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement pursuant to which such Securities are to be
issued.


 


(h)                   The Underlying Securities reserved
for issuance upon conversion of the Securities have been duly authorized and
reserved and, when issued upon conversion of the Securities in accordance with
the terms of the Securities, will be validly issued, fully paid and
non-assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights.


 


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(i)                       Each of the Indenture and the
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company, and (assuming the due authorization, execution and delivery of
the Indenture by the Trustee and the due authorization, execution and delivery
of the Registration Rights Agreement by the Initial Purchaser) will constitute
the valid and binding agreement of, the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and equitable principles of
general applicability including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), and except as rights to indemnification and
contribution under the Registration Rights Agreement may be limited under
applicable law. Each of the Indenture and the Registration Rights Agreement
will conform in all material respects to the description thereof in the Final
Memorandum.


 


(j)                       The issuance and sale by the
Company of the Securities and the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities will not
contravene any provision of applicable law or the articles of organization or
by-laws of the Company or any of its Significant Subsidiaries or any agreement
or other instrument binding upon the Company or any of its Significant
Subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any Significant Subsidiary, and
no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement or the Securities, except such as may be required by the securities
or Blue Sky laws of the various states in connection with the offer and sale of
the Securities and by Federal and state securities laws with respect to the
Company’s obligations under the Registration Rights Agreement.


 


(k)                    There has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Preliminary Memorandum provided to prospective purchasers of
the Securities.


 


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(l)                       Neither the Company nor any of
its Significant Subsidiaries is in violation of its respective charter or
by-laws or in default in the performance of any obligation, agreement, covenant
or condition contained in any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound.


 


(m)                 There are no legal or governmental
proceedings pending or, to the knowledge of the Company, threatened to which
the Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject other than (i)
proceedings described in each Memorandum and (ii) proceedings that would not
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement, the Indenture, the Registration
Rights Agreement or the Securities or to consummate the transactions
contemplated by the Final Memorandum.


 


(n)                   The Company and its subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses, (iii) are in compliance with all terms and
conditions of any such permit, license or approval, (iv) are in compliance with
any provisions of the Employee Retirement Income Security Act of 1974, as
amended, (“ERISA”) or the rules and regulations promulgated thereunder
and (v) are in compliance with any provisions of the Foreign Corrupt Practices
Act or the rules and regulations promulgated thereunder, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals, or noncompliance with ERISA or the
Foreign Corrupt Practices Act would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.


 


(o)                   The Company is not, and after giving
effect to the offering and sale of the Securities and the application of the
proceeds thereof as described in the Final Memorandum will not be, required to
register as an


 


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“investment
company” as such term is defined in the Investment Company Act of
1940, as amended.


 


(p)                   Neither the Company nor any
affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act,
an “Affiliate”)
of the Company has directly, or through any agent (provided that no
representation is made as to the Initial Purchaser or any person acting on its
behalf), (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) which
is or will be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or (ii)
offered, solicited offers to buy or sold the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.


 


(q)                   Assuming the accuracy of the
representations of the Initial Purchaser contained in Section 3 hereof and its
compliance with the agreements set forth therein, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser in the manner contemplated by this Agreement to register the
Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.


 


(r)                      The Securities satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.


 


(s)                    The Company has established and
maintained disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) that are adequate and effective and designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to its chief executive officer and chief financial
officer by others within those entities.


 


(t)                      The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.


 


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(u)                   To the Company’s knowledge, the
Company owns or possesses, or can acquire on reasonable terms, all patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, “Intellectual Property”) currently employed by it in commerce,
in connection with the business now operated by it, except where the failure to
own or possess or otherwise be able to acquire such Intellectual Property would
not, singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries taken as a whole; and to the Company’s knowledge, the
Company is not infringing or conflicting with asserted rights of others with
respect to any of such Intellectual Property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its subsidiaries taken as a whole.


 


(v)                   Each of the Company and its
Significant Subsidiaries has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an “Authorization”) of, and has
made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except to the extent the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole. 
Each such Authorization is valid and in full force and effect and each
of the Company and its Significant Subsidiaries is in compliance with all the
terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto; and
no event has occurred (including, without limitation, the receipt of any notice
from any authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other material impairment of the rights of the holder of any such
Authorization; except to the extent such failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.


 


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(w)                 There are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or liens granted or issued by the Company or any of its
subsidiaries relating to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of the Company or any of its
subsidiaries, except options granted by the Company subsequent to June 30,
2004, pursuant to its employee benefit plans and except as otherwise disclosed
in the Final Memorandum.


