EXHIBIT 10.17
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Second Amended and Restated Registration Rights Agreement (this
"Agreement") is made and entered into effective as of December 21, 1999, by and
between Kos Pharmaceuticals, Inc., a Florida corporation (the "Company"), Kos
Holdings, Inc., a Florida corporation ("Holdings"), Kos Investments, Inc., a
Florida corporation ("Investments"), and Xxxxxxx Xxxxxxx, an individual residing
in South Norwalk, Connecticut ("Jaharis") and effectively amends and restates
the Amended and Restated Registration Rights Agreement entered into by the
Company, Holdings and Investments dated as of September 1, 1999.
RECITALS
A. Holdings has acquired 10,000,000 shares (the "Holdings
Shares") of the Company's common stock, par value $.01 per
share (the "Common Stock"), under the terms of an Assignment
and Assumption Agreement dated as of June 30, 1996 between the
Company and Holdings (the "Assignment Agreement"). Pursuant to
the Assignment Agreement, the Company has agreed to grant
Holdings certain registration rights in accordance with the
terms of this Agreement.
B. The Company has issued a Promissory Note dated July 1, 1996
(the "Investments Note"), to Investments for an aggregate
principal amount of $15,000,000, which has been converted to
shares of Common Stock (the "Investments Shares"). The Company
has granted Investments certain registration rights in
accordance with the terms of this Agreement.
C. The Company has issued a Promissory Note dated September 1,
1999 (the "September Jaharis Note") to Jaharis for an
aggregate principal amount of $50,000,000, which is
convertible to shares of Common Stock (the "Convertible Note
Shares"). Under the terms of the Jaharis Note, the Company has
granted Jaharis certain registration rights in accordance with
the terms of this Agreement.
D. The Company is issuing a Promissory Note of even date herewith
(the "January Jaharis Note") to Jaharis for an aggregate
principal amount of $50,000,000. In connection with the
January Jaharis Note, the Company
is issuing a Warrant Agreement of even date herewith (the
"Warrant Agreement") pursuant to which Jaharis will receive
warrants to purchase shares of common stock (the "Warrant
Shares", and, together with the Holdings Shares, the
Investments Shares, the Convertible Note Shares, the "Shares")
Under the terms of the Warrant Agreement, the Company will
xxxxx Xxxxxxx certain registration rights in accordance with
the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the meanings set forth
below:
a. "COMMISSION" means the Securities and Exchange Commission, or
any other Federal agency at the time administering the Federal securities laws.
b. "CONVERSION" means Jaharis' right to convert indebtedness
owing under the September Jaharis Note into the Convertible Note Shares as
provided in the September Loan Agreement and the September Jaharis Note.
c. "CUTBACK REGISTRATION" means any registration in connection
with an underwritten public offering in which the managing underwriter advises
the Company that marketing factors require a limitation of the number of the
Company's securities to be underwritten in such public offering (including a
limitation to zero).
d. "1933 ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
e. "1934 ACT" means the Securities Exchange Act of 1934 or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
f. "REGISTRATION RIGHTS HOLDER" means either Holdings,
Investments, or Jaharis, individually (collectively referred to as the
"Registration Rights Holders").
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g. "REGISTRATION STATEMENT" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company (other than any registration statement on Form S-4 or Form S-8,
or their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation or entity).
h. "REGISTRATION EXPENSES" means the expenses described in
Section 4.
i. "REGISTRABLE SHARES" means all of the Shares, and any other
shares of Common Stock or other securities of the Company or any other issuer
issued or issuable in respect of such Shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, mergers, combinations or
similar events, if applicable); provided, HOWEVER, that the Shares which are
Registrable Shares shall cease to be Registrable Shares upon any sale or
transfer of such shares pursuant to a Registration Statement, Section 4(1) of
the 1933 Act, Rule 144 under the 1933 Act or otherwise, except that the Shares
which are Registrable Shares shall remain Registrable Shares notwithstanding any
transfer of the shares by Holdings or Investments to Jaharis or any of his
affiliates or by Jaharis or such affiliates to any member of Jaharis' immediate
family or to a trust established for the benefit of Jaharis or any family member
of Jaharis or to any corporation or other entity which is wholly owned by
Jaharis, such affiliates, such family members, or such trusts (Jaharis, such
affiliates, such family members such trusts and such entities referred to herein
collectively as "Permitted Transferees"). As a condition to effecting any
registration pursuant to this Agreement, the Company may require that Holdings,
Investments, Jaharis, or any Permitted Transferees, on whose behalf a
registration hereunder is being effected, execute an agreement further
acknowledging their obligations under Section 7 of this Agreement. All
references in this Agreement to the term "Holdings", "Investments" or "Jaharis"
shall be read to include any Permitted Transferee that owns or holds any
Registrable Shares.
j. "SEPTEMBER LOAN AGREEMENT" shall mean that certain Revolving
Credit and Loan Agreement dated as of September 1, 1999 between the Company and
Jaharis providing for an extension of credit by Jaharis to the Company in the
principal amount of $50,000,000.
