EXHIBIT 7
REGISTRATION RIGHTS AGREEMENT, dated June 30, 1998, between
PHARMACEUTICAL RESOURCES, INC., a New Jersey corporation (the "Company"), Lipha
Americas, Inc., a Delaware corporation ("Lipha") Merck KGaA, a
Kommanditgesellschaft auf Aktien organized under the laws of Germany ("Merck"),
and Genpharm, Inc., a corporation organized and existing under the laws of the
Province of Ontario, Canada ("Genpharm", together with Merck and Lipha, the
"Holders" and each a "Holder").
WHEREAS, Lipha concurrently herewith is purchasing 10,400,000
shares of common stock, par value $.01 per share, of the Company ("Common
Stock") pursuant to a Stock Purchase Agreement, dated March 25, 1998, between
the Company and the Holder (the "Stock Purchase Agreement");
WHEREAS, Lipha concurrently herewith is purchasing 2,313,000
shares of Common Stock owned by Clal Pharmaceutical Industries Ltd., pursuant to
the Clal Stock Purchase Agreement (as such term is defined in the Stock Purchase
Agreement);
WHEREAS, the Holders may purchase an aggregate of up to an
additional 1,171,040 shares of Common Stock upon exercise of the separate
Options (as such term is defined in the Stock Purchase Agreement); and
WHEREAS, the Stock Purchase Agreement provides that the
execution and delivery of this Agreement is a condition precedent to the
respective obligations of the Company and Lipha to consummate the transactions
contemplated by such Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties hereto agree as follows:
SECTION 1. Demand Registrations.
1.1 The Company agrees that, commencing on the date nine (9)
months from the date hereof, upon receiving a written request (the "Request")
from any Holder to register under the Securities Act of 1933, as amended (the
"Securities Act"), and under the securities laws of a reasonable number of
states specified by the Holder in the Request (the "Specified States"), a
specified number of shares of Subject Stock (as hereinafter defined), which
number may be all or a material part of the Subject Stock then owned by the
Holders, the Company shall, as soon thereafter as practicable, file with the
Securities and Exchange Commission (the "Commission") on the appropriate form a
registration statement, together with any requisite registration statements or
applications under the securities laws of the Specified States, covering the
number of shares of Subject Stock specified in the Request. The
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Company, under no circumstances, shall be required to make more than three
effective filings of a registration statement under this Section 1; provided,
however, that beginning at such time, if ever, as any Holder shall exercise the
Options, in whole or in material part, the Company shall be obligated to effect
two additional registrations pursuant to this Section 1 following any Holder's
delivery of a Request; provided, further, that the Holders may not deliver more
than one Request in total during any 12-month period. For the purpose of the
preceding sentence, Requests delivered at the same time by the Holders together
shall be counted as one Request. The Company may, in its sole discretion,
include additional issued or unissued shares of Common Stock in such
registration statement; provided, that the inclusion of any such shares shall
not reduce the number of shares of Subject Stock contained in the Request which
are covered by such registration statement.
1.2 The term "Subject Stock", as used herein, shall mean the
number of shares of Common Stock owned by the Holders which shall have been
purchased by any Holder (a) under the Stock Purchase Agreement at the Closing
(as such term is defined therein), (b) under the Clal Stock Purchase Agreement
or (c) upon any exercise of the Options. "Registration statement" means all
registration statements, including all prospectuses contained therein and all
amendments or supplements thereto, or any related applications filed under the
Securities Act or under the securities laws of the applicable states.
1.3 The Company shall use its best efforts to cause a
registration statement including the shares of Subject Stock to become effective
under the Securities Act and, if necessary, under the securities laws of the
Specified States. The Company shall further use its best efforts to maintain the
effectiveness of such registration statement for such period as may be
reasonably necessary to complete the distribution of the Subject Stock covered
thereby, subject to the limitations set forth in Sections 3 and 4 hereof.
1.4 If the method of disposition requested by a Holder
pursuant to this Section 1 shall be an underwritten public offering, such Holder
shall have the right to designate the underwriter of such offering. Any
underwriter selected by such Holder shall be subject to the approval of the
Company, which approval shall not be unreasonably withheld (the "Underwriter").
The Company will join the Holders in entering into an underwriting agreement and
related agreements with the Underwriter, which shall be in form and substance
reasonably satisfactory to the Company and its counsel and shall contain terms
and provisions customarily contained in the underwriting agreements utilized by
such Underwriter in connection with comparable public offerings, including an
indemnification of the Underwriter by the Company and the Holders.
