EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into effective as of June 30, 1996, by and between Kos Pharmaceuticals,
Inc., a Florida corporation (the "Company") and Kos Holdings, Inc., a Florida
corporation ("Holdings").
RECITALS
Holdings has acquired 10,000,000 shares (the "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.
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. "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).
c. "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.
d. "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.
e. "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 that effects
the Company's initial public offering, 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).
f. "REGISTRATION EXPENSES" means the expenses described
in Section 4.
g. "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 to Xxxxxxx Xxxxxxx (the "Shareholder") or any
of his affiliates or by the Shareholder or such affiliates to any member of the
Shareholder's immediate family or to a trust established for the benefit of the
Shareholder or any family member of the Shareholder or to any corporation or
other entity which is wholly owned by the Shareholder, such affiliates, such
family members, or such trusts (Shareholder, 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 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" shall be read
to include any Permitted Transferee that owns or holds any Registrable Shares.
2. REGISTRATION RIGHTS.
a. REQUESTED REGISTRATION.
i. Subject to the other provisions of this
Agreement, Holdings shall have the right (a "Request Right") to require the
Company to effect three registrations with respect to the Registrable Shares
(each such registration being a "Requested Registration"). (The Company is
required to effect a total of only three Requested Registrations pursuant to
this Section 2(a) notwithstanding that Registrable Shares may have been
transferred to one or more Permitted Transferees.) To effect a Requested
Registration, Holdings shall make a written request (a "Request Notice") to the
Company 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 Requested 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. Holdings 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 Holding's Registrable Shares
specified to be sold in the Request Notice.
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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.
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 Holdings
of its intention to do so and, upon the written request of Holdings given within
fifteen (15) days after the Company provides such notice, the Company shall use
its good faith efforts to cause all Registrable Shares which the Company has
been requested by Holdings 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 Holdings;
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this Section 2.b. without obligation to
Holdings.
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 in such
underwriting unless Holdings 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 Holdings 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 Holdings has requested to be included, then Holdings
shall participate in the underwriting pro rata based upon its total ownership of
Registrable Shares compared to the total number of shares held by 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.
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. 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
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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. furnish to Holdings 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 Holdings may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by Holdings; and
d. 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 Holdings shall reasonably request, and do any and all
other acts and things that may be necessary or desirable to enable Holdings to
consummate the public sale or other disposition of the Registrable Shares owned
by Holdings 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.
If the Company advises Holdings 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,
Holdings shall immediately cease offering or selling the Registrable Securities
and, if requested, return all old prospectus to the Company. Holdings 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 Holdings' own counsel and accountants, which
shall be borne by Holdings.
5. INFORMATION BY HOLDINGS. Holdings shall promptly furnish to the
Company such information regarding Holdings and the distribution proposed
by Holdings 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.
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6. "LOCK-UP" AGREEMENT. If requested by the Company or an underwriter
or both in connection with an underwritten offering of Common Stock or other
securities of the Company, Holdings shall agree not to sell or otherwise
transfer or dispose of any Registrable Shares or other securities of the Company
held by Holdings 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 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 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
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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 plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation.
8. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed
in all respects by the laws of the state of Florida.
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 Holdings.
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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 mail, postage prepaid, or delivered personally by hand or nationally
recognized courier addressed as follows:
If to Holdings:
Attention:
If to the Company:
Kos Pharmaceuticals, Inc.
0000 X. Xxxxxxxx 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. SEPARABILITY. 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.
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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
KOS PHARMACEUTICALS, INC, a Florida
corporation.
By:/s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx, President
KOS HOLDINGS, INC., a Florida corporation.
By:
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