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EXHIBIT E
TRIANGLE PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as
of June __, 1997, by and among Triangle Pharmaceuticals, Inc., a Delaware
corporation (the "Company") with its principal office at 0 Xxxxxxxxxx Xxxxx,
0000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxx Xxxxxxxx, 00000, (000) 000-0000 (fax), and
the entities listed on the Schedule of Investors attached hereto as Exhibit A
---------
(the "Purchasers"). Unless otherwise defined herein, capitalized terms used
herein and not defined herein shall have the meanings given to them in
Regulation S ("Regulation S") under the Securities Act of 1933, as amended (the
"Securities Act").
Section 1
Authorization and Sale of Common Stock
--------------------------------------
1.1 Authorization. The Company has authorized the sale and
-------------
issuance of 2,000,000 shares of its Common Stock pursuant to this Agreement (the
"Shares").
1.2 Sale of Common. Subject to the terms and conditions of this
--------------
Agreement, the Company agrees to issue and sell to each Purchaser and each
Purchaser severally agrees to purchase from the Company the number of Shares set
forth opposite each Purchaser's name on Exhibit A for $15.00 per share. The
---------
Company shall be responsible for any transfer or stamp taxes in respect of
issuing the Shares.
Section 2
Closing Date; Delivery
----------------------
2.1 Closing Date. The closing of the purchase and sale of the
-------------
Shares hereunder (the "Closing") shall be held at the offices of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at
2:00 p.m. Eastern Daylight Savings Time on June ___, 1997, or at such other time
and place upon which the Company and the Purchasers purchasing the majority of
the Shares shall agree. The date of the Closing is hereinafter referred to as
the "Closing Date."
2.2 Delivery. At the Closing, the Company will deliver to each
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Purchaser a certificate, registered in the Purchaser's name as shown on Exhibit
-------
A, representing the number of Shares to be purchased by the Purchaser. Such
-
delivery shall be against payment of the purchase price therefor by check or
wire transfer to the Company in the amount set forth on Exhibit A. It is agreed
---------
among all parties that the issuance and sale of the Shares to the Purchasers
shall occur as one simultaneous transaction at the Closing.
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Section 3
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to the Purchasers as of the
Closing as follows:
3.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing as a domestic corporation under the laws of
said state.
3.2 Corporate Power; Authorization. The Company has all requisite
------------------------------
legal and corporate power and has taken all requisite corporate action to
execute and deliver this Agreement, to sell and issue the Shares and to carry
out and perform all of its obligations under this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally. The execution and delivery of this Agreement does not, and
the performance of this Agreement and the compliance with the provisions hereof
and the issuance, sale and delivery of the Shares by the Company will not,
materially conflict with, or result in a material breach or violation of the
terms, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien pursuant to the terms
of, the Certificate of Incorporation or Bylaws of the Company or any statute,
law, rule or regulation or any state or federal order, judgment or decree or any
indenture, mortgage, lease or other material agreement or instrument to which
the Company or any of its properties is subject.
3.3 Issuance and Delivery of the Shares. The Shares, when issued
-----------------------------------
and paid for in accordance with the provisions of this Agreement, will be
validly issued and outstanding, fully paid and nonassessable. The issuance and
delivery of the Shares is not subject to preemptive or any other similar rights
of the stockholders of the Company or any liens or encumbrances.
3.4 SEC Documents; Financial Statements. Each report or proxy
--------------------------------------
statement delivered to the Purchasers is a true and complete copy of such
document as filed by the Company with the Securities and Exchange Commission
(the "SEC"). The Company has delivered to each Purchaser its Annual Report on
Form 10-K for the year ended December 31, 1996 (the "1996 10-K") and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (the "March
10-Q"). The Company has filed in a timely manner all documents that the Company
was required to file with the SEC under Sections 13, 14(a) and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since its
initial public offering. As of their respective filing dates, all documents
filed by the Company with the SEC (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
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of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
3.5 Governmental Consents. No consent, approval, order or
----------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement except for (a) such filings as have been made
prior to the Closing, except that any notices of sale required to be filed with
the SEC under Regulation D of the Securities Act, or such post-closing filings
as may be required under applicable state securities laws, which will be timely
filed within the applicable periods therefor, and (b) the filing of the Nasdaq
National Market Notification Form with the Nasdaq National Market.