1.5 All expenses, disbursements, fees (filing fees and
others), legal and accounting expenses, and other costs of every kind and nature
incurred or borne
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by the Company and the Holders in connection with a registration requested under
this Section 1 (both under the Securities Act and under the securities laws of
the Specified States) shall be paid and/or reimbursed by the Holders; provided,
however, that if the Company shall include any shares of Common Stock in any
such registration, then the Company shall reimburse the Holders, within 10 days
following the Holders' written request, for all such expenses, disbursements,
fees and other costs using the ratio of net cash received by the Company and any
other sellers of shares of Common Stock under such registration statement to the
total amount of net cash received by the Holders unless the Holders shall have
otherwise agreed to bear such expenses, disbursements, fees and other costs on
behalf of any other stockholder of the Holders for whom shares of Common Stock
are being included in such registration.
SECTION 2. Piggyback Registrations.
2.1 The Company agrees that, on each occasion that it shall
propose to file a registration statement covering shares of Common Stock,
whether on its own behalf or at the request of any other stockholder of the
Company (other than a registration statement on Form S-4 or Form S-8 under the
Securities Act), with the Commission or under the laws of any state
jurisdiction, the Company shall give written notice ("Piggyback Notice") of such
proposed filing to the Holders at least 40 days prior to such filing. Upon the
written request of any Holder, given within 10 days after the date of the
Piggyback Notice, the Company shall use its best efforts to include in any such
filing such number of shares of Subject Stock that shall be requested by the
Holders, subject to any limitations as to the number of shares of Subject Stock
that may be imposed by the Company's underwriter (if any); provided, however,
that if such registration statement is being filed at the request of another
stockholder of the Company, then the maximum number of shares of Subject Stock
included in such registration shall be equal to the lesser of (a) the aggregate
number of shares of the Common Stock to be included in such registration
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock owned by the Holders on the date of the Piggyback Notice and the
denominator of which shall be the aggregate number of shares of Common Stock
that are issued and outstanding on such date, or (b) the number of shares of the
Common Stock that the Holders shall have requested to have included in such
registration.
2.2 The Company agrees that it shall use its best efforts to
cause the registration statement including the shares of Subject Stock to become
effective under the Securities Act and under the securities laws of Specified
States. The Company shall further use its best efforts to maintain the
effectiveness of such registration statement for such period as may be
reasonably necessary to complete the distribution of the Subject Stock covered
thereby, subject to the limitations set forth in Section 4 hereof.
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2.3 The Holders shall pay all fees and expenses of its counsel
and accountants who shall not also be representing the Company, and shall
reimburse the Company for certain additional expenses incurred by the Company as
set forth in this Section 2.3. The Company shall pay all expenses,
disbursements, fees (filing and others), legal and accounting and other costs of
every kind and nature incurred or borne by the Company in connection with such a
registration requested under this Section 2 (both under the Securities Act and
under the laws of the Specified States in which shares of the Subject Stock are
being sold), except that the Holders shall promptly reimburse the Company for
all such expenses, disbursements, fees and other costs using the ratio of net
cash received by the Holders to the total amount of net cash received by the
Company and any other sellers of shares of Common Stock under such registration
statement unless the Company shall have otherwise agreed to bear such expenses,
disbursements, fees and other costs on behalf of any other stockholder of the
Company for whom shares of Common Stock are being included in such registration.
SECTION 3. Holdback Agreement; Limitation on Resales. If the
Company at any time shall register shares of Common Stock under the Securities
Act for sale to the public, neither Holder shall sell publicly, make any short
sale of, or grant any option for the purchase of, or otherwise dispose publicly
of, any of the shares of Subject Stock (other than Subject Stock included in a
registration statement pursuant to Sections 1 or 2 hereof), without the prior
written consent of the Company, for a period designated by the Company in
writing to the Holders, which period shall begin not more than ten (10) days
prior to the effectiveness of the registration statement pursuant to which such
public offering shall be made and shall terminate at such time as similar
restrictions imposed by law and/or Company policy on directors and executive
officers of the Company generally shall terminate; provided, however, that, in
no event, shall such restrictions last more than 180 days after the effective
date of such registration statement.
SECTION 4. Preparation and Filing. Whenever the Company shall
be under an obligation pursuant to this Agreement to use its best efforts to
effect the registration of the shares of Subject Stock, the Company and the
Holders agree as follows:
(a) The Company shall, in no event, be required to keep such
registration effective for longer than nine months after the effective
date thereof or during any period in which the trading of any shares of
Common Stock shall be suspended for any reason by the Commission.
