Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT, dated May 1, 1995, between
PHARMACEUTICAL RESOURCES, INC., a New Jersey corporation (the "Company"), and
CLAL PHARMACEUTICAL INDUSTRIES LTD., a corporation formed under the laws of the
State of Israel (the "Holder").
WHEREAS, the Holder has purchased shares of common stock, par value
$.01 per share, of the Company ("Common Stock") pursuant to a Stock Purchase
Agreement, dated March 25, 1995, between the Company and the Holder (the "Stock
Purchase Agreement") and may purchase additional shares of Common Stock upon
exercise of the Warrant and the Additional Warrant (as such terms are defined in
the Stock Purchase Agreement) (collectively referred to herein as the "Warrants"
and each as a "Warrant"); and
WHEREAS, the Stock Purchase Agreement provides that the execution and
delivery of this Agreement is a condition precedent to the obligation of the
Holder to consummate 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 Registration.
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1.1 The Company agrees that, upon receiving a written request (the
"Request") from the Holder to register under the Securities Act of 1933 (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 part of the Subject Stock then owned by the Holder, 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 Company, under no circumstances, shall be
required to make more than two effective filings of a registration statement
under this Section 1; provided, however, that beginning at such time, if ever,
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as the Holder shall exercise the Warrant which shall be dated the date hereof,
in whole or in part, the Company shall be obligated to effect one additional
registration pursuant to this Section 1 following the Holder's delivery of a
Request and, provided further, that
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the Holder may not deliver more than one Request during any 12 month period.
The Company may, in its sole discretion, include additional 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.
1.2 "Subject Stock" shall mean the number of shares of Common Stock
owned by the Holder which shall have been purchased by the Holder (a) under the
Stock Purchase Agreement at the Closing (as such term is defined therein), (b)
upon any exercise of the Warrants or (c) in any other manner. "Registration
statement" means all registration statements, including all prospectuses
contained therein and all amendments or supplements thereto, or any applications
filed under the Securities Act or under the securities laws of the applicable
states.
1.3 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 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, subject
to the limitations set forth in Section 4 hereof.
1.4 If the method of disposition requested by the Holder pursuant to
this Section 1 shall be an underwritten public offering, the Holder shall have
the right to designate the underwriter of such offering. Any underwriter
selected by the Holder shall be subject to the approval of the Company, which
approval shall not be unreasonably withheld (the "Underwriter"). The Company
will join the Holder in entering into an underwriting agreement and related
agreements with the Underwriter, which shall be in form and substance reasonably
satisfactory to the Company but to contain terms and provisions typically
contained in the underwriting agreements utilized by such Underwriter in
connection with comparable public offerings, including an indemnification of the
Underwriter by the Company.
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 by the Company and the Holder 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 by the Holder; provided, however,
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that if the Company shall include any shares of Common Stock in any such
registration, then the Company shall reimburse the Holder,
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within ten days following the Holder's written request, for the Company's pro
rata share of any underwriting discounts, commissions, filing fees, other fees
and transfer taxes on the sale of any shares, based on the number of shares of
Common Stock included by the Company in such registration as compared to the
total number of shares of Common Stock being registered.
SECTION 2. Piggyback Registration.
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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 Holder
at least forty days prior to such filing. Upon the written request of the
Holder, given within fourteen 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 Holder, subject to
limitations as to the number of shares of Subject Stock that may be imposed by
the Company's underwriter; provided, however, that if such registration
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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
Holder 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 Holder
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 a reasonable
number of states specified by the Holder. 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, subject to the limitations set forth in Section 4 hereof.
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2.3 The Holder 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 states in which shares of the Subject Stock are being sold), except that
the Holder shall promptly reimburse the Company for all such expenses using the
ratio of net cash received by the Holder 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 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. (a) If the
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Company at any time shall register shares of Common Stock under the Securities
Act for sale to the public, the Holder shall not sell publicly, make any short
sale, 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 Holder, which period shall begin not more than ten 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 on directors and executive officers of the Company shall terminate;
provided, however, that, in no event, shall such restrictions last more than 180
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days after the effective date of such registration statement.
(b) During the Consent Period (as such term is defined in the Stock
Purchase Agreement), the Holder shall not sell, transfer or otherwise dispose of
shares of Common Stock registered pursuant to this Agreement constituting 3% or
more of the issued and outstanding shares of Common Stock at the time of such
sale, transfer or disposition, to any one person or entity or group of related
persons or entities in one transaction or series of related transactions,
notwithstanding anything herein to the contrary.