3.6 No Material Adverse Change. Except as otherwise disclosed
----------------------------
herein or as disclosed to the Purchasers in writing prior to the Closing, since
March 31, 1997, there have not been any changes in the assets, liabilities,
financial condition, business prospects or operations of the Company from that
reflected in the March 10-Q and the Financial Statements except changes in the
ordinary course of business which have not been, either individually or in the
aggregate, materially adverse.
3.7 Authorized Capital Stock. The authorized capital stock of the
------------------------
Company consists of (i) 75,000,000 shares of Common Stock, of which 17,585,108
shares are outstanding, and (ii) 5,000,000 shares of Preferred Stock, none of
which is outstanding. Except as set forth in the March 10-Q or the 1996 10-K or
as disclosed to the Purchasers in writing prior to the Closing, and except for
the grant of options to purchase a total of 15,500 shares of Common Stock
granted on May 1, 1997, there are no outstanding options, warrants or other
securities exercisable for, or convertible into, or commitments to issue
securities exercisable for or convertible into, capital stock of the Company, or
other commitments to issue any capital stock of the Company.
3.8 No Dividends. The Company has not declared or paid any
-------------
dividends, or authorized or made any distribution or established any record date
for the issuance of any dividend or other distribution upon or with respect to
any class or series of its capital stock and will not do any of the foregoing
until after Purchasers have been listed as record holders of the Shares
purchased at the Closing.
3.9 Litigation. Except as disclosed in the SEC Documents, there
----------
are no actions, suits, proceedings or investigations pending or, to the best of
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the Company's knowledge, threatened against the Company or any of its properties
before or by any court or arbitrator or any governmental body, agency or
official in which there is a reasonable likelihood (in the judgment of the
Company) of an adverse decision that (a) could have a material adverse effect on
the Company's properties or assets or the business of the Company as presently
conducted or proposed to be conducted or (b) could impair the ability of the
Company to perform in any material respect its obligations under this Agreement.
3.10 Real Property Holding Corporation. The Company is not and
-----------------------------------
will not voluntarily become a real property holding corporation within the
meaning of Internal Revenue Code Section 897(c)(2) and any regulations
promulgated thereunder.
3.11 Regulation S Representations.
----------------------------
(a) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) nor any person acting on its or
their behalf has engaged or will engage in any Directed Selling Efforts in
connection with the offer and sale of the Shares.
(b) The Company is a Reporting Issuer within the meaning of
Regulation S.
(c) The Company has not offered the Shares to any persons other
than the Purchasers.
(d) The offer and sale of the Shares to the Purchasers are not
part of a plan or scheme on the part of the Company, any of its affiliates
(within the meaning of Rule 144 under the Securities Act) or any person acting
on its or their behalf to evade the registration provisions of the Securities
Act.
3.12 Amendment to Rights Agreement. The First Amendment to
--------------------------------
Restated Investors' Rights Agreement (the "Rights Amendment") in the form
attached hereto as Exhibit B. has been executed by the persons and entities that
---------
are required to effectively amend the Restated Investors' Rights Agreement dated
June 11, 1996 among the Company and the persons listed in Schedule A attached
----------
thereto (the "Rights Agreement"), and the Rights Amendment constitutes a legal,
valid and binding obligation of the Company.
Section 4
Representations, Warranties and Covenants of the Purchasers
-----------------------------------------------------------
Each Purchaser hereby severally represents and warrants to the
Company as of the Closing Date, and agrees in favor of the Company, as follows,
except that Duquesne Fund, L.P. ("Duquesne") does not make any of the
representations or warranties contained in Section 4.5(a), (b) or (f):
4.1 Authorization. Purchaser represents and warrants to the
-------------
Company that: (i) Purchaser has been duly formed and is validly existing in good
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standing under the laws of the jurisdiction of its formation; (ii) Purchaser has
all requisite legal and corporate or other power and capacity and has taken all
requisite corporate or other action to execute and deliver this Agreement, to
purchase the Shares to be purchased by it and to carry out and perform all of
its obligations under this Agreement; and (iii) this Agreement constitutes the
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, or similar laws relating to or affecting the enforcement of
creditors' rights generally and (b) as limited by equitable principles
generally.
