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Exhibit 4.1    
    

 
 

FORM OF GLOBAL 0% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE 2024
  [FACE OF GLOBAL NOTE]    

UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

THIS
SECURITY AND THE SHARES OF SEPRACOR INC. (THE "COMPANY") COMMON STOCK ("COMMON STOCK") ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NONE OF THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN OR
THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. 

THE
HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHTS OF THE COMPANY AND THE TRUSTEE PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES WHERE REGISTRATION OR TRANSFER OF THIS SECURITY IS REQUIRED, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER THE RESALE RESTRICTION TERMINATION DATE UPON THE REQUEST OF THE HOLDER AND THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATES AND/OR OTHER
INFORMATION SATISFACTORY TO THE COMPANY. 

SEPRACOR INC.

0% Convertible Senior Subordinated Notes due 2024 

No.                                        
                                          
                                         
                               $

CUSIP No. 817315 AV 6 

        Sepracor Inc.,
a corporation duly organized and validly existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of
$                  (which
amount may from time to time be increased or decreased to such other principal amounts (which, taken together with the principal amounts of all other outstanding Notes, shall not exceed
$                  in aggregate at any time (or $ if the option set forth in the Purchase Agreement is exercised in full by the Initial Purchaser)) by
adjustments made on the records of the Trustee as
set forth in Schedule I hereto, as Custodian of the Depositary, in accordance with the rules and procedures of the Depositary) on October 15, 2024, and Liquidated Damages in the manner,
at the rates and to the persons set forth in the Registration Rights Agreement. 

        Payment
of the principal of and Liquidated Damages accrued on this Note shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The
City of New
York, or, at the option of the holder of this Note, at the Corporate Trust Office, in such lawful money of the United States of America as at the time of payment shall be legal tender for the payment
of public and private debts; provided, however, Liquidated Damages may be paid by check mailed to your address as it appears in the Note register;  provided further, however,
 that, with respect to any holder of Notes with an aggregate principal amount equal to or in excess of $2,000,000, at the
request of such holder in writing to the Company, Liquidated Damages on such holder's Notes shall be paid by wire transfer in immediately available funds in accordance with the written wire transfer
instruction supplied by such holder from time to time to the Trustee and Paying Agent (if different from the Trustee) at least two days prior to the applicable record date; provided that any payment
to the Depositary or its nominee shall be paid by wire transfer in immediately available funds in accordance with the wire transfer instruction supplied by the Depositary or its nominee from time to
time to the Trustee and Paying Agent (if different from Trustee) at least two days prior to the applicable record date. 

        Reference
is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions subordinating the payment of principal of and premium,
if any, and Liquidated Damages on this Note to the prior payment in full of all Senior Obligations as defined in the Indenture and provisions giving the holder of this Note the right to convert this
Note into cash and Common Stock of the Company on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall
for all purposes have the same effect as though fully set forth at this place. 

        This
Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State
(without regard to the conflicts of laws provisions thereof). 

        This
Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized
authenticating agent under the Indenture. 

[Remainder
of page intentionally left blank] 

        IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed. 

	 	 	SEPRACOR INC.
	

 	
 	
By:	

 Name: Timothy J. Barberich

Title: Chief Executive Officer
	

Attest:	
 	

 	

 
	

 Name: David P. Southwell

Title: Secretary

Dated: September    , 2004	
 	

 	

 
	

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

JPMORGAN CHASE BANK,

as Trustee, certifies that this is one of the

Notes described in the within-named Indenture.

	

By:	
 	

 	
 	

 	
 	

 
	 	 	
 Authorized Signatory	 	 	 	 

[REVERSE OF NOTE]

SEPRACOR INC.

0% Convertible Senior Subordinated Notes due 2024 

        This
Note is one of a duly authorized issue of Notes of the Company, designated as its 0% Convertible Senior Subordinated Notes due 2024 (herein called the "Notes"), limited to
the aggregate principal amount of $                  (or
$                  if the option set forth in the Purchase Agreement is exercised in full by the Initial Purchaser) all issued or to be issued
under and pursuant to an Indenture dated as of September 22, 2004 (herein called the "Indenture"), between the Company and JPMorgan Chase Bank, (herein called the "Trustee"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture. 

