EXHIBIT 10.6
AMENDMENT NUMBER ONE TO THE
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment Number One (this "Amendment") to the Agreement and
Plan of Reorganization dated as of June 30, 1997 (the "Agreement") among
Triangle Pharmaceuticals, Inc. ("Triangle"), Project Z Corporation ("Project
Z") and Avid Corporation ("Avid"), is made as of this 28th day of February,
1999, by and among Triangle, Avid and Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx and
Xxxxxx X. Xxxxx (the "Securityholder Agent"), on behalf of and as
attorney-in-fact for all of the stockholders, optionholders and
warrantholders of Avid immediately prior to the merger of Project Z with and
into Avid (the "Former Avid Stockholders"). Capitalized terms used herein
which are not defined herein shall have the definitions ascribed to them in
the Agreement.
RECITALS
A. Triangle, Project Z and Avid entered into the Agreement, pursuant
to which Project Z merged with and into Avid on August 28, 1997, and Avid
became a wholly-owned subsidiary of Triangle.
B. Triangle, Avid and the Securityholder Agent, on behalf of and as
attorney-in-fact for the Former Avid Stockholders, desire to extend the
eighteen (18) month period set forth in Section 1.6(b)(ii)(B) of the
Agreement after which, if Triangle has not Initiated a Definitive Clinical
Trial with the Lead Compound or elected in writing to continue the
development of the Lead Compound, the Securityholder Agent will have the
option to either exercise the Lead Compound Option and to amend certain other
provisions of the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the promises
and covenants contained herein, and for other good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. AMENDMENTS TO AGREEMENT.
1.1 SECTION 1.6(B). The first paragraph of Section
1.6(b) is hereby amended and restated in its entirety as follows:
"(b) STOCK CONSIDERATION. The "Stock Consideration"
shall be the number of shares of Parent Common Stock equal to the sum
of (x) the First Payment (as defined in Section 1.6(b)(i) below) plus
(y) the Second Payment (as defined in Amendment Number One to this
Agreement) plus (z) the Milestone Payments (as defined in Section
1.6(b)(ii) below)."
1.2 SECTION 1.6(B)(II)(A). Section 1.6(b)(ii)(A) of the
Agreement is hereby amended and restated in its entirety as follows:
"(A) In the event that Parent, in its sole
discretion, (x) Initiates (as defined in Section 1.6(b)(iii) below) a
Definitive Clinical Trial (as defined in Section 1.6(b)(iii) below)
with the Lead Compound (as defined in Section 1.6(b)(iii) below), or
(y) notifies the Securityholder Agent (as defined in Section
7.2(g) below) in a writing that specifically references this Section
1.6(b)(ii)(A) of its election to continue the development of the Lead
Compound even if Parent has not Initiated a Definitive Clinical Trial
with the Lead Compound, Parent shall within seventy-five (75) days
thereafter make available to the Exchange Agent (as defined in Section
1.10(a) below) for distribution pursuant to Section 1.10, 1,500,000
shares of Parent Common Stock."
1.3 SECTION 1.6(B)(II)(B). Section 1.6(b)(ii)(B) of the
Agreement is hereby amended and restated in its entirety as follows:
"(B) If neither of the conditions described in
Section 1.6(b)(ii)(A) above is satisfied on or prior to thirty (30)
months after the Closing Date and the Securityholder Agent elects not
to exercise the Lead Compound Option (as defined in Section 5.17
below) within the thirty (30) day period set forth in Section 5.17
below, Parent shall within seventy-five (75) days thereafter make
available to the Exchange Agent for distribution pursuant to Section
1.10, 100,000 shares of Parent Common Stock."
1.4 SECTION 1.7(B)(III). Section 1.7(b)(iii) of the Agreement
is hereby amended and restated in its entirety as follows:
"(iii) REVALUATION OF DESIGNATED ASSETS.
Notwithstanding any prior distribution of the Designated Assets, as of
the date on which all unexercised Assumed Options and Assumed Warrants
expire (the "Revaluation Date"), the Designated Assets shall be
redistributed among the Former Company Stockholders in accordance with
Section 1.7(b)(ii) based on the valuation of such Designated Assets as
of the Revaluation Date. Solely for purposes of the redistribution of
the Designated Assets as of the Revaluation Date contemplated by this
Section 1.7(b)(iii), the shares of Parent Common Stock included in
such Designated Assets shall be valued at the average of the closing
prices of Parent Common Stock on the Nasdaq National Market for the
five (5) consecutive trading days ending five (5) trading days prior
to the Revaluation Date. No revaluation or redistribution of any of
the Designated Assets shall occur with respect to the Stock
Consideration, if any, distributed by Parent after the Revaluation
Date. In no event, however, shall the aggregate value of the Merger
Consideration distributed to the holders of Company Preferred Stock be
less than the aggregate value of the Merger Consideration distributed
to the holders of the Company Common Stock and the holders of Assumed
Options and Assumed Warrants."