 


(x)                     The consolidated financial
statements incorporated by reference in each Memorandum, together with related
schedules and notes, present fairly in all material respects the consolidated
financial position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated therein at the respective
dates or for the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical
information and data set forth in the Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.


 


2.                             Agreements
to Sell and Purchase.  The
Company hereby agrees to sell to the Initial Purchaser, and the Initial
Purchaser, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase
from the Company the Firm Securities at a purchase price of 97.25% of the
principal amount thereof (the “Purchase Price”).


 


On the basis
of the representations and warranties contained in this Agreement, and subject
to its terms and conditions, the Company agrees to sell to the Initial
Purchaser the Additional Securities, and the Initial Purchaser shall have the
right to purchase, up to $100,000,000 aggregate principal amount of Additional
Securities at the Purchase Price. You may exercise this right in whole or from
time to time in part by giving written notice not later than 30 days after the
date of this Agreement.  Any exercise
notice shall specify the principal amount of Additional Securities to be
purchased by the Initial Purchaser and the date on which such Additional
Securities are to be purchased.  Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Securities nor
later than ten business days after the date of such notice.  On each day, if any, that Additional
Securities are to be purchased (an “Option Closing Date”), the Initial
Purchaser agrees to purchase the principal amount of Additional Securities set
forth in such notice.


 


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The Company
hereby agrees that, without the prior written consent of Morgan Stanley &
Co. Incorporated, it will not, during the period ending 60 days after the date
of the Final Memorandum, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the common
stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of common stock or such other securities, in cash or
otherwise.  The foregoing sentence shall
not apply to (A) the sale of the Securities under this Agreement, (B) the
issuance of the Underlying Securities upon conversion of the Securities in
accordance with the provisions of the Indenture, (C) the grant by the Company
of any options, restricted stock or other awards pursuant to benefit plans
existing on the date of this Agreement, (D) the issuance by the Company of any
shares of common stock in respect of any acquisition by the Company of the
assets or capital stock of another person or entity, provided, however,
that any such shares so issued shall be subject to the restrictions on offers,
sales and dispositions of shares set forth in this Section 2 for the remainder
of the 60-day period referenced above (E) the issuance by the Company of any
shares of common stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof or (F) the issuance by
the Company of shares of common stock in connection with the repurchase of
convertible securities outstanding on the date hereof, provided that the number
of shares of common stock so issued does not exceed the number of shares of
common stock that would then be issuable upon conversion of such securities.


 


3.                                       Terms of
Offering. The Initial Purchaser has advised the Company that the
Initial Purchaser will make an offering of the Securities purchased by the
Initial Purchaser hereunder on the terms to be set forth in the Final
Memorandum, as soon as practicable after this Agreement is entered into as in
your judgment is advisable.


 


4.                                       Payment and
Delivery. Payment for the Firm Securities shall be made to the
Company in Federal or other funds immediately available in New York City
against delivery of such Firm Securities for the account of the Initial
Purchaser at 10:00 a.m., New York City time, on September 22, 2004, or at such
other time on the same or such other date, not later than September 29, 2004,
as shall be designated in writing by you. 
The time and date of such payment are hereinafter referred to as the “Closing Date”.


 


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Payment for
any Additional Securities shall be made to the Company in Federal or other
funds immediately available in New York City against delivery of such
Additional Securities for the account of the Initial Purchaser at 10:00 a.m.,
New York City time, on the date specified in the corresponding notice described
in Section 2 or at such other time on the same or on such other date, in any
event not later than 13 days after the Closing Date, as shall be designated in
writing by you.


 


Certificates
for the Securities shall be in definitive form or global form, as specified by
you, and registered in such names and in such denominations as you shall
request in writing not later than one full business day prior to the Closing
Date or the applicable Option Closing Date, as the case may be. The
certificates evidencing the Securities shall be delivered to you on the Closing
Date or an Option Closing Date, as the case may be, for the account of the
Initial Purchaser, with any transfer taxes payable in connection with the
transfer of the Securities to the Initial Purchaser duly paid, against payment
of the Purchase Price therefor.


 


5.                                       Conditions
to the Initial Purchaser’s Obligations. The obligations of the
Initial Purchaser to purchase and pay for the Firm Securities on the Closing
Date is subject to the following conditions:


 


(a)                    Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date:


 


(i)                                 there shall not have
occurred any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating, if any, accorded
the Company or any of the Company’s securities or in the rating outlook for the
Company by any “nationally recognized statistical rating organization,” as such
term is defined for purposes of Rule 436(g)(2) under the Securities Act; and


 


(ii)                              there shall not have
occurred any change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set forth in
the Preliminary Memorandum provided to prospective purchasers of the Securities
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.