        In
case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, premium, if any, and accrued Liquidated Damages, if any, on all Notes
may be declared, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. 

        The
Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the holders of the Notes, and in other circumstances, with the
consent of the holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding
any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or extend the time for payment of Liquidated Damages thereon, or
reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption or repurchase thereof, or impair, or change in any respect adverse to the holder of Notes,
the obligation of the Company to repurchase any Note at the option of the holder upon the happening of a Designated Event or any Repurchase Date, or change the time at which the Notes may or must be
redeemed or repurchased, or impair or adversely affect the right of any Noteholder to institute suit for the payment thereof, or change the currency in which the Notes are payable, or impair the right
to convert the Notes into Common Stock, cash or other property, subject to the terms set forth in the Indenture or reduce the number of shares of Common Stock or the amount of any other property
receivable upon conversion, or modify the provisions of the Indenture in any material respect with respect to the subordination of the Notes in a manner adverse to the Noteholders, reduce the quorum
or voting requirements under the Indenture with respect to the Notes or, subject to certain exceptions, modify certain provisions of the Indenture relating to these modification provisions, in each
case without the consent of the holder of each Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Notes then outstanding. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of the Notes, the holders of
a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past default or Event of Default under the Indenture and its
consequences except (i) a default in the payment of Liquidated Damages or premium, if any, on, or the principal of, the Notes when due which default has not been cured, (ii) a failure by
the Company to convert any Notes into Common Stock or (iii) a default in respect of a covenant or provisions of the Indenture which under Article 11 of the Indenture cannot be modified
or amended without the consent of the holders of all Notes then outstanding. Any such consent or waiver by the holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this Note and any Notes which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof
is made upon this Note or such other Notes. 

        The
indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, expressly subordinate and subject in right of payment to the prior payment in full
in cash or other payment satisfactory to the holders of Senior Obligations of all Senior Obligations of the Company, as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the Indenture with respect to such subordination. Each holder of this Note, by accepting the same, agrees to and shall be
bound by such provisions and authorizes the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and appoints the Trustee his
attorney in fact for such purpose. 

        No
reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of, premium, if any, and Liquidated Damages on this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed. 

        The
Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to
on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized
denominations. 

        The
Notes are not subject to redemption through the operation of any sinking fund. Prior to October 20, 2009, the Notes will not be redeemable at the Company's option. Subject to
the terms and conditions of the Indenture, beginning on October 20, 2009, the Company, at its option, may redeem the Notes for cash at any time as a whole, or from time to time in part, at a
price equal to the principal amount of the Notes redeemed plus accrued and unpaid Liquidated Damages, if any, on the Notes redeemed to (but excluding) the Redemption Date. 

        Subject
to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the holder, all or any portion of Notes held by such holder on
October 15, 2009, October 15, 2014 and October 15, 2019, in integral multiples of $1,000 at a Repurchase Price equal to the principal amount of the Notes repurchased plus accrued
and unpaid Liquidated Damages, if any, on the Notes repurchased to (but excluding) the Repurchase Date. 

        Upon
the occurrence of a "Designated Event," the Noteholder has the right, at such holder's option, to require the Company to repurchase all of such holder's Notes or any portion thereof
(in principal amounts of $1,000 or integral multiples thereof) on the Designated Event Purchase Date at a price equal to 100% of the principal amount of the Notes such holder elects to require the
Company to repurchase, together with accrued and unpaid Liquidated Damages, if any, to but excluding the date fixed for repurchase. The Company or, at the written request of the Company, the Trustee
shall mail to all holders of record of the Notes a notice of the occurrence of a Designated Event and of the repurchase right arising as a result thereof on or before the tenth calendar day after the
occurrence of such Designated Event. 

        Subject
to the provisions of the Indenture, the holder hereof has the right, at its option, upon the occurrence of certain conditions specified in the Indenture and prior to the close of
business on the business day immediately preceding October 15, 2024, to convert any Notes or portion thereof which is $1,000 or an integral multiple thereof, at a Conversion Rate specified in
the Indenture, as adjusted from time to time as provided in the Indenture, upon surrender of this Note, together with a conversion notice as provided in the Indenture and this Note, to the Company at
the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, or at the option of such holder, the Corporate Trust Office, and, unless the shares
issuable on conversion are to be issued in the same name as this Note, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or
by his duly authorized attorney. The initial Conversion Rate shall be 14.8816 shares for each $1,000 principal amount of Notes. No fractional shares of Common Stock will be issued upon any conversion,
but an adjustment in 

cash
will be paid to the holder, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Note or Notes for conversion. No
adjustment shall be made for dividends or any shares issued upon conversion of such Note except as provided in the Indenture. 