(b) The Company shall use its best efforts to cause all shares
of Subject Stock registered pursuant to Sections 1 or 2 hereof to be
listed for
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trading on each securities exchange or other securities market on which
the Common Stock shall then be listed.
(c) The Company may require each Holder to promptly furnish in
writing to the Company such information regarding such Holder, the
distribution of the shares of Subject Stock as the Company may from
time to time reasonably request and such other information as may be
legally required in connection with such registration.
(d) The Company shall supply the Holders with such number of
copies of registration statements, and amendments and supplements
thereto, and any prospectus relating thereto as may be reasonably
requested by the Holders, and will supply the Holders with copies of
any preliminary and final prospectus filed in connection therewith that
may be reasonably required and, if necessary, with copies of a
prospectus meeting the requirements of Section 10(a)(3) of the
Securities Act; provided, however, that no such prospectus need be
supplied more than nine months after the effective date of any such
registration statement.
(e) The Company shall not be required in connection with any
qualification of the shares of Subject Stock to be sold within any
state jurisdiction to qualify to do business as a foreign corporation
in any state, to execute a general consent to service of process or to
subject itself to taxation, registration as a broker-dealer or to any
unreasonable regulatory requirements or unreasonable expenses, but
shall execute and deliver consents to service of process in the
Specified States as to matters relating to the sale of the shares of
Subject Stock in such States.
(f) The Company shall promptly notify the Holders of any stop
order issued or threatened by the Commission or any state regulatory
authority with respect to any registration statement covering the
shares of Subject Stock and shall take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered.
(g) Each of the Company and each Holder shall promptly notify
the other party of the occurrence of any event which shall require the
filing of an amendment or supplement to any registration statement and
prospectus covering the shares of Subject Stock. Upon receipt of such
notice, each party shall refrain from the sale of any shares of Subject
Stock pursuant to such registration statement and prospectus until the
receipt by such party of copies of the supplemented or amended
registration statement and prospectus.
SECTION 5. Information. Each Holder agrees that, promptly upon
the request of the Company, it shall furnish to the Company such information
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regarding itself and its Affiliates, as such term is defined in Rule 12b-2 of
the Securities Exchange Act of 1934 (the "Exchange Act"), and its holdings of
shares of the Subject Stock as the Company shall specify in such request and as
shall be required in connection with any registration statement, proxy or other
reporting requirements of the Company. Each Holder further agrees to cooperate
with the Company in any way reasonably necessary to accomplish any such
registration hereunder and, when participating in any such registration, to
comply with all of the requirements of the Securities Act and the securities
laws of the states in which the shares of Subject Stock are being sold,
including delivery by the Holder to any purchaser of the shares of Subject Stock
of a copy of any required prospectus. Notwithstanding anything herein to the
contrary, each Holder further agrees that it shall indemnify the Company and
hold it harmless from and against, and pay or reimburse it for, any liability,
loss, cost or damage, including attorneys' fees, incurred by the Company as a
result of any failure on such Holder's part to carry out the foregoing
agreement.
SECTION 6. Indemnification.
6.1 Indemnitors; Indemnified Persons. For purposes of this
Section 6, each party which, pursuant to this Section 6, agrees to indemnify any
other person or entity shall be referred to, as applicable, as the "Indemnitor"
with respect to such person or entity, and each such person or entity who is
indemnified shall be referred to as the "Indemnified Person" with respect to
such Indemnitor.
6.2 Company Indemnity. The Company hereby agrees to indemnify
and hold harmless each Holder, and their respective directors, officers,
employees, agents and controlling persons (within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act), from and against any
and all claims, liabilities, losses, damages and expenses (including reasonable
attorneys' fees and disbursements) asserted against or incurred by any such
Indemnified Person which shall be caused by any untrue statement of a material
fact contained in any registration statement or prospectus relating to the
Subject Stock, including any amendment or supplement thereto, or shall be caused
by any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities and expenses shall be caused by any
untrue statement or omission based upon information furnished in writing to the
Company by such Holder or on such Holder's behalf for use therein.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.2 shall not inure to the benefit of any
Indemnified Person from whom a person or entity asserting a claim purchased
shares if an untrue statement or omission of material fact in any prospectus
shall have been corrected by the Company on a timely basis, such person or
entity shall have failed to utilize such corrected prospectus and such corrected
prospectus would have cured the defect giving rise to such claim.