 


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(b)                   The Initial Purchaser shall have
received on the Closing Date a certificate, dated the Closing Date and signed
by an executive officer of the Company, to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has, in all material respects,
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date.


 


The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to proceedings
threatened.


 


(c)                    The Initial Purchaser shall have
received on the Closing Date an opinion of Wilmer Cutler Pickering Hale and
Dorr LLP, outside counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit A.  Such
opinion shall be rendered to the Initial Purchaser at the request of the
Company and shall so state therein.


 


(d)                   The Initial Purchaser shall have
received on the Closing Date an opinion of Davis Polk & Wardwell, counsel
for the Initial Purchaser, dated the Closing Date, to the effect set forth in
Exhibit B.


 


(e)                    The Initial Purchaser shall have
received on each of the date hereof and the Closing Date a letter, dated the
date hereof or the Closing Date, as the case may be, in form and substance
reasonably satisfactory to the Initial Purchaser, from PricewaterhouseCoopers
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial information
contained in or incorporated by reference into each Memorandum; provided that
the letter delivered on the Closing Date shall use a “cut-off date” not earlier
than the date hereof.


 


(f)                      The “lock-up” agreements, each
substantially in the form of Exhibit C hereto, between you and certain of the
Section 16 officers and directors of the Company relating to sales and certain
other dispositions of shares of common stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.


 


The obligations of the Initial Purchaser to purchase Additional
Securities hereunder are subject to the delivery to you on the applicable
Option Closing Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due authorization, execution
and authentication of


 


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the Additional
Securities to be sold on such Option Closing Date and other matters related to
the execution and authentication of such Additional Securities.


 


6.                             Covenants of
the Company. In further consideration of the agreements of the
Initial Purchaser contained in this Agreement, the Company covenants with the
Initial Purchaser as follows:


 


(a)                    To furnish to you in New York City,
without charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments thereto as
you may reasonably request.


 


(b)                   Before amending or supplementing
either Memorandum, to furnish to you a copy of each such proposed amendment or
supplement for your review and not to use any such proposed amendment or
supplement to which you reasonably object by written notice to the Company
within 3 business days after receipt of such copy.


 


(c)                    If, during such period after the
date hereof and prior to the date on which all of the Securities shall have
been sold by the Initial Purchaser, any event shall occur or condition exist as
a result of which it is necessary to amend or supplement the Final Memorandum
in order to make the statements therein, in the light of the circumstances when
the Final Memorandum is delivered to a purchaser, not misleading, or if, in the
reasonable opinion of counsel for the Initial Purchaser, it is necessary to
amend or supplement the Final Memorandum to comply with applicable law,
forthwith to prepare and furnish, at its own expense, to the Initial Purchaser,
either amendments or supplements to the Final Memorandum so that the statements
in the Final Memorandum as so amended or supplemented will not, in the light of
the circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented, will
comply with applicable law.


 


(d)                   To endeavor to qualify the
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request; provided, however,
that neither the Company nor its subsidiaries shall be obligated to qualify as
a foreign corporation in any jurisdiction where it is not then qualified or to
take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.


 


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(e)                    Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company’s counsel and the Company’s accountants in connection
with the issuance and sale of the Securities and all of its other fees or
expenses in connection with the preparation of each Memorandum and all
amendments and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Initial Purchaser, in
the quantities herein above specified, (ii) all costs and expenses related to
the transfer and delivery of the Securities to the Initial Purchaser, including
any transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with the
qualification of the Securities for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchaser in connection with
such qualification and in connection with the Blue Sky memorandum, (iv) any
fees charged by rating agencies for the rating of the Securities, (v) the fees
and expenses, if any, incurred in connection with the admission of the
Securities for trading in PORTAL or any appropriate market system, (vi) the
costs and charges of the Trustee and any transfer agent, registrar or
depositary, (vii) the cost of the preparation, issuance and delivery of the
Securities, (viii) the costs and expenses of the Company relating to investor
presentations on any “road show” undertaken in connection with the marketing of
the offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, (ix) the document production charges and expenses associated with
printing this Agreement and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.  It
is understood, however, that except as provided in this Section, Section 8, and
the last paragraph of Section 10, the Initial Purchaser will pay all of its
costs and expenses, including fees and disbursements of its counsel, transfer
taxes payable on resale of any of the Securities by it and any advertising
expenses connected with any offers it may make.


 


(f)                      Neither the Company nor any
Affiliate will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any


 


13

















 


security (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require the registration
under the Securities Act of the Securities.


 


(g)                   Not to solicit any offer to buy or
offer or sell the Securities or the Underlying Securities by means of any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.


 


(h)                   While any of the Securities or the
Underlying Securities remain “restricted securities” within the meaning
of the Securities Act, to make available, upon request, to any seller of such
Securities the information specified in Rule 144A(d)(4) under the Securities
Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.