1.5 SECTION 1.8(C)(I)(A). Section 1.8(c)(i)(A) of the
Agreement is hereby amended and restated in its entirety as follows:
"(A) At the Effective Time, each Assumed Option
shall be, in connection with the Merger, assumed by Parent. Each
Assumed Option so assumed by Parent under this Agreement shall be
amended prior to the Effective Time to provide that from and after
the Effective Time such Assumed Option (1) may be exercised through a
cashless exercise procedure (to the extent that the Assumed Option
does not already permit the holder thereof to do so) and may be
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exercised notwithstanding the failure of the holder thereof to enter
or remain in the employ of Parent or the Company following the
Merger, (2) may not be exercised at any time prior to the earlier of
(a) thirty (30) months after the Closing Date and (b) the date, if
any, of the written notice from the Securityholder Agent addressed to
the last known domicile address of the holder of such Assumed Option
informing such holder that one of the conditions described in Section
1.6(b)(ii)(A) above has been satisfied (the earlier of such dates
being the "Option Exercise Date"), (3) may not be exercised at any
time after 5:00 p.m. eastern standard time on the date that is
forty-five (45) days after the Option Exercise Date, and (4)
represents only the right to receive upon exercise the portion of the
Merger Consideration issuable to such holder pursuant to Section 1.7
above. Except as so amended, each Assumed Option shall continue to
have, and be subject to, the same terms and conditions set forth in
the Option Plan under which it was issued and/or as provided in the
respective option agreements governing such Assumed Option
immediately prior to the Effective Time. Parent shall reserve from
the Cash Distribution the amount, if any, that the holders of the
Assumed Options would have received had all of the Assumed Options
and all of the Assumed Warrants been exercised in full immediately
prior to the Effective Time (assuming that the exercise price was
paid in cash). The portion of the Cash Distribution reserved by
Parent for issuance upon exercise of the Assumed Options is referred
to as the "Assumed Option Amount." "
1.6 SECTION 1.8(D)(I)(A). Section 1.8(d)(i)(A) of the
Agreement is hereby amended and restated in its entirety as follows:
"(A) At the Effective Time, each Assumed Warrant
shall be, in connection with the Merger, assumed by Parent. Each
Assumed Warrant so assumed by Parent under this Agreement shall be
amended prior to the Effective Time to provide that from and after the
Effective Time such Warrant (1) may be exercised through a cashless
exercise procedure (to the extent that the Assumed Warrant does not
already permit the holder thereof to do so), (2) may not be exercised
at any time prior to the earlier of (a) thirty (30) months after the
Closing Date and (b) the date, if any, of the written notice from the
Securityholder Agent addressed to the last known domicile address of
the holder of such Assumed Warrant informing such holder that one of
the conditions described in Section 1.6(b)(ii)(A) above has been
satisfied (the earlier of such dates being the "Warrant Exercise
Date"), (3) may not be exercised at any time after 5:00 p.m. eastern
standard time on the date that is forty-five (45) days after the
Warrant Exercise Date, and (4) represents only the right to receive
upon exercise the portion of the Merger Consideration issuable to such
holder pursuant to Section 1.7 above. Except as so amended (and as the
warrants issued by the Company to Dominion Ventures, Inc. may be
further amended as contemplated by Section 6.3(s) below prior to the
Effective Time), each Assumed Warrant shall continue to have, and be
subject to, the same terms and conditions as provided in the
respective Assumed Warrant agreement immediately prior to the
Effective Time. Parent shall reserve from the Cash Distribution the
amount, if any, that the holders of the Assumed Warrants would have
received had all of the Assumed Warrants and all
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of the Assumed Options been exercised in full immediately prior to the
Effective Time (assuming that the exercise price was paid in cash).
