EXHIBIT 10.20
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY
BE SOLD, ASSIGNED, PLEDGED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT OF 1933 AND ALL STATE SECURITIES LAWS AND THE TERMS AND
CONDITIONS HEREOF.
NON-DETACHABLE COMMON STOCK PURCHASE WARRANT
Void After June 30, 2006
This is to certify that, for value received, Xxxxxxx Xxxxxxx, or
registered assigns thereof (the "Holder"), is entitled to purchase from Kos
Pharmaceuticals, Inc., a Florida corporation (the "Corporation"), at a price of
$5.00 per share (the "Warrant Price") at any time on or before June 30, 2006,
all or any part of 6,000,000 shares of Common Stock, par value $.01 per share,
of the Corporation ("Common Stock"), on the terms and subject to the conditions
hereinafter set forth. This Warrant is being issued to the Holder in connection
with a loan to the Corporation by the Holder pursuant to that certain Promissory
Note dated December 21, 1999, from the Corporation, in favor of the Holder (the
"Note").
1. This Warrant will become void, and all rights of the Holder will
expire, at 5:00 P.M., Miami, Florida local time, on June 30, 2006.
2. This Warrant may be exercised by the Holder, upon surrender of the
Note (if the Note is outstanding), as to all or any portion of the shares of
Common Stock covered hereby, by surrender by the Holder or his agent of this
Warrant to the Corporation at its principal office, with the form of Election to
Purchase attached hereto duly executed. Upon any such exercise, the Warrant
Price for such shares shall be paid and satisfied only through the conversion of
principal or interest outstanding under the Note in an aggregate amount equal to
the Warrant Price for such shares. This Warrant shall be exercisable only for so
long as and to the extent of the aggregate amount of principal and interest
outstanding under the Note. The Election to Purchase shall state the name of the
person or entity exercising the Warrant (with address and such further
information as may be required by the Corporation) and the certificate or
certificates for shares of Common Stock shall be issued in this name. Thereupon
this Warrant shall be deemed to have been exercised and the person or entity
exercising the Warrant shall be deemed to have become a holder of record of
shares of Common Stock purchased hereunder for all purposes and thereafter the
Holder may exercise all rights and be entitled to all benefits of a shareholder
of record of the Corporation, and a certificate or certificates for such shares
so purchased shall be delivered to the person or entity exercising the Warrant
within a reasonable time after this Warrant shall have been exercised as set
forth hereinabove.
3. The following adjustments shall be made:
a. In the event that, prior to the exercise of this Warrant and
issuance of the underlying shares, there shall be an increase or decrease in the
number of issued shares of Common Stock of the Corporation as a result of a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend or other increase or decrease in such shares,
effected without receipt of consideration by the Corporation, the remaining
number of shares shall be adjusted so that the adjusted number of shares subject
to this Warrant and the adjusted Warrant Price shall be the substantial
equivalent of the remaining number of shares still subject to the Warrant and
the Warrant Price thereof prior to such change.
b. If at any time while this Warrant is outstanding another
corporation merges into the Corporation, the Holder of this Warrant shall be
entitled, immediately after the merger becomes effective and upon exercise of
this Warrant, to obtain the same number of shares of Common Stock of the
Corporation (or shares into which the Common Stock has been changed as provided
in the paragraph of this Warrant covering changes) that the Holder would have
been entitled upon the exercise hereof to obtain immediately before the merger
became effective at the same Warrant Price. The Corporation shall take any and
all steps necessary in connection with the merger to assure that sufficient
shares of Common Stock to satisfy all conversion and purchase rights represented
by outstanding convertible securities, options and warrants, including this
Warrant, are available so that these convertible securities, options and
warrants, including this Warrant, may be exercised.
c. On the happening of an event requiring an alteration or
adjustment of the shares purchasable upon exercise of this Warrant, or an
alteration or adjustment of their number or designation, the Corporation shall
give written notice to the Holder of this Warrant stating the adjusted number,
designation and kind of securities or other property obtainable upon exercise of
this Warrant as a result of and following the event. The notice shall set forth
in reasonable detail the method of calculation determining the securities or
property obtainable after the event, and the facts upon which the calculation is
based. The Corporation's board of directors, acting in good faith, shall
determine the calculation.
4. This Warrant is exchangeable by the Holder, upon the surrender of
the Warrant at the principal office of the Corporation, for new Warrants of like
tenor and date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder.
5. The Corporation covenants and agrees that all shares of Common Stock
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof except for
any taxes required in connection with the transfer thereof. The Corporation
further covenants and agrees that, during the period within which the rights
represented by this Warrant may be exercised, the Corporation will at all times
have
2
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant.