4.2 Independent Investment Decision. Purchaser understands that
--------------------------------
no United States federal or state agency has passed on, reviewed or made any
recommendation or endorsement of the Shares. In making the decision to purchase
the Shares in accordance with this Agreement, Purchaser has relied solely upon
independent investigations made by it and not upon any representations made by
the Company other than those made pursuant to this Agreement.
4.3 Investment Intent. Purchaser is purchasing the Shares for its
-----------------
own account, for investment purposes only, and not with a view to a distribution
thereof. Purchaser further understands that its acquisition of the Shares has
not been registered under the Securities Act or registered or qualified under
any state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein. Duquesne is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D under the
Securities Act, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares to be made by it hereunder.
4.4 Registration or Exemption Requirements. Purchaser further
---------------------------------------
acknowledges and understands that the Shares have not been registered under the
Securities Act and may not be resold or otherwise transferred except in a
transaction registered under the Securities Act or unless an exemption from such
registration is available.
4.5 Regulation S Representations.
----------------------------
(a) Purchaser is not a U.S. Person and is not acquiring the
Shares for the account or benefit of any U.S. Person, and Purchaser is not an
affiliate (within the meaning of Rule 144 under the Securities Act) of the
Company.
(b) At the time the buy orders for the Shares were originated,
Purchaser was located outside the United States.
(c) Neither Purchaser nor any of its affiliates nor anyone
acting on its or their behalf has engaged or will engage in any Directed Selling
Efforts in connection with the offer and sale of the Shares.
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(d) Purchaser:
will not, prior to the later of the end of the Restricted Period
and November 1, 1997, offer or sell any of the Shares (or create or maintain any
derivative position equivalent thereto) in reliance on Regulation S and will
only offer or sell any of the Shares (or create or maintain any derivative
position equivalent thereto) during such period pursuant to registration under
the Securities Act or pursuant to an available exemption from registration other
than Regulation S and, in any case, in accordance with applicable state
securities laws and the provisions of this Agreement; and will, after November
1, 1997, offer or sell the Shares (or create or maintain any derivative position
equivalent thereto) only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration and, in any case, in accordance with applicable
state securities laws and the provisions of this Agreement. Purchaser further
agrees that unless the transfer is pursuant to a registration under the
Securities Act, prior to the transfer (A) Purchaser will notify the Company of
the proposed transfer and will furnish the Company with a detailed statement of
the circumstances surrounding the proposed transfer, and (B) if reasonably
requested by the Company, Purchaser will furnish the Company with an opinion of
counsel, reasonably satisfactory to the Company and its counsel, that such
transfer will not require registration of the Shares under the Securities Act.
Purchaser agrees to provide an opinion of counsel for all transfers pursuant to
Regulation S.
(e) Neither Purchaser's offer to buy the Shares nor Purchaser's
acquisition of the Shares is part of a plan or scheme on the part of Purchaser,
any of its affiliates or any person acting on its or their behalf to evade the
registration requirements of the Securities Act.
(f) Purchaser's offer to buy the Shares constituted, and
Purchaser's acquisition of the Shares will constitute, an Offshore Transaction.
(g) In addition to, and without in any way limiting, the other
restrictions contained in this Agreement, during any Restricted Period
applicable to the Shares, neither Purchaser nor any of its affiliates nor any
person acting on its or their behalf will engage in any Directed Selling Efforts
with respect to such Shares.
4.6 No Legal, Tax or Investment Advice. Purchaser understands
------------------------------------
that nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
4.7 Legends. To the extent applicable, each certificate or other
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document evidencing any of the Shares shall be endorsed with the legends set
forth in Sections 4.7(a) and (b) below (other than the Shares purchased by
Duquesne, which shall be endorsed with the legends set forth in Sections 4.7(b)
and (c) below), and the Purchaser covenants that, except to the extent such
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restrictions are waived by the Company, the Purchaser shall not transfer the
shares represented by any such certificate without complying with the
restrictions on transfer described in the legends endorsed on such certificate:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"). PRIOR TO NOVEMBER 1,
1997, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION OTHER THAN REGULATION S.
AFTER NOVEMBER 1, 1997, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT,
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION."
"THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER CONTAINED IN A CERTAIN COMMON STOCK PURCHASE AGREEMENT, AS AMENDED FROM
TIME TO TIME. THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER THE SECURITIES
ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE SECURITIES ACT OR ANOTHER
AVAILABLE EXEMPTION THEREFROM, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
(d) Any other legend required by law.
4.8 HSR Filings. No filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
-----------
Improvements Act of 1976, as amended, is or will be required by any of the
Purchasers in connection with the acquisition of the Shares by the Purchasers.
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Section 5
Conditions to Closing of Purchasers
-----------------------------------
Each Purchaser's obligation to purchase the Shares at the Closing
is, at the option of such Purchaser, subject to the fulfillment or waiver (in
its sole discretion) on or before the Closing Date of the following conditions:
5.1 Representations and Warranties. The representations and
--------------------------------
warranties of the Company contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Covenants. The Company shall have performed and complied with
---------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required as of the Closing in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective as of the Closing.
5.4 Amendment to Rights Agreement. The Company and the persons
------------------------------
whose signatures are required to effectively amend the Rights Agreement shall
have executed the First Amendment to Restated Investors' Rights Agreement in the
form attached hereto as Exhibit B.
Section 6
Conditions to Closing of Company
--------------------------------
The Company's obligation to sell and issue the Shares at the
Closing is, at the option of the Company, subject to the fulfillment or waiver
of the following conditions:
6.1 Representations and Warranties. The representations and
--------------------------------
warranties of the Purchasers contained in Section 4 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of such Closing.
6.2 Covenants. The Purchasers shall have performed and complied
---------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by the Purchasers on or before the
Closing.
6.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
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any state that are required as of the Closing in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective as of the Closing.
6.4 Amendment to Rights Agreement. The Purchasers and the persons
-----------------------------
whose signatures are required to effectively amend the Rights Agreement shall
have executed the First Amendment to Restated Investors' Rights Agreement in the
form attached hereto as Exhibit B.
Section 7
Affirmative Covenants of the Company
------------------------------------
The Company hereby covenants and agrees as follows:
7.1 Financial Information. The Company will mail the following
----------------------
reports to each Purchaser until such Purchaser transfers, assigns or sells the
Shares purchased by such Purchaser pursuant to this Agreement:
(a) Within one hundred (100) days after the end of each fiscal
year, a copy of its Annual Report on Form 10-K.
(b) Within fifty-five (55) days after the end of the first,
second and third quarterly accounting periods of each fiscal year of the
Company, a copy of its Quarterly Report on Form 10-Q.
(c) Within ten (10) days after the Company files any Current
Report on Form 8-K with the SEC, such Current Report on Form 8-K.
7.2 Registration Requirements.
-------------------------
(a) As soon as practicable after the Company becomes eligible to
file a registration statement on Form S-3 registering the resale of the Shares,
or, in the event that the Company is not eligible to file a registration
statement on Form S-3 registering the resale of the Shares by November 1, 1997,
then on a subsequent date as soon as practicable after the Purchasers holding
more than fifty percent (50%) of the Shares then outstanding may request in
writing, the Company shall prepare and file a registration statement with the
SEC under the Securities Act to register the resale of the Shares (and the
additional 789,500 shares of the Company's Common Stock held by the Purchasers
as of the date hereof) by the Purchasers (the "Registration Statement") and use
its best efforts to cause such registration statement to be declared effective.
All Purchasers shall deliver to the Company an executed copy of the Registration
Statement Questionnaire in the form attached hereto as Exhibit C as a condition
precedent to the Company's obligation to file the Registration Statement with
the SEC and in any event within ten (10) days of the Company's request therefor.
Each Purchaser will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding such Purchaser or
such Purchaser's "Plan of Distribution."
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(b) The Company shall pay all Registration Expenses (as defined
below) in connection with any registration, qualification or compliance
hereunder, and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the Shares
resold by such Purchaser. "Registration Expenses" shall mean all expenses,
except for Selling Expenses, incurred by the Company in complying with the
registration provisions herein described, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration. "Selling Expenses" shall mean all selling commissions,
underwriting discounts and stock transfer taxes applicable to the Shares and all
fees and disbursements of counsel for any Purchaser.