The portion of the Cash Distribution reserved by Parent for issuance
upon exercise of the Assumed Warrants is referred to as the "Assumed
Warrant Amount." "
1.7 SECTION 5.17. The first paragraph of Section 5.17 of the
Agreement is hereby amended and restated in its entirety as follows:
"5.17 OPTION TO OBTAIN RIGHTS TO LEAD COMPOUND. In
the event that neither of the conditions described in Section
1.6(b)(ii)(A) is satisfied on or prior to the date that is thirty (30)
months after the Closing Date, the Securityholder Agent shall have the
option ("Lead Compound Option"), subject to the conditions and on the
terms described below, to acquire on behalf of each holder of any
Company Capital Stock outstanding immediately prior to the Effective
Time and each holder of an Assumed Option or an Assumed Warrant that
is timely and properly exercised after the Closing (together, the
"Former Company Stockholders") pursuant to the Technology Transfer
Agreement in the form attached hereto as EXHIBIT 5.17 (the "Technology
Transfer Agreement"): (i) all of Parent's and the Company's rights in
the Lead Compound, in all improvements solely and exclusively of, and
enhancements solely and exclusively to, the Lead Compound (the "Lead
Compound Improvements") and in all documents and data created solely
and exclusively in connection with the development of the Lead
Compound (the "Lead Compound Information") (and in both the case of
Lead Compound Improvements and Lead Compound Information, not in any
way related to any of the other compounds, technologies or assets of
Parent or the Company), and (ii) one copy of all documents that
contain any data regarding clinical trials of the Lead Compound in
combination with other drugs or drug candidates, redacted to exclude
therefrom any other information contained therein (together with the
Lead Compound Information, the "Lead Compound Documents"). In the
event the Securityholder Agent delivers written notice to Parent of
his or her election to exercise the Lead Compound Option within thirty
(30) calendar days after the date of the Parent Notice (as defined in
Section 5.17(a) below), Parent shall thereafter, subject to and in
compliance with good medical and clinical trial practices, promptly
and permanently cease, and shall cause the Company to cease, all
development and use of the Lead Compound, the Lead Compound
Improvements and the Lead Compound Documents (collectively, the "Lead
Compound Rights")."
1.8 SECTION 7.2(B)(I). Section 7.2(b)(i) of the Agreement is
hereby amended and restated in its entirety as follows:
"(i) In the event that neither of the conditions
described in Section 1.6(b)(ii)(A) is satisfied on or prior to the
date that is eighteen (18) months after the Closing Date, Parent and
the Securityholder Agent shall deliver written notice to the Escrow
Agent certifying that neither of the conditions has been satisfied.
The Escrow Agent shall within seventy-five (75) days thereafter
deliver to the stockholders of the Company the portion of the Escrow
Fund, if any, in excess of 200,000 shares of Parent
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Common Stock, not including the Second Payment. Deliveries of Escrow
Amounts to the stockholders of the Company pursuant to this Section
7.2(b)(i) shall be made in accordance with Section 1.7(b)(ii) based on
their interest in such Escrow Amounts as of February 28, 1999. Parent
shall reserve from such distribution the amount, if any, that the
holders of the Assumed Options and the Assumed Warrants would have
received had all of the Assumed Options and all of the Assumed
Warrants been exercised in full on February 28, 1999. Solely for
purposes of the distribution pursuant to this Section 7.2(b)(i) the
shares of Parent Common Stock included in such distribution shall be
valued at the average of the closing prices of Parent Common Stock on
the Nasdaq National Market for the five (5) consecutive trading days
ending February 28, 1999, and not at the value as of the Revaluation
Date. The Escrow Agent shall not be obligated to deliver any Escrow
Amounts to the stockholders of the Company pursuant to Section
7.2(b)(i) unless and until the Securityholder Agent shall have
delivered an Agent Certificate to Parent and the Escrow Agent with
respect to such Escrow Amounts as required by this Section 7.2(b)(i)."