SECTION 4. Preparation and Filing. Whenever the Company shall be
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under an obligation pursuant to this Agreement to use its best efforts to effect
the registration
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of the shares of Subject Stock, the Company and the Holder 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
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 trading on each securities exchange or other securities market on which
the shares of Common Stock shall then be listed.
(c) The Company may require the Holder to promptly furnish in writing
to the Company such information regarding 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 Holder 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 Holder,
and will supply such Holder 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
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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, to subject
itself to taxation 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 Holder of any stop order
issued or threatened by the Commission or any state regulatory authority
with respect to any registration statement covering the
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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) The Company shall promptly notify the Holder 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, the Holder shall refrain from the sale
of any shares of Subject Stock pursuant to such registration statement and
prospectus until the receipt by such Holder of copies of the supplemented
or amended registration statement and prospectus.
SECTION 5. Information. The Holder agrees that, promptly upon the
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request of the Company, it shall furnish to the Company such information
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. The 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, the Holder further agrees that it indemnify the Company and hold it
harmless from and against any liability, loss, cost or damage, including
attorneys' fees, incurred by the Company as a result of any failure on the
Holder's part to carry out the foregoing agreement.
SECTION 6. Indemnification.
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6.1 Indemnitors; Indemnified Persons. For purposes of this Section
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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 persons and entities, and each such person and 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
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hold harmless each of the Holder, and its directors, officers, employees, agents
and controlling persons (within the meaning of Section 15 of the Securities
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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 the Holder or on the Holder's behalf expressly for use therein.
6.3 Holder Indemnity. The Holder hereby agrees to indemnify and hold
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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 Holder,
but only with reference to information relating to the Holder furnished in
writing by the Holder or on the Holder's behalf expressly for use in any
registration statement or prospectus relating to the Subject Stock or any
amendment or supplement thereto. The total amount payable by the Holder
pursuant to this Section 6.3 shall not exceed an amount equal to the number of
shares sold by the Holder in the registered offering that 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
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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 materially 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 in its
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judgment 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
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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 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, 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, 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
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held by a court 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
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Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the 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 the Holder pursuant to this
Section 6.5 shall not exceed an amount equal to the number of shares sold by the
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 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.
SECTION 7. Termination. This Agreement shall terminate upon the sale
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or disposition of beneficial ownership by the Holder of all shares of the
Subject Stock; provided, however, this Agreement shall continue in effect as to
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any indemnification and payment or reimbursement obligations herein.
SECTION 8. Miscellaneous.
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8.1 Assignment. All terms and provisions of this Agreement shall be
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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 by any party hereto
without the prior written consent of the other party; provided, however, that
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the Holder may assign this Agreement to any permitted assignee under Section
15.2 of the Stock Purchase Agreement without the Company's written consent so
long as (i) such assignee shall agree to assume and agree to be bound by all of
the Holder's obligations hereunder and (ii) the Holder shall not be relieved of
its primary liability to the Company for all of the Holder's obligations set
forth herein.
8.2 Entire Agreement. This Agreement and the other agreements
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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 and contemporaneous arrangements or understandings with respect thereto.
8.3 Notices. All notices hereunder shall be in writing and shall be
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given: (a) if to the Company, at One Ram Ridge Road, Spring Valley, New York
10977 (attention:
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Kenneth I. Sawyer), fax number: (914) 425-5097, or such other address or fax
number as the Company shall have designated in writing to the Holder, or (b) if
to the Purchaser, at Clal House, 5 Druyanov Street, Tel Aviv 63143, Israel
(attention: Ze'ev Zehavi), fax number: (011-972-3) 293633, with a copy to
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036
(attention: Jeffrey A. Horwitz, Esq.), fax number: (212) 969-2900, or such other
address or fax number as the Holder shall have designated in writing to the
Company. 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
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terminated, and no provision hereof may be waived, except pursuant to a written
instrument executed by the Company and the Holder.
8.5 Counterparts. This Agreement may be executed in any number of
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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
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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
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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
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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 the intention of the parties with respect to the
invalid or unenforceable term or 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/ Kenneth I. Sawyer
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Kenneth I. Sawyer,
President
CLAL PHARMACEUTICAL
INDUSTRIES LTD.
By /s/Mony Ben-Dor, Director
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By /s/Ze'ev Zehavi, President
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