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6.3 Holder Indemnity. Each Holder hereby agrees to indemnify
and hold harmless each of the Company, and its directors, officers, employees,
agents and controlling persons (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act), from and against any and
all claims, liabilities, losses, damages and expenses (including reasonable
attorneys' fees and disbursements) asserted against or incurred by any such
Indemnified Person to the same extent as the foregoing indemnity from the
Company to the Holders, but only with respect to information relating to such
Holder furnished in writing by such Holder or on such Holder's behalf for use in
any registration statement or prospectus relating to the Subject Stock or any
amendment or supplement thereto. The total amount payable by such Holder
pursuant to this Section 6.3 shall not exceed an amount equal to the number of
shares proposed to be sold by such Holder in the registered offering that shall
give rise to any such claim for indemnity multiplied by the selling price per
share.
6.4 Defense. Promptly after receipt by an Indemnified Person
of notice of any claim or demand or the commencement of any action or proceeding
with respect to which indemnification may be sought hereunder, such Indemnified
Person shall notify the Indemnitor of such claim or demand or the commencement
of such action or proceeding, but failure so to notify the Indemnitor shall not
relieve the Indemnitor from any liability which the Indemnitor may have
hereunder or otherwise, unless the Indemnitor shall be actually prejudiced by
such failure. If the Indemnitor shall so elect, the Indemnitor shall assume the
defense of such claim, demand, action or proceeding, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and shall pay the
fees and disbursements of such counsel. In the event, however, that such
Indemnified Person shall reasonably determine that having common counsel would
present such counsel with a conflict of interest or alternative defenses shall
be available to an Indemnified Person or if the Indemnitor shall fail to assume
the defense of the claim, demand, action or proceeding in a timely manner, then
such Indemnified Person may employ separate counsel to represent or defend such
Person against any such claim, demand, action or proceeding and the Indemnitor
shall pay the reasonable fees and disbursements of such counsel; provided,
however, that the Indemnitor shall not be required to pay the fees and
disbursements of more than one separate counsel for all Indemnified Persons in
any jurisdiction in any single or related action or proceeding. For any claim,
demand, action or proceeding the defense of which the Indemnitor shall assume,
the Indemnified Person shall have the right to participate therein and to retain
its own counsel at such Indemnified Person's own expense (except as otherwise
specifically provided in this Section 6.4), so long as such participation shall
not interfere with the Indemnitor's control of such claim, demand, action or
proceeding. The Indemnitor shall not, without the prior written consent of the
Indemnified Person, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder unless such settlement,
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compromise or consent shall include an unconditional release of such
Indemnified Person from all liability arising out of such claim, demand, action
or proceeding.
6.5 Contribution. If the indemnification in this Section 6
shall be held by a court of competent jurisdiction to be unavailable to an
Indemnified Person with respect to any claim, liability, loss, damage or expense
referred to herein, then the Indemnitor shall contribute to the amounts paid or
payable by such Indemnified Person as a result of such claim, liability, loss,
damage or expense in such proportion as is appropriate to reflect the relative
benefits and also the relative fault of the Indemnitor, on the one hand, and the
Indemnified Party, on the other, in connection with the transactions giving rise
to such claim, liability, loss, damage or expense, as well as any other relevant
equitable considerations. The relative benefits received by the Indemnitor, on
the one hand, and the Indemnified Party, on the other, shall be deemed to be in
the same proportion as the total net proceeds from the sale of Common Stock
under the registration statement or prospectus (before deducting expenses)
received by the Indemnitor shall bear to the total net proceeds from such sale
received by the Indemnified Person. The relative fault of the Indemnitor and of
the Indemnified Person shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact shall relate to information supplied by the Indemnitor or by the
Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and equitable if
contribution were determined by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the foregoing, (a) the total amount payable by a Holder pursuant to this Section
6.5 shall not exceed an amount equal to the number of shares sold by such Holder
in the registered offering that give rise to any such claim for contribution
multiplied by the selling price per share and (b) no person or entity guilty of
or liable for fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of fraudulent misrepresentation.
6.6 Holder-Related Claims. If there shall be any claim for
indemnification by or against any Holder or any of its related persons under
this Section 6, all determinations by the Company relating thereto, including,
without limitation, the choice and engagement of counsel, the prosecution of any
action and the terms and conditions of any settlement or compromise, shall be
made solely by the "Company Designees" (as defined in the Stock Purchase
Agreement) by majority vote thereof.