(c) In the case of the registration effected by the Company
pursuant to these registration provisions, the Company will use its best efforts
to: (i) keep such registration effective until the earliest of (A) nineteen (19)
months after the initial effective date of the Registration Statement, which
date shall be extended by the period (not to exceed five (5) months) equal to
the period, if any, that the Purchasers are unable to sell any Shares as a
result of any withdrawal of the Registration Statement by the Company pursuant
to Section 7.2(f) below (other than a withdrawal in response to any Notice of
Sale (as defined in Section 7.2(f) below) that indicates any Purchaser desires
to sell no more than 50,000 Shares)(the "Effective Period"), and (B) such date
as all of the Shares have been resold in transactions in which the Purchasers
have not assigned their benefits and obligations under Section 7 in accordance
with the provisions of Section 8.5 below; (ii) prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement; (iii) furnish such number of
prospectuses and other documents incident thereto, including any amendment of or
supplement to the prospectus, as a Purchaser from time to time may reasonably
request; (iv) cause all Shares registered as described herein to be listed on
each securities exchange and quoted on each quotation service on which similar
securities issued by the Company are then listed or quoted; (v) provide a
transfer agent and registrar for all Shares registered pursuant to the
Registration Statement and a CUSIP number for all such Shares; and (vi) file the
documents required of the Company and otherwise use its best efforts to maintain
requisite blue sky clearance in (A) all jurisdictions in which any of the Shares
are originally sold and (B) all other states specified in writing by a
Purchaser, provided as to clause (B), however, that the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any state in which it is not now so qualified or has not so
consented.
(d) The Company shall furnish to each Purchaser upon request a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary in order to facilitate the public sale or other
disposition of all or any of the Shares held by the Purchaser.
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(e) With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit a Purchaser to
sell Shares to the public without registration or pursuant to the Registration
Statement, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) the end of the Effective Period or (B) such date as all
of the Shares have been resold in transactions in which the Purchasers have not
assigned their benefits and obligations under Section 7 in accordance with the
provisions of Section 8.5 below; (ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
Exchange Act; and (iii) furnish to any Purchaser upon request, as long as the
Purchaser owns any Shares, (A) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act, (B) a copy of the most recent annual or quarterly report of the Company,
and (C) such other information as may be reasonably requested in order to avail
any Purchaser of any rule or regulation of the SEC that permits the selling of
any such Shares without registration or pursuant to the Registration Statement.
(f) In the event any Purchaser desires to sell the Purchaser's
Shares pursuant to the Registration Statement, the Purchaser shall give the
Company three (3) business days' notice (which notice, if given orally, will be
confirmed in writing within 24 hours) of its desire to sell in reliance on such
Registration Statement including an estimate of whether its desire is to sell
more than 50,000 Shares (the "Notice of Sale"). The Company may refuse to permit
a Purchaser to resell any Shares pursuant to the Registration Statement;
provided, however, that in order to exercise this right, the Company must
deliver a certificate in writing to the Purchaser within three (3) business days
following the Company's receipt of the Notice of Sale to the effect that
withdrawal of such Registration Statement is necessary because a sale pursuant
to the Registration Statement in its then-current form could constitute a
violation of the federal securities laws. In such an event, the Company shall
use its best efforts to amend the Registration Statement if necessary as soon as
practicable and in any event within sixty (60) days after the Company's receipt
of the Notice of Sale, and shall notify the Purchasers promptly after it has
determined that such sale has become permissible under the federal securities
laws. Notwithstanding the foregoing, the Company shall not under any
circumstances be entitled to exercise its right to refuse to permit the resale
of any Shares pursuant to the Registration Statement more than two (2) times in
any twelve (12) month period, except that the Company's exercise of its right to
refuse to permit the resale of any Shares pursuant to the Registration Statement
in response to any Notice of Sale that indicates the Purchaser desires to sell
no more than 50,000 Shares shall not count toward its limit of two (2) refusals
in any twelve (12) month period. The period during which such Registration
Statement may be withdrawn shall not exceed sixty (60) days. Each Purchaser
hereby covenants and agrees that it will not sell any Shares pursuant to the
Registration Statement during the periods the Registration Statement is
withdrawn as set forth in this Section 7.2(f).