        Upon
due presentment for registration of transfer of this Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, a new Note or Notes of authorized
denominations for an equal aggregate principal amount will be issued to the transferee in exchange thereof, subject to the limitations provided in the Indenture, without charge except for any tax,
assessments or other governmental charge imposed in connection therewith. 

        The
Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and any Note registrar may deem and treat the registered holder hereof as the absolute owner of
this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the Trustee nor any other authenticating agent nor any Paying Agent nor any other Conversion Agent nor any Note registrar
shall be affected by any notice to the contrary. Notwithstanding the foregoing, the Indenture provides that owners of beneficial interests in a Global Note may directly enforce against the Company
such owners' right to exchange such beneficial interest for Notes in certificated form. All payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid,
satisfy and discharge liability for monies payable on this Note. 

        No
recourse for the payment of the principal of or any premium or Liquidated Damages on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer, director or subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly
or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 

        Terms
used in this Note and defined in the Indenture are used herein as therein defined. 

[ABBREVIATIONS] 

        The
following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or
regulations: 

	TEN COM—as tenants in common	 	UNIF GIFT MIN ACT
	

 	
 	

                                     Custodian

            (Cust)
	

TEN ENT—as tenants by the entireties	
 	

                                    

            (Minor)
	

JT TEN—as joint tenants with right of survivorship and not as tenants in common	
 	

Uniform Gifts to Minors Act                      (State)

Additional abbreviations may also be used

though not in the above list. 

[FORM
OF CONVERSION NOTICE] 

To:
Sepracor Inc. 

        The
undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion hereof (which is $1,000 principal amount or an integral
multiple thereof) below designated, into cash and shares of Common Stock, if any, in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, if any, together with any check in payment of the Principal Return (as defined in the Indenture) and for fractional shares and any Notes representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Note not converted are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of interest
accompanies this Note. 

	

Dated:	
 	

 
	
	 	 
	 	 	
 Signature(s)
	
 Signature Guarantee	 	 
	Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion
program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes to be delivered, other than to and in the name of the registered holder.	 	 
	Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:	 	 
	

 (Name)
 (Street Address)	
 	

 
	
 (City, State and Zip Code)

Please print name and address	 	 
	 	 	Principal amount to be converted (if less than all): $        ,000
	 	 	
 Social Security or Other Taxpayer Identification Number

[FORM OF OPTION TO ELECT REPAYMENT]

UPON A DESIGNATED EVENT 

To:
Sepracor Inc. 

        The
undersigned registered owner of this Note hereby acknowledges receipt of a notice from Sepracor Inc. (the "Company") as to the occurrence of a Designated Event with respect to
the Company and requests and instructs the Company to repay the entire principal amount of this Note, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this Note, together with accrued Liquidated Damages, if any, to, but excluding, such date, to the registered holder hereof. 

	Dated:                                       
                             	 	

	

 	
 	

 Signature(s)
	

 	
 	

 Social Security or Other Taxpayer Identification Number

Principal amount to be repaid (if less than all): $        ,000

NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

[FORM OF OPTION TO ELECT REPAYMENT]

ON A REPURCHASE DATE 

To:
Sepracor Inc. 

        The
undersigned registered owner of this Note hereby requests and instructs Sepracor Inc. to repay the entire principal amount of this Note, or the portion thereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Note, together with accrued Liquidated Damages, if any, to,
but excluding, such date, to the registered holder hereof. 

	Dated:                                       
                             	 	

	

 	
 	

 Signature(s)
	

 	
 	

 Social Security or Other Taxpayer Identification Number

Principal amount to be repaid (if less than all): $            ,000
	

 	
 	

NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

[FORM OF ASSIGNMENT AND TRANSFER] 

        For
value received                        hereby sell(s), assign(s) and transfer(s)
unto                        (Please insert social security or Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and
appoints                                    attorney to transfer the
said Note on the books of the Company, with full power of substitution in the premises.
 