 


(i)                       If requested by you, to use its
reasonable best efforts to permit the Securities to be designated PORTAL
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market.


 


(j)                       During the period of two years
after the Closing Date or any Option Closing Date, if later, the Company will
not, and will not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to resell any of the Securities or the Underlying Securities
which constitute “restricted securities” under Rule 144 that
have been reacquired by any of them.


 


(k)                    Not to take any action prohibited
by Regulation M under the Exchange Act in connection with the distribution of
the Securities contemplated hereby.


 


7.                             Offering of
Securities; Restrictions on Transfer.  The Initial Purchaser represents and warrants that it is a
qualified institutional buyer as defined in Rule 144A under the Securities Act
(a “QIB”).  The Initial Purchaser, agrees with the
Company that (i) it will not solicit offers for, or offer or sell, such
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
and will offer such Securities only to, persons that it reasonably believes to
be QIBs and that in purchasing such Securities are deemed to have represented
and agreed as provided in the Final Memorandum under the caption “Transfer
Restrictions”.


 


14

















 


8.                             Indemnity
and Contribution.  (a)  The Company agrees to indemnify and hold
harmless the Initial Purchaser, each person, if any, who controls the Initial
Purchaser within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of the Initial Purchaser
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) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (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, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein; provided, however, that the foregoing indemnity with respect to any Preliminary
Memorandum shall not inure to the benefit of the Initial Purchaser or any
person controlling or who is an affiliate of the Initial Purchaser, if a copy
of the Final Memorandum (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 the Initial Purchaser to the person asserting any such losses,
claims, damages or liabilities, at or prior to the written confirmation of the
sale of the Securities to such person, and if the Final Memorandum (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.


 


(b)                   The
Initial Purchaser agrees to indemnify and hold harmless the Company, its
directors, its officers 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 to the same extent as the foregoing indemnity from the Company
to the Initial Purchaser, but only with reference to information relating to
the Initial Purchaser furnished to the Company in writing expressly for use in
either Memorandum or any amendments or supplements thereto.


 


(c)                    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 8(a) or 8(b), 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


 


15

















 


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 Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section
8(b). 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)                   To
the extent the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities 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


 


16

















 


result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and
the Initial Purchaser on the other hand from the offering of the Securities or
(ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but also the relative
fault of the Company on the one hand and of the Initial Purchaser on the other
hand in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other hand in connection with the offering of
the Securities shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total discounts and commissions received by the
Initial Purchaser, in each case as set forth in the Final Memorandum, bear to
the aggregate offering price of the Securities. The relative fault of the
Company on the one hand and of the Initial Purchaser 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 Company or by the
Initial Purchaser and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.


 


(e)                    The
Company and the Initial Purchaser agree that it would not be just or equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) 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 the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities resold
by it in the initial placement of such Securities were offered to investors
exceeds the amount of any damages that the Initial Purchaser 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 8 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.


 


17

















 


(f)                      The
indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company contained in
this Agreement 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 the Initial Purchaser, any person controlling the Initial Purchaser
or any affiliate of the Initial Purchaser or by or on behalf of the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Securities.


 


9.                             Termination.
The Initial Purchaser may terminate this Agreement by notice given to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) a
general moratorium on commercial banking activities shall have been declared by
Federal or New York State authorities or (v) there shall have occurred any
outbreak or escalation of hostilities, or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse and
which, singly or together with any other event specified in this clause (v),
makes it, in your judgment, impracticable or inadvisable to proceed with the
offer, sale or delivery of the Securities on the terms and in the manner
contemplated in the Final Memorandum.


 


10.                       Effectiveness.  This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.


 


If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Initial Purchaser for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by
the Initial Purchaser in connection with this Agreement or the offering
contemplated hereunder.


 


11.                       Counterparts.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.


 


12.                       Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York.


 


18

















 


13.                       Headings.  The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.


 


19

















 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  SEPRACOR
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  David P. Southwell

  
	
   

  	
   

  	
  Name:David
  P. Southwell

  
	
   

  	
   

  	
  Title:Chief
  Financial Officer

  



 


 


	
  Accepted as
  of the date hereof

  	
   

  
	
   

  	
   

  
	
  MORGAN
  STANLEY & CO. INCORPORATED

  
	
   

  
	
   

  
	
  By:

  	
    /s/
  Kenneth G. Pott

  	
   

  
	
   

  	
  Name:Kenneth
  G. Pott

  	
   

  
	
   

  	
  Title:Managing
  Director

  	
   

  



 

















 


SCHEDULE I


 


List of Significant
Subsidiaries:


 


None