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7.3 Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Purchaser and its affiliates (within the meaning of Rule 144 under the
Securities Act) from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which they may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon, (x) any untrue statement of a material fact contained in the
Registration Statement, on the effective date thereof, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (y) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (z) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, or any rule or regulation promulgated
under the Securities Act or the Exchange Act, or arise out of any failure by the
Company to fulfill any undertaking included in the Registration Statement, and
the Company will, as incurred, reimburse such Purchaser for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such loss, claim, damage or liability (or action or proceeding in respect
thereof); provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability (or action or
proceeding in respect thereof) arises out of, or is based upon (i) an untrue
statement made in such Registration Statement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser specifically for use in preparation of the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in Section 7.3 hereof, or
(iii) any untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company and its affiliates (within the meaning
of Rule 144 under the Securities Act) from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, provided, however, that no Purchaser shall be liable in
any such case for any untrue statement included in any Prospectus which
statement has been corrected, in writing, by such Purchaser and delivered to the
Company before the sale from which such loss occurred, (ii) the failure of such
Purchaser to comply with the covenants and agreements contained in Section 7.3
hereof, or (iii) any untrue statement in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser prior to the pertinent
sale or sales by the Purchaser, and each Purchaser, severally and not jointly,
12
Page 41 of 50 Pages
will, as incurred, reimburse the Company for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
loss, claim, damage or liability (or action or proceeding in respect thereof);
provided, however, that no Purchaser shall be liable for any amount in excess of
the amount by which the net amount received by the Purchaser from the sale of
the Shares to which such loss relates exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(c) Promptly after receipt by any indemnified person of a notice
of a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.3, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof; provided,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the indemnified person for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person.
(d) If the indemnification provided for in this Section 7.3 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Purchasers
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
13
Page 42 of 50 Pages
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the net amount received by the Purchaser from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective sales
of Shares to which such loss relates and not joint.
(e) The obligations of the Company and the Purchasers under this
Section 7.3 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Company or any
Purchaser within the meaning of the Act.
7.4 Nomination for Election to Company Board of Directors. Upon
------------------------------------------------------
the request of the record holders of more than fifty percent (50%) of the Shares
then outstanding and held by Purchasers (the "Majority Holders"), the Company
shall use its best efforts to cause its Board of Directors to nominate and elect
or have elected after June 24, 1997, an individual designated in writing by the
Majority Holders, which individual must also be acceptable to the Chairman of
the Company's Board of Directors, to serve on the Company's Board of Directors;
provided, however, that the Company's obligation pursuant to this Section 7.4
shall terminate on the earlier of (i) the second anniversary of the Closing Date
and (ii) the date when the aggregate number of shares of the Company's Common
Stock held by the Purchasers is less than ten percent (10%) of the total number
of outstanding shares of the Company's Common Stock.
7.5 Public Statements. Neither the Company nor the Purchasers
------------------
shall use the name of the other in any press release or filing with the SEC
(excluding Schedule 13Ds and Forms 3, 4 and 5) without the prior approval of the
other party, which approval may not be unreasonably withheld or delayed;
provided, however, that to the extent such prior approval is impracticable, the
-------- -------
party issuing the press release or making the filing with the SEC shall provide
a copy of such press release or SEC filing to the other party as promptly as
practicable thereafter; and provided, further, that if the other party does not
-------- -------
approve such press release or SEC filing, the party issuing the press release or
making the filing with the SEC may still use the name of the other party in any
press release or SEC filing without the prior written approval of the other
party, if the party issuing the press release or making the filing with the SEC
is advised by counsel that such disclosure is required to comply with applicable
law.
14
Page 43 of 50 Pages
Section 8
Miscellaneous
-------------
8.1 Waivers and Amendments. With the exception of Section 7
------------------------
hereof, the terms of this Agreement may be waived or amended with the written
consent of the Company and each Purchaser. With respect to Section 7 hereof,
with the written consent of the Company and the record holders of more than
fifty percent (50%) of the Shares then outstanding and held by Purchasers, the
terms of Section 7 of this Agreement may be waived or amended and any such
amendment or waiver shall be binding upon the Company and all holders of Shares.