        In
connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Note (unless such Note is being
transferred pursuant to a registration statement that has been declared effective under the Securities Act), the undersigned confirms that such Note is being transferred: 

o
*To Sepracor Inc. or a subsidiary thereof; or 

o *Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or 

o *Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; and unless the box below is
checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): 

o *The transferee is an Affiliate of the Company. 

	

Dated:
	
 	

 
	

	

 	

 
	

 Signature(s)	

 	

 
	

 Signature Guarantee	
 	

 
	

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes to be delivered, other than to and in the name of the registered holder.	
 	

 

NOTICE: The signature on the conversion notice, the option to elect repurchase upon a Designated Event or the assignment must correspond with the name as written upon the face
of the Note in every particular without alteration or enlargement or any change whatever. 

Schedule I

SEPRACOR INC.

0% Convertible Senior Subordinated Notes Due 2024 

	Date
 
	 	Principal Amount
	 	Notation Explaining Principal Amount Recorded
	 	Authorized Signature of Trustee or Custodian

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

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Exhibit 4.1

FORM OF GLOBAL 0% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE 2024 [FACE OF GLOBAL NOTE]QuickLinks
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Exhibit 10.24  

 
 

CONFIDENTIAL SEPARATION AGREEMENT
  AND GENERAL RELEASE OF ALL CLAIMS    
    

        This Confidential Separation Agreement and General Release of All Claims ("Agreement") is made by and between Peregrine Systems, Inc. ("Peregrine") and
Andrew Cahill ("Employee") with respect to the following facts: 

        A.    Employee
is currently employed by Peregrine as Executive Vice President, Global Field Operations. 

        B.    Employee's
employment will terminate effective November 26, 2003 ("Separation Date"). 

        C.    Employee
and Peregrine are parties to a Secured Promissory Note (the "Note"), effective June 8, 2000. 

        D.    The
parties desire to settle all claims and issues that have, or could have been raised, between them including all claims in relation to Employee's employment with
Peregrine and arising out of or in any way related to the acts, transactions or occurrences between Employee and Peregrine to date, including, but not limited to, Employee's employment with Peregrine
or the termination of that employment, on the terms set forth below. 

        THEREFORE,
in consideration of the promises and mutual agreements hereinafter set forth, it is agreed by and between the undersigned as follows: 

        1.     Severance Package. Peregrine agrees to provide Employee with the following payments and benefits ("Severance Package") to
which Employee is not otherwise entitled. The parties acknowledge and agree that the consideration herein constitutes adequate legal consideration for the promises and representations made by the
parties in this Agreement. 

        1.1.  Salary Continuation Severance Payments. Peregrine agrees to pay Employee the equivalent of twelve (12) months'
base salary, or Three Hundred Thirty Thousand Dollars and Zero Cents ($330,000.00) less all appropriate federal and state income and employment taxes ("SC Severance Payment"). The SC Severance Payment
will be paid in semi-monthly installments during the period between December 1, 2003 and November 30, 2004 ("Salary Continuation Period"), following the Effective Date of the
Agreement as described in paragraph 8.4. 

        1.1.1. Notwithstanding
the above, if Employee is at any time found to be guilty of any criminal misconduct, enters into a plea bargain, is found civilly liable or enters
into a civil settlement with any governmental agency in connection with his employment with Peregrine then any unpaid SC Severance Payment shall be suspended and the full amount of the SC Severance
Payment paid by Peregrine promptly shall be refunded by Employee. The fact that any finding of civil or criminal liability is subject to appeal shall not affect the application of this subsection
1.1.1. 

        1.2.  Lump Sum Severance Payment. Peregrine agrees to pay Employee $300,000 in a lump sum on January 5, 2004, less all
appropriate federal and state income and employment taxes ("LS Severance Payment"). 

        1.2.1. Payment
of the LS Severance Payment is not subject to paragraph 1.1.1, above. 

        1.3.  Payment of the Note. Employee agrees to pay Peregrine all sums remaining unpaid under the Note simultaneously with the
payment made to Employee pursuant to section 1.2. 

        1.4.  Continuation of Medical, Dental, and Vision Benefits. Peregrine agrees to reimburse Employee for the cost of continuing
medical, dental, and vision benefits under COBRA that is above the amount Employee would pay for such benefits as a full-time employee, provided Employee makes a timely election under
COBRA. Peregrine will continue these payments through 

the
earlier to occur of November 30, 2004, and the date Employee is eligible for medical benefits from another employer. 