6. The Holder of this Warrant, by acceptance hereof, agrees that,
except as hereinafter stated, such holder will not sell, hypothecate or
otherwise transfer or dispose of this Warrant or the shares of Common Stock
issuable on the exercise hereof without giving prior written notice to the
Corporation of such holder's intention to do so, describing briefly the manner
of any such proposed transfer. Notwithstanding the foregoing, this Warrant is
transferable (i) to a trust in which a Holder or Holders is/are the settlor(s)
and either one or more Holders and/or direct family members of such Holder
is/are a primary beneficiary or beneficiaries, (ii) a corporation, partnership
or limited liability company in which one or more Holders and/or direct family
members of such Holders control at least 80 percent of the stockholder,
partnership or membership interests in such corporation, partnership or limited
liability company; or (iii) by descent upon death to direct family members of
such Holders. This Warrant and the rights evidenced hereby shall be transferable
only when attached to the Note. Upon the request of the Corporation, the Holder
proposing to transfer this Warrant shall be required to deliver to the
Corporation an opinion of counsel for the Holder stating that the proposed
transfer described in the notice given by the Holder may be effected without
registration of this Warrant or the shares of Common Stock issuable on the
exercise hereof under the Securities Act of 1933, as then in effect, or any
similar federal statute (the "Securities Act").
7. The restrictions in Section 6 hereof shall be binding upon any
transferee who has received this Warrant or shares of Common Stock issuable on
exercise hereof. A legend in substantially the following form shall be typed,
printed or stamped on the face and back of all certificates issued on exercise
of this Warrant and on the face and back of all certificates issued in
substitution or exchange thereof:
"This security has not been registered under the
Securities Act of 1933, as amended. It has been
acquired for investment and may not be sold or
transferred in the absence of an effective registration
statement with respect thereto under the Securities Act
of 1933, as amended, or an opinion of counsel
acceptable to the Company that registration is not
required under said Act."
8. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate.
9. This Warrant and all rights hereunder are transferable on the books
of the Corporation (subject, however, to the provisions of Sections 6 and 7
hereof), upon surrender of this Warrant, with the form of Transfer of Warrant
attached hereto duly executed by the registered holder hereof or by his attorney
duly authorized in writing, to the Corporation at its principal office, and
thereupon there shall be issued in the name of the transferee or transferees, in
exchange for this Warrant, a new Warrant or Warrants of like tenor and date,
3
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder.
10. The Corporation may deem and treat the registered holder of this
Warrant as the absolute owner of this Warrant for all purposes and shall not be
affected by any notice to the contrary.
11. This Warrant shall not entitle the Holder to any rights of a
stockholder of the Corporation, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Corporation.
12. This Warrant shall be governed by the laws of the State of Florida.
Dated: December 21, 1999 KOS PHARMACEUTICALS, INC.
By
-----------------------------
Xxxxxx X. Xxxx, President
4
TRANSFER OF WARRANT
For value received ___________________ hereby sells, assigns and
transfers unto _______________________ the right to purchase ______ shares of
Common Stock, par value $.01 per share, of Kos Pharmaceuticals, Inc., which
rights are represented by the attached Warrant, and does hereby irrevocably
constitute and appoint ______________ attorney to transfer said rights on the
books of such Corporation. This transfer is effective only if the Warrant is
attached to the Note (as defined in the Warrant).
Dated: ______________, ____
In the Presence of
_____________________________
5
ELECTION TO PURCHASE
Date: ____________, _____
TO:
The registered holder of the attached Warrant as named below (the
"Holder") hereby subscribes for ________ shares of the Common Stock of the
Corporation covered by the attached Warrant and tenders payment herewith by
converting the Note (as such term is defined in the Warrrant) or portion thereof
below designated.
Name of Holder: ____________________________________________
Principal amount to be converted: $_________________________
Unpaid accrued interest to be converted: $__________________
Principal amount of replacement Note, if any: $_____________
Issue Certificate(s) Deliver certificate(s)
for said stock to _________ by mail ____ against
counter receipt to
---------------------------- ------------------------------
(Name) (Name)
---------------------------- ------------------------------
(Street and Number) (Street and Number)
---------------------------- ------------------------------
City State City State
---------------------------- ------------------------------
Social Security or Tax Social Security or Tax
Identification Number Identification Number
The Holder hereby represents and warrants to and agrees with the
Company that, if the shares of Common Stock which the Holder hereby subscribes
for have not been effectively registered under the Securities Act of 1933, or
any similar Federal statute in effect at the date of this Election to Purchase,
the Holder is purchasing said shares of Common Stock for his or its own account
for investment, and not with a view to, or for sale in connection with, any
6
distribution of such shares and without any present intention of distributing or
selling such shares and that a legend to such extent may be placed on all
certificates for shares of such Common Stock.
Very truly yours,
(Signature of Holder or duly authorized Agent)
7