SECTION 7. Termination. This Agreement shall terminate upon
the sale or disposition of beneficial ownership by the Holders of all shares of
the Subject Stock; provided, however, this Agreement shall continue in effect as
to any indemnification and payment or reimbursement obligations herein.
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SECTION 8. Miscellaneous.
8.1 Assignment. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned or delegated
by any party hereto without the prior written consent of the other party.
8.2 Entire Agreement. This Agreement and the other agreements
referred to herein or delivered pursuant hereto contain the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior arrangements or understandings with respect thereto.
8.3 Notices. All notices hereunder shall be in writing and
shall be given: (a) if to the Company, at Xxx Xxx Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx
Xxxx 00000 (attention: Xxxxxxx X. Xxxxxx), fax number: (000) 000-0000, or such
other address or fax number as the Company shall have designated in writing to
the Holders in accordance with this Section 8.3, with a copy to Xxxxxxx,
Calamari & Xxxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (attention:
Xxxxxxx X. Xxxxxxxxxx, Esq. and Xxxxxxx X. Xxxxxxx, Esq.), fax number: (212)
000-0000, (b) if to Merck, at Xxxxxxxxxxx Xxxxxxx 000, 00000 Xxxxxxxxx, Xxxxxxx
(attention: Xx. Xxxx Xxxxxxxxx), fax number: 000 00 0000 00 0000 with a copy to
Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000
(attention: Xxxxx X. Xxxxxxxx, Xx., Esq.), fax number: (000) 000-0000, (c) if to
Genpharm, at 00 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx (attention:
Chief Financial Officer), fax number: (000) 000-0000, with a copy to Coudert
Brothers, at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (attention:
Xxxxx X. Xxxxxxxx, Xx., Esq.), fax number: (000) 000-0000, or (d) if to Lipha,
at [ ], with a copy to Coudert Brothers, at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (attention: Xxxxx X. Xxxxxxxx, Xx., Esq.), fax number:
(000) 000-0000 or such other address(es) or fax number(s) as a Holder shall have
designated in writing to the Company in accordance with this Section 8.3. Any
notice shall be deemed to have been given if personally delivered or sent by
express commercial courier or delivery service or by telegram, telefax, telex or
facsimile transmission. Any notice given in any other manner shall be deemed
given when actually received.
8.4 Amendments; Waiver. This Agreement may not be amended or
terminated, and no provision hereof may be waived, without the prior written
consent of at least a majority of the Company Designees (on behalf of the
Company) and except pursuant to a written instrument executed by the Company and
the Holders. Each Holder shall not cause, and shall use its best efforts not to
permit, the Company to agree to any amendment, modification or waiver or take
any action in respect of this Agreement, including, without limitation, in
respect of any agreement or
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settlement relating to a dispute or claim for indemnification hereunder, without
the prior written consent of at least a majority of the Company Designees, as
such term is defined in the Stock Purchase Agreement (including any
replacement(s) therefor as provided in Section 8.1 of the Stock Purchase
Agreement).
8.5 Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.6 Headings. The headings of the Sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
8.8 Severability. If any term or provision hereof shall be
invalid or unenforceable, (i) the remaining terms and provisions hereof shall be
unimpaired, (ii) any such invalidity or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction and (iii) the invalid or unenforceable term or provision shall be
deemed replaced by a term or provision as determined by a court to be valid and
enforceable and to express, to the fullest extent legally permissible, the
intention of the parties with respect to the invalid or unenforceable term or
provision.
8.9 Expenses. Except as otherwise specifically provided in
this Agreement, the parties shall bear their own respective expenses (including,
but not limited to, all fees and expenses of counsel, financial advisers and
independent accountants) incurred in connection with the preparation,
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. To the extent that a Company Designee shall be
required to make any determination or take any action hereunder (including,
without limitation, with respect to indemnification under Section 6 hereof) in
his/her capacity as a Company Designee, the Holders shall cause the Company to,
and the Company shall, promptly reimburse and/or pay any reasonable expenses
incurred by the Company Designee in acting in such capacity. The Company
Designees are intended third-party beneficiaries of this provision.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Registration Rights Agreement to be executed as of the date first written above.
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO & Chairman
LIPHA AMERICAS, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
--------------------------
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: Asst. Secretary
MERCK KGaA
By: /s/ Xxxxxxxx
----------------------
Name: Xxxxxxxx Xxxxxxxx
Title: CEO Phama
GENPHARM, INC.
By: /s/ X. Xxxxxxxxx
---------------------
Name: X.X. Xxxxxxxxx
Title: Chairman