        1.5.  Del Mar Country Club Membership. Peregrine and Employee acknowledge that the Del Mar Country Club Membership, originally
understood by the parties to be held in Peregrine's name, has recently been determined to be held in Employee's name and is, therefore, Employee's membership and not an asset of Peregrine. Peregrine
will make a payment to appropriate tax authorities to cover Employee's imputed income on the payments made by the Company for this membership. This payment will be made through Peregrine's normal
payroll gross up process. 

        1.6.  Initial Communication of Employee's Termination. Employee has agreed to and approved the language set forth in
Attachment A to the Agreement, which is incorporated herein by reference, to be distributed by Peregrine to initially communicate that his employment with Peregrine has terminated. 

        2.     General Release. 

        2.1.  Except
as provided in 6.5, Employee unconditionally, irrevocably and absolutely releases and discharges Peregrine, and any parent and subsidiary corporations, divisions
and affiliated corporations, partnerships or other affiliated entities of Peregrine, past and present, as well as Peregrine's employees, officers, directors, agents, successors and assigns
(collectively, "Released Parties") from all claims related in any way to the transactions or occurrences between Employee and Released Parties to date, to the fullest extent permitted by law,
including, but not limited to, Employee's employment with Peregrine, the termination of Employee's employment, and all other losses, liabilities, claims, charges, demands and causes of action, known
or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee's employment with Peregrine. This release is intended to have the broadest possible
application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, including, but not limited to alleged violations of the California Labor Code
or the federal Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964 and the California Fair Employment and Housing Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act of 1967, as amended, ERISA, FMLA and all claims for attorneys' fees, costs and expenses. 

        2.1.1. Except
to the extent provided in paragraph 6.5, this release further includes an agreement on the part of Employee to release and consent to the disallowance,
with prejudice, of all proofs of claim that have been or could be filed by Employee in the Peregrine bankruptcy case, including, without limitation, proof of claim numbers 809 and 812. Employee will
cooperate with Peregrine in submitting an order to the bankruptcy court disallowing these proofs of claim. 

        2.2.  Employee
acknowledges that he may discover facts or law different from, or in addition to, the facts or law that are presently know or believed to be true with respect
to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or
additional facts or the discovery of them. 

        2.3.  Employee
declares and represents that he intends his Agreement to be complete and not subject to any claim of mistake, and that the release herein expresses a full and
complete release of all claims known and unknown, suspected or unsuspected and, regardless of the adequacy or inadequacy of the consideration, he intends the release herein to be final and complete.
Employee executes this release with the full knowledge that this release covers all possible claims to the fullest extent permitted by law. 

        3.     California Civil Code Section 1542 Waiver. Employee expressly acknowledges and agrees that all rights under
Section 1542 of the California Civil Code are expressly waived. That section provides: 

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR. 

        4.     Representation Concerning Filing of Legal Actions. Employee represents that, as of the date of this Agreement, he has not
filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against any Released Parties in any court or with any governmental agency. Employee further agrees that, to the
fullest extent permitted by law, he will not prosecute, nor allow to be prosecuted on his behalf, in any administrative agency, whether state or federal, or in any court, whether state or federal, any
claim or demand of any type related to the matters released above, it being the intention of Employee that with the execution of this release, the Released Parties will be absolutely, unconditionally
and forever discharged of and from all obligations related in any way to the matters discharged herein. 

        5.     Nondisparagement. Employee agrees not to make any voluntary statements, written or verbal, or cause or encourage others to
make any such statements that defame, disparage or in any way criticize the personal and/or business reputations, practice, products, services or conduct of Peregrine or any of the other Released
Parties. 