8.2 Placement Agent's Fee. Each Purchaser acknowledges that the
----------------------
Company intends to pay to Xxxxxx XxXxxxxx or an entity designated by him a fee
of $500,000 in respect of the sale of the Shares. Each of the parties hereto
hereby represents that, on the basis of any actions and agreements by it, there
are no other brokers or finders entitled to compensation in connection with the
sale of the Shares to the Purchasers.
8.3 Governing Law. This Agreement shall be governed in all
--------------
respects by and construed in accordance with the laws of the State of Delaware
without any regard to conflicts of laws principles.
8.4 Survival. The representations, warranties, covenants and
--------
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchasers and the Closing.
8.5 Successors and Assigns. The provisions hereof shall inure to
----------------------
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties to this Agreement. Notwithstanding the
foregoing, no Purchaser shall assign this Agreement without the prior written
consent of the Company, which consent may be withheld by the Company in its sole
discretion for any or no reason; provided, that the benefits and obligations of
any Purchaser under Section 7 may be transferred by a Purchaser without the
prior written consent of the Company to any person that acquires at least 51% of
the Shares acquired by such Purchaser at the Closing, so long as the transferee
agrees in writing to be bound by the provisions of Section 7 to the same extent
as the Purchaser from whom it acquired the Shares.
8.6 Entire Agreement. This Agreement constitutes the full and
-----------------
entire understanding and agreement between the parties with regard to the
subjects hereof.
8.7 Notices, etc. All notices and other communications required
-------------
or permitted under this Agreement shall be in writing and may be delivered in
person, by facsimile, overnight delivery service or registered or certified
United States mail, addressed to the Company or the Purchasers, as the case may
be, at their respective addresses set forth at the beginning of this Agreement
or on Exhibit A, and in the case of all notices and other communications to the
---------
Purchasers, a copy will be delivered to Xxxxx Fund Management LLC, 888 Seventh
15
Page 44 of 00 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxx Xxxxxx, (000) 000-0000
(fax), or at such other address as the Company or the Purchasers shall have
furnished to the other party in writing. All notices and other communications
shall be effective upon the earlier of actual receipt thereof by the person to
whom notice is directed or (i) in the case of notices and communications sent by
personal delivery or facsimile, one business day after such notice or
communication arrives at the applicable address or was successfully sent to the
applicable facsimile number, (ii) in the case of notices and communications sent
by overnight delivery service, at noon (local time) on the second business day
following the day such notice or communication was sent, and (iii) in the case
of notices and communications sent by United States mail, seven days after such
notice or communication shall have been deposited in the United States mail.
8.8 Severability of this Agreement. If any provision of this
--------------------------------
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
8.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.10 Further Assurances. Each party to this Agreement shall use
-------------------
its best efforts to cause the Closing to occur and shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
the other party hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.11 Expenses. The Company shall bear its own expenses incurred
-------
on its behalf with respect to the execution of this Agreement and the Closing of
the transactions contemplated hereby, including fees of its legal counsel, and
will, promptly after receipt of an invoice therefor, reimburse the reasonable
fees and costs of one special counsel for the Purchasers up to a maximum amount
of $15,000.
8.12 Currency. All references to "dollars" or "$" in this
--------
Agreement shall be deemed to refer to United States dollars.
16
Page 45 of 50 Pages
8.13 Attorneys' Fees. If any action at law or in equity is
----------------
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
The foregoing agreement is hereby executed as of the date first
above written.
"COMPANY"
TRIANGLE PHARMACEUTICALS, INC.,
a Delaware corporation
By: /S/ XXXXX X. XXXXX
---------------------------------------
Title:Chairman and Chief Executive Officer
"PURCHASERS"
QUANTUM PARTNERS LDC,
a Cayman Islands limited duration company
By: /S/ XXXX X. XXXXXX
---------------------------------------
Title: Attorney-in-Fact
QUANTUM INDUSTRIAL PARTNERS LDC,
a Cayman Islands limited duration company
By: /S/ XXXX X. XXXXXX
---------------------------------------
Title: Attorney-in-Fact
DUQUESNE FUND, L.P.
By: Duquesne Capital Management, L.L.C.,
its investment advisor
By: /S/ XXXXXX XXXXXX
----------------------------------
Xxxxxx Xxxxxx, Managing Director
17
