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"), Kos Holdings, Inc., a Florida
corporation ("Holdings"), and Kos Investments, Inc., a Florida corporation
("Investments").
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 proposed to issue a Promissory Note, dated
July 1, 1996 (the "Note"), to Investments for an aggregate
principal amount of $15,000,000, which is convertible to
shares of Common Stock (the "Investments Shares", and together
with the Holdings Shares, the "Shares") at the option of
Investments. Under the terms of the Note, the Company will
grant Investments 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 or Investments to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (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,
Investments, 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" or "Investments" 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 and Investments shall have the right (a "Request Right") to require the
Company to effect an aggregate of 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 or Investments 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
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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 or Investments 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.
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
and Investments of its intention to do so and, upon the written request of
Holdings or Investments or both 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 or
Investments 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 or
Investments; 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 or Investments.
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 or Investments or both accept 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 or Investments or both 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 and Investments have requested to be
included, then Holdings or Investments or both shall participate in the
underwriting pro rata based upon their total ownership of Registrable Shares
compared to the total number of shares held by affiliates of the Company for
which
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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 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 or Investments or both 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 or Investments or both may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares; 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 or Investments shall reasonably request, and do
any and all other acts and things that may be necessary or desirable to enable
Holdings or Investments or both to consummate the public sale or other
disposition of the Registrable Shares owned by Holdings or Investments or both
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 or Investments or both 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 or Investments or both shall
immediately cease offering or selling the Registrable Securities and, if
requested, return all old prospectus to the Company. Holdings or Investments or
both 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.
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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' and Investments' own counsel and
accountants, which shall be borne by such party.
5. INFORMATION BY HOLDINGS AND INVESTMENTS. Holdings and Investments
shall promptly furnish to the Company such information regarding Holdings and
Investments and the distribution proposed by Holdings or Investments 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 the Company or an underwriter
or both in connection with an underwritten offering of Common Stock or other
securities of the Company, Holdings and Investments shall agree not to sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by Holdings or Investments 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
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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 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.
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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.
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 Investments:
Attention:
If to the Company:
Kos Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, President
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
KOS HOLDINGS, INC., a Florida
corporation.
By:
KOS INVESTMENTS, INC., a Florida
corporation.
By:
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