        6.     Confidentiality and Return of Peregrine Property. 

        6.1.  Confidential Separation Information. Employee agrees that the terms and conditions of this Agreement, as well as the
discussions that led to the terms and conditions of the Agreement (collectively referred to as the "Confidential Separation Information") are intended to remain confidential between Employee and
Peregrine. Employee further agrees that Employee will not disclose the Confidential Separation Information to any other persons, except that Employee may disclose such
information to Employee's immediate family members and to Employee's attorney(s) and accountant(s), if any, to the extent needed for legal advice or income tax reporting purposes. When releasing this
information to any such person, Employee shall advise the person receiving the information of its confidential nature, and shall receive from such person, that person's agreement to maintain the
confidentiality of the information provided to that person. Neither Employee, nor anyone to whom the Confidential Separation Information has been disclosed will respond to, or in any way participate
in or contribute to, any public discussion, notice or other publicity concerning the Confidential Separation information. Without limiting the generality of the foregoing, Employee specifically agrees
that neither Employee, Employee's immediate family, Employee's attorney nor Employee's accountant, if any, shall disclose the Confidential Separation information to any current, former or prospective
employee of Peregrine. 

        6.2.  Confidential and Proprietary Information. Employee also agrees that Employee will not use, remove from Peregrine's
premises, make unauthorized copies of or disclose any confidential or proprietary information of Peregrine or any affiliated or related entities, including but not limited to, their trade secrets,
copyrighted information, customer lists, human resources records, payroll records, personnel file records, billing records, any information encompassed in any research and development, reports, work
in progress, drawings, software, computer files or models, designs, plans, proposals, marketing and sales programs, financial projections, and all concepts or ideas, materials or information related
to the business or sales of Peregrine and any affiliated or related entities that has not previously been released to the public by an authorized representative of those companies. 

        6.3.  Return of Company Property. By signing this Agreement, Employee represents and warrants that Employee will have returned
to Peregrine on or before the Separation Date, all 

Peregrine
property, including all confidential and proprietary information, as described in paragraph 6.2 above, and all materials and documents containing trade secrets and copyrighted
materials, including all copies and excerpts of the same. 

        6.4.  Continuing Obligations. Employee further agrees to comply with all continuing obligations of the Invention,
Non-Disclosure and Arbitration Agreement, signed by him, including but not limited to promises to protect all confidential and proprietary information of Peregrine. Employee understands
that he may have knowledge that may be needed by Peregrine in the event of an investigation or court proceeding involving Peregrine. In return for the severance payment Employee is receiving under the
Agreement, Employee agrees to cooperate fully with and respond truthfully, completely, and promptly to any request for information made by Peregrine or its attorneys in connection with any
investigation or court proceeding involving Peregrine. Peregrine agrees to reimburse Employee for reasonable travel expenses that Employee incurs at Peregrine's request to respond to Peregrine
requests for information. Peregrine agrees to consider in good faith any request for information made by Employee or his attorneys in connection with any investigation or court proceeding involving
Employee, but Peregrine will determine in its sole discretion whether or not to provide any such information and Peregrine reserves the right in its sole discretion to notify any government agency of
information provided to Employee. 

        6.5.  Advance of Legal Expenses; Indemnification. Pursuant to the agreement of the parties set forth in the August 13,
2003 letter to Employee from Kathy Vizas for Peregrine, Peregrine is hereby exercising its right to cease advancing and reimbursing Employee's legal expenses incurred in connection with the referenced
investigation after the Separation Date. Any claim(s) for indemnification of Employee with regard to Peregrine arising out of facts occurring before the effective date of the Fourth Amended Plan of
Reorganization of Peregrine Systems, Inc. and Peregrine Remedy, Inc., as modified (the "Plan"), shall be governed exclusively by the terms of the Plan. Any claims for indemnification of
Employee with regard to Peregrine arising out of facts occurring after the effective date of the Plan, shall be governed by applicable law. 

        6.6.  Noncompetition/Inevitable Disclosure. Employee acknowledges that Peregrine's business is highly innovative and
competitive and that trade secret information and Confidential Information that Employee has come to possess during his employment involve valuable and proprietary information, including information
with regard to the products, services, product development and design, manufacturing, pricing and sales and marketing strategy. Employee further acknowledges that this trade secret information and
Confidential Information would necessarily be utilized by Employee during the lifecycle of the Company's products, even if Employee attempted in good faith not to utilize the information, if Employee
were to accept other employment involving products and/or services similar to those with which Employee was involved with Peregrine. Although the lifecycles of such products and services vary
depending upon the service or the product, Employee and Peregrine agree that for Peregrine and its products a 12 month period of protection is reasonable and necessary in order to protect
Peregrine's trade secrets and Confidential Information. Accordingly, Employee agrees that for the 12 month period following the termination of Employee's employment with Peregrine, Employee
will not, directly or indirectly, engage in any business, or become an employee of, consult with, render services for, own, manage, control, participate in, or in any manner engage in any business
where the performance of Employee's duties and/or the knowledge utilized would be similar to the duties of, or the knowledge utilized by, Employee at Peregrine, for in such circumstances Employee and
Peregrine agree that the performance of Employee's duties for any such new employer, business or entity would inevitably result (through intentional, negligent or inadvertent action) in Employee's
utilizing trade secret or Confidential Information that Employee acquired as a result of Employee's employment by, or association with, Peregrine. Because of the international scope of Peregrine's
markets, Employee and Peregrine agree that such limitations shall apply throughout the world wherever Peregrine sells its products. 