1.9 SECTION 7.2(B)(II). Section 7.2(b)(ii) of the Agreement
is hereby amended and restated in its entirety as follows:
"(ii) As soon as all claims specified in any
Officer's Certificate delivered to the Escrow Agent prior to
termination of the Escrow Period have been resolved and after the
termination of the Escrow Period, the Escrow Agent shall deliver to
the stockholders of the Company the remaining portion of the Escrow
Fund, not including the Second Payment, not required to satisfy such
claims. Deliveries of Escrow Amounts to the stockholders of the
Company pursuant to this Section 7.2(b)(ii) shall be made in
accordance with Section 1.7(b)(ii) based on their interest in such
Escrow Amounts as of August 31, 1999. Parent shall reserve from such
distribution the amount, if any, that the holders of the Assumed
Options and the Assumed Warrants would have received had all of the
Assumed Options and all of the Assumed Warrants been exercised in full
on August 31, 1999. Solely for purposes of the distribution pursuant
to this Section 7.2(b)(ii) the shares of Parent Common Stock included
in such distribution shall be valued at the average of the closing
prices of Parent Common Stock on the Nasdaq National Market for the
five (5) consecutive trading days ending August 31, 1999, and not at
the value as of the Revaluation Date. The Escrow Agent shall not be
obligated to deliver any Escrow Amounts to the stockholders of the
Company pursuant to Section 7.2(b)(ii) unless and until the
Securityholder Agent shall have delivered an Agent Certificate to
Parent and the Escrow Agent with respect to such Escrow Amounts as
required by this Section 7.2(b)(ii)."
2. SECOND PAYMENT.
Triangle shall, on or before May 14, 1999, or as soon
thereafter as is reasonably practicable, deliver 100,000 shares of Triangle
Common Stock (the "Second Payment") to the Escrow Agent. The certificate for
the Second Payment shall be issued as of April 1, 1999, shall be deposited in
the Escrow Fund and shall be held by the Escrow Agent for each of the Former
Avid Stockholders in proportion to the aggregate number of shares of Parent
Common Stock which such holder would otherwise be entitled to receive from
the aggregate of the First
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Payment and the Second Payment pursuant to Section 1.7 of the Agreement by
virtue of such holder's ownership of outstanding shares of Company Capital
Stock immediately prior to the Effective Time, and assuming for the purposes
of such allocation that the holders of all Assumed Options and the holders of
all Assumed Warrants were the holders of the number of shares of the Company
Common Stock that would have been issued had all of the Assumed Options and
all of the Assumed Warrants been exercised in full immediately prior to the
Effective Time (assuming that the exercise price was paid in cash). The
Second Payment shall not be subject to claims against the Escrow Fund by
Triangle for Losses pursuant to Section 7.2 of the Agreement, except for
Losses, if any, identified in Subsection 7.2(a)(iv) of the Agreement. Subject
to the receipt of an Agent Certificate, in form acceptable to Triangle,
pursuant to Section 1.7(d)(i) of the Agreement with respect to the
distribution of the Second Payment, the Second Payment shall be distributed
from the Escrow Account within seventy-five (75) days after the expiration of
the thirty (30) month period set forth in Section 1.6(b)(ii)(B) of the
Agreement. Triangle shall be entitled to rely without investigation on the
accuracy of the information set forth in such Agent Certificate.
3. SECURITYHOLDER AGENT'S EXPENSES.
Triangle shall pay the reasonable fees and expenses of
legal counsel to the Securityholder Agent incurred in connection with the
drafting and review of this Amendment and the transactions contemplated
hereby, subject to verification of fees by Triangle.
4. EFFECT OF AMENDMENT.
Except as amended and set forth above, the Agreement shall
continue in full force and effect. In the event of any conflict between the
terms of the Agreement and the terms of this Amendment, the terms of this
Amendment shall govern and control.
5. FURTHER ASSURANCES.
The parties agree to execute such further instruments,
agreement and documents and to take such further action as may reasonably be
necessary to carry out the intent of this Amendment.
6. COUNTERPARTS.
This Amendment may be executed in any number of
counterparts, each which will be deemed an original, and all of which
together shall constitute one instrument.
7. SEVERABILITY.
If one or more provisions of this Amendment are held to be
unenforceable under applicable law, such provision shall be excluded from
this Amendment and the balance of the Amendment shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with
its terms.
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8. GOVERNING LAW.
This Amendment shall be governed by and construed under the
laws of the State of Delaware regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
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This Amendment is hereby executed as of the date first above written.
TRIANGLE: TRIANGLE PHARMACEUTICALS, INC., a
Delaware corporation
By:
---------------------------------
X. Xxxxx Xxxxx, President and
Chief Operating Officer
AVID: AVID CORPORATION, a Pennsylvania
corporation
By:
---------------------------------
X. Xxxxx Xxxxx, President
SECURITYHOLDER AGENT:
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Xxxxxxx X. Xxxxxxx
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Xxxx X. Xxxxxx
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Xxxxxx X. Xxxxx
[SIGNATURE PAGE TO AMENDMENT NUMBER ONE TO
THE AGREEMENT AND PLAN OF REORGANIZATION]