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2. REGISTRATION RIGHTS.
a. REQUIRED REGISTRATIONS.
i. Subject to the other provisions of this Agreement, Holdings,
Investments, and Jaharis shall each have the right to require the Company, upon
demand, whether before or after any indebtedness evidenced by the Investments
Note or the September Jaharis Note shall become convertible into Common Stock of
the Company, or whether before or after Jaharis shall exercise any warrants
pursuant to the Warrant Agreement, or whether before or after Investments or
Jaharis shall have become a holder of any Common Stock issued upon conversion
without registration under the 1933 Act, to effect unlimited registrations with
respect to the Registrable Shares (each such registration being a " Required
Registration"). To effect a Required Registration, a Registration Rights Holder
shall make a written request (a "Request Notice") to the Company with respect to
his or its Shares which shall describe in detail the contemplated sale of
Registerable Securities, including the number of Registerable Securities to be
registered. The Company shall be entitled to include in any Required
Registration shares of Common Stock to be sold by holders of either Common Stock
or rights to acquire Common Stock to whom the Company has previously granted or
in the future does grant any registration rights and shares of Common Stock to
be sold by the Company for its own account, provided that such inclusion shall
not limit the number of Registrable Shares included in such Registration
Statement.
ii. Each Registration Rights Holder may revoke its Request Notice
in the event of a Cutback Registration that would limit the total number of
Registrable Shares that can be sold pursuant to such Requested Registration to a
number that is less than 90% of the number of the Registrable Shares specified
to be sold in the Request Notice.
iii. The Company shall, as soon as practicable, but in no event
more than 120 days after receipt of a Request Notice, file a Registration
Statement covering the Registrable Shares to be included in the registration
requested by such Request Notice and cause such Registration Statement to become
effective as soon as practicable thereafter.
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b. PIGGYBACK REGISTRATION.
i. At any time and from time to time after the date of this
Agreement, whenever the Company proposes to file a Registration Statement, the
Company will prior to such filing give written notice to all Registration Rights
Holders of its intention to do so and, upon the written request of any
Registration Rights Holders given within fifteen (15) days after the Company
provides such notice, the Company shall use its good faith efforts to cause all
Registrable Shares of such Registration Rights Holder which the Company has been
requested by such Registration Rights Holder to register, to be registered under
the 1933 Act to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the request
of such Registration Rights Holder; provided that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this Section
2.b. without obligation to any Registration Rights Holder.
ii. In connection with any registration under Section 2.b.
involving an underwritten offering of the Company's securities, the Company
shall not be required to include any Registrable Shares of a Registration Rights
Holder in such underwriting unless such Registration Rights Holder accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
sole discretion of the underwriters, jeopardize the success of the offering by
the Company. If in the sole discretion of the managing underwriter or
underwriters the registration of all, or part of, the Registrable Shares which a
Registration Rights Holder has requested to be included would adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of Registrable Shares, if any, which the managing
underwriter or underwriters believe may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of shares which
such Registration Rights Holder has requested to be included, then such
Registration Rights Holder shall participate in the underwriting pro rata based
upon such Registration Rights Holder's total ownership of Registrable Shares
compared to the total number of shares held by any other Registration Rights
Holder or other affiliates of the Company for which registration has been
requested whether or not such shares are the subject of separate agreements with
the Company concerning registration rights.
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3. REGISTRATION PROCEDURES. When the Company is required by the
provisions of this Agreement to effect the registration of any of the
Registrable Shares under the 1933 Act, the Company shall:
a. file with the Commission a Registration Statement with respect
to such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;
b. as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective until the earlier to occur of (i) such time
as all Registrable Shares included therein have been sold or (ii) the expiration
of two years;
c. as expeditiously as possible furnish to those Registration
Rights Holders whose Shares are being registered such reasonable numbers of
copies of the prospectus, including a preliminary prospectus and any amended or
supplemental prospectus, in conformity with the requirements of the 1933 Act,
and such other documents as such Registration Rights Holders may each reasonably
request in order to facilitate the public sale or other disposition of such
Registration Rights Holder's Registrable Shares; and
d. as expeditiously as possible use its best efforts to register
or qualify the Registrable Shares covered by the Registration Statement under
the securities or Blue Sky laws of such states as the Registration Rights
Holders shall reasonably request, and do any and all other acts and things that
may be necessary or desirable to enable the Registration Rights Holders to
consummate the public sale or other disposition of the Registrable Shares owned
by the Registration Rights Holders in such jurisdiction; PROVIDED, HOWEVER, that
the Company shall not be required in connection with this Section 3 to qualify
as a foreign corporation in any jurisdiction nor register or qualify the
securities in any state which as a condition to such registration or
qualification would impose material restrictions or other material conditions on
the Company or any of its officers, directors or shareholders (including with
respect to any shares held by such persons or entities) unless such restrictions
or other conditions are approved by the party adversely affected.
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If the Company advises a Registration Rights Holder that any
preliminary or final prospectus is no longer in compliance with the requirements
of the 1933 Act, or that at such time it is otherwise a violation of any
applicable securities laws to offer or sell securities pursuant to a preliminary
or final prospectus, such Registration Rights Holder shall immediately cease
offering or selling the Registrable Securities and, if requested, return all old
prospectus to the Company. Such Registration Rights Holder may recommence offers
and sales of Registrable Securities upon receipt from the Company of an amended
prospectus, if applicable, or receipt of ratification from the Company that the
offer and sale of Registrable Securities may resume.
4. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. The term "Registration
Expenses" shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions attributable to the Registrable
Shares and the fees and expenses of each Registration Rights Holder's own
counsel and accountants, which shall be borne by such Registration Rights
Holder.
5. INFORMATION BY REGISTRATION RIGHTS HOLDERS. Each Registration Rights
Holder shall promptly furnish to the Company such information regarding such
Registration Rights Holder and the distribution proposed by such Registration
Rights Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
6. "LOCK-UP" AGREEMENT. If requested by an underwriter in connection
with an underwritten offering of Common Stock or other securities of the
Company, each Registration Rights Holder shall agree not to sell or otherwise
transfer or dispose of any Registrable Shares or other securities of the Company
held by such Registration Rights Holder for a specified period of time before
and/or after the effective date of a Registration Statement, PROVIDED that the
same request shall have been made of other holders of the Company's Common Stock
or other securities (including affiliates of the Company) and such other holders
have complied with such request. Such agreement shall
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be in writing in a form satisfactory to the Company and any such underwriter.
The Company may impose stop transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of the lock-up period.
7. INDEMNIFICATION.
a. BY THE COMPANY. In the event of any registration of any of the
Registrable Shares under the 1933 Act pursuant to this Agreement, the Company
will indemnify and hold harmless the sellers of such Registrable Shares against
any losses, claims, damages or liabilities, joint or several, to which such
sellers may become subject under the 1933 Act, 1934 Act, state securities laws
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the Company will
reimburse such sellers for any legal or any other expenses reasonably incurred
by such sellers in connection with investigating and defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company by or on behalf of such
sellers, specifically for use in the preparation thereof, or as a result of the
failure of such sellers, or any agent of such sellers, to deliver any amendments
and supplements to any Registration Statement and the prospectus included in any
such Registration Statement (provided such amended or supplemental prospectus
has been delivered to sellers or their agent).
b. BY SELLERS OF REGISTRABLE SHARES. In the event of any
registration of any of the Registrable Shares under the 1933 Act pursuant to
this Agreement, each seller of Registrable Shares, severally and not jointly,
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls
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the Company or any such underwriter within the meaning of the 1933 Act or the
1934 Act, against any losses, claims, damages or liabilities, joint or several,
to which the Company, such directors and officers, underwriter or controlling
person may become subject under the 1933 Act, 1934 Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and each seller of Registrable Shares will reimburse the Company, each of its
directors and officers, each underwriter and each controlling person, severally
and not jointly, for any legal or other expenses reasonably incurred by the
Company, each director and officer, each underwriter and each controlling person
in connection with investigating and defending any such loss, claim, damage,
liability or action, if the statement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on behalf of such
seller, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement.
c. CLAIMS. Each party entitled to indemnification under this Section
7 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, PROVIDED, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 7. The Indemnified Party may participate in such
defense at such party's expense. No Indemnifying Party, in the defense of any
such claim or litigation, except with the consent of the Indemnified Party,
shall consent to entry of any judgment or enter into any settlement, which does
not include as an unconditional term thereof the giving by the claimant or
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plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation.
8. MERGERS, ETC.
The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the
surviving corporation unless the proposed surviving corporation shall, prior to
such merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Shares" shall be deemed to be references to the
securities which either Registration Rights Holder would be entitled to receive
in exchange for Registrable Shares under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 8 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if all Registration Rights Holders
and all other holders of Common Stock of the Company are entitled to receive in
exchange for their Registrable Shares consideration consisting solely of (i)
cash, (ii) securities of the acquiring corporation which may be immediately sold
to the public without registration under the Securities Act, or (iii) securities
of the acquiring corporation which the acquiring corporation has agreed to
register within 90 days of completion of the transaction for resale to the
public pursuant to the Securities Act.
9. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the state of Connecticut.
b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
c. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subjects hereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument signed
by the Company, and each Registration Rights Holder affected by such change. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one
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or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
d. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class certified or registered mail, return receipt requested, postage
prepaid, or delivered personally by hand or nationally recognized courier
addressed as follows:
If to Holdings:
C/o Xxxxxx X. Xxxxxxx, P.C.,
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Investments:
C/o Xxxxxx X. Xxxxxxx, P.C.,
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Jaharis:
Xxxxxxx Xxxxxxx
C/o Xxxxxx X. Xxxxxxx, P.C.,
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Company:
Kos Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxx X. Xxxx, President
or at such other address as a party shall have furnished to the other party in
writing. All such notices and other written communications shall be effective on
the earlier of the date of mailing or delivery.
e. SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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f. TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
g. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
COMPANY
KOS PHARMACEUTICALS, INC.
By:________________________________________
Xxxxxx X. Xxxx, President
KOS HOLDINGS, INC.
By:________________________________________
KOS INVESTMENTS, INC.
By:________________________________________
_________________________________________
XXXXXXX XXXXXXX
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