        7.     No Admissions. By entering into this Agreement, the Released Parties make no admission that they have engaged, or are now
engaging, in any unlawful conduct. The parties understand and 

acknowledge
that this Agreement is not an admission of liability and shall not be used or construed or such in any legal or administrative proceeding. 

        8.     Older Workers' Benefit Protection Act. This Agreement is intended to satisfy the requirements of the Older Workers'
Benefit Protection Act, 29 U.S.C. sec. 626(f). The following general provisions, along with the other provisions of this Agreement, are agreed to for this purpose: 

        8.1.  Employee
acknowledges and agrees that he has read and understands the terms of this Agreement. 

        8.2.  Employee
acknowledges that this Agreement advises him in writing that he may consult with an attorney before executing this Agreement, and that he has obtained and
considered such legal counsel as he deems necessary, such that he is entering into this Agreement freely, knowingly, and voluntarily. 

        8.3.  Employee
acknowledges that he has been given at least twenty-one (21) days in which to consider whether or not to enter into this Agreement. Employee
understands that, at him option, Employee may elect not to use the full 21-day period. 

        8.4   This
Section 8 shall not become effective or enforceable until the eighth day after Employee signs this Agreement. In other words, Employee may revoke his
acceptance of this Section within seven (7) days after the date he signs it. Employee's revocation must be in writing any received by Peregrine's Human Resources Department by 6:00 p.m.
P.S.T. on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee's acceptance of this Section shall become binding and
enforceable on the eighth day ("Effective Date"). The SC Severance Payment is being paid in consideration of his waiver of any claims with regard to the federal Age Discrimination in Employment Act
and that in the event of a revocation provided in this subsection 8.4, such payments will not be made. 

        9.     Severability. In the event any provision of this Agreement shall be found unenforceable by an arbitrator or a court of
competent jurisdiction, the provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the
benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be
deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby. 

        10.   Full Defense. This Agreement may be pled as a full and complete defense to, and may be used as a basis for an injunction
against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof. Employee and Peregrine agree that in the event an action or proceeding is
instituted by the other in order to enforce the terms or provisions of this Agreement, the prevailing party shall be entitled to an award of reasonable costs and attorneys' fees incurred in connection
with enforcing this Agreement. 

        11.   Good Faith. The parties agree to do all things necessary and to execute all further documents necessary and appropriate
to carry out and effectuate the terms and purposes of this Agreement. 

        12.   Applicable Law. The validity, interpretation and performance of this Agreement shall be construed and interpreted
according to the laws of the United States of America and the state of California. 

        13.   Entire Agreement; Modification. Except with respect to any rights that may exist in either party with regard to
indemnification, this Agreement, including the surviving provisions of the Invention, Non-Disclosure and Arbitration Agreement (including its arbitration provisions) referenced above, is
intended to be the entire agreement between the parties and supersedes and cancels any and all other and prior agreements, written or oral, between the parties regarding this subject matter. It is
agreed that there are no collateral agreements or representations, written or oral, regarding the terms and conditions of Employee's separation of employment with Peregrine and settlement of all
claims 

between
the parties other than those set forth in this Agreement. This Agreement may be amended only by a written instrument executed by all parties hereto. 

THE
PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN
BELOW. 

	

Dated: 12/24/03	
 	

By:	

/s/  ANDREW CAHILL      
 Andrew Cahill
	

Dated: 12/24/03	
 	

By:	

/s/  MARY LOU O'KEEFE      
 Mary Lou O'Keefe

Sr. VP, Human Resources

QuickLinks

CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS

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