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TRIANGLE PHARMACEUTICALS, INC.
STOCKHOLDER RIGHTS AGREEMENT
dated as of
June 2, 1999
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TABLE OF CONTENTS
PAGE
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SECTION 1 REGISTRATION RIGHTS............................................................1
1.1 Registration Request..........................................1
1.2 Company Registration..........................................2
1.3 Underwriting..................................................2
1.4 Allocation of Registration Opportunities......................2
1.5 Registration Expenses.........................................3
1.6 Company Obligations...........................................3
1.7 Prospectus Supplements........................................3
1.8 Rule 144......................................................4
1.9 Selling Procedures............................................4
1.10 Purchaser Information.........................................4
1.11 Termination of Registration Rights............................4
1.12 Registration Rights Date......................................5
SECTION 2 INDEMNIFICATION AND CONTRIBUTION...............................................5
2.1 Indemnification by the Company................................5
2.2 Indemnification by Purchaser..................................6
2.3 Indemnification Procedures....................................6
2.4 Contribution..................................................6
2.5 Continuing Obligations........................................7
SECTION 3 RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES ACT......7
3.1 Restrictions on Transferability...............................7
3.2 Compliance with Securities Act................................7
3.3 Right of First Refusal........................................8
3.4 Market Stand-Off Agreement....................................9
SECTION 4 ADDITIONAL PURCHASE RIGHT......................................................9
4.1 Purchase Right................................................9
4.2 Definitions..................................................10
SECTION 5 COVENANTS OF PURCHASER........................................................11
5.1 Transfer Restriction.........................................11
5.2 Standstill Provisions........................................11
5.3 Tolling; Termination Upon Certain Events.....................12
5.4 Definitions..................................................13
SECTION 6 NOMINATION FOR ELECTION TO COMPANY BOARD OF DIRECTORS.........................14
6.1 Initial Board Designee.......................................15
6.2 Continuing Rights............................................15
SECTION 7 NO RESTRICTIONS...............................................................16
7.1 Rights Agreement.............................................16
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TABLE OF CONTENTS (continued)
SECTION 8 MISCELLANEOUS.................................................................18
8.1 Waivers and Amendments.......................................18
8.2 Governing Law................................................18
8.3 Dispute Resolution...........................................18
8.4 Successors and Assigns.......................................18
8.5 Entire Agreement.............................................18
8.6 Notices, etc.................................................18
8.7 Severability of this Agreement...............................20
8.8 Counterparts.................................................20
8.9 Expenses.....................................................20
8.10 No Third Party Rights........................................20
8.11 SEC Rule Changes.............................................20
8.12 Attorneys' Fees..............................................20
8.13 Termination..................................................20
Exhibit A - Form of Registration Statement Questionnaire
Exhibit B - Form of Purchaser's Certificate of Subsequent Sale
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TRIANGLE PHARMACEUTICALS, INC.
STOCKHOLDER RIGHTS AGREEMENT
This Stockholder Rights Agreement (the "Agreement") is made
as of June 2, 1999, by and among Triangle Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), with its principal offices at ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇
Laboratories, an Illinois corporation ("Purchaser"), with its principal
offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and shall be
effective subject to and commencing as of the Closing Date (as such term is
defined in the Stock Purchase Agreement (as hereinafter defined)) (the
"Effective Date").
RECITALS
WHEREAS, the Company and Purchaser are parties to a certain
Common Stock Purchase Agreement of even date herewith (the "Stock Purchase
Agreement") pursuant to which the Company has agreed to issue and sell, and
Purchaser has agreed to purchase, up to 6,571,428 shares of Common Stock of
the Company; and
WHEREAS, in order to induce the Company to enter into the
Stock Purchase Agreement and to induce Purchaser to purchase shares of the
Company's Common Stock pursuant to the Stock Purchase Agreement, the Company
and Purchaser are entering into this Agreement to provide Purchaser with
certain rights to cause the Company to register shares of Common Stock issued
to Purchaser pursuant to the Stock Purchase Agreement, and certain other
matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
SECTION 1
REGISTRATION RIGHTS
1.1 REGISTRATION REQUEST. At any time from and after the
Registration Rights Date (as defined in Section 1.12 hereof) Purchaser may
request the Company to file a registration statement registering the resale
of the Shares (as defined in the Stock Purchase Agreement). Within forty five
(45) days following such request, the Company shall prepare and file a
registration statement with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act") to
register the resale of the Shares by Purchaser (the "Registration
Statement"). Purchaser shall deliver to the Company an executed copy of the
Registration Statement Questionnaire in the form attached hereto as Exhibit A
at the time the request for registration is made. Notwithstanding the
foregoing, the Company shall not be obligated to effect any registrations
under this Section 1 unless (i) Purchaser proposes to sell a minimum
aggregate of ten million dollars ($10,000,000) of Company securities or
600,000 Shares, whichever is less, pursuant to such registration and (ii)
Company has not been obligated to effect any more than one (1) registration
in any consecutive twelve (12) month period. Further, the Company shall not
be obligated to effect any further registrations under this Section
1 after it has effected a total of three (3) registrations under this Section
1 for which Registration Statements have been declared effective.
1.2 COMPANY REGISTRATION. If at any time following the
Registration Rights Date, the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders exercising their respective registration rights, other than (i) a
registration relating solely to employee benefit plans on Form S-8 (or
similar successor form), or (ii) a registration on Form S-4 (or similar
successor form) relating solely to a transaction subject to Rule 145 under
the Securities Act, the Company will (a) promptly give Purchaser written
notice thereof, and (b) subject to the terms of Sections 1.3 and 1.4 hereof,
use its reasonable efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all Registrable Securities (as hereinafter
defined) specified in a written request to the Company made within 15
business days after receipt of such written notice by Purchaser. "Registrable
Securities" include such portion of the Shares which have not previously been
registered or otherwise sold to the public.
1.3 UNDERWRITING. Notwithstanding the foregoing, if the
registration of which the Company gives notice pursuant to Section 1.2 hereof
is for a registered offering involving an underwriting, the right to
registration pursuant to this Section 1 shall be conditioned upon such
Purchaser's participation in such underwriting and the inclusion of
Purchaser's Registrable Securities in the underwriting to the extent provided
herein. Purchaser shall (together with the Company and the holders of other
securities of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting.
The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated first to the
Company for securities being sold for its own account and thereafter as set
forth in Section 1.4 hereof. If any person does not agree to the terms of any
such underwriting, he shall be excluded therefrom by written notice from the
Company or the underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
1.4 ALLOCATION OF REGISTRATION OPPORTUNITIES. In any
circumstance in which all of the Registrable Securities and other shares of
Common Stock of the Company (including shares of Common Stock issued or
issuable upon conversion of shares of any currently unissued series of
Preferred Stock of the Company) with registration rights (the "Other Shares")
requested to be included in a registration on behalf of Purchaser or other
selling stockholders cannot be so included as a result of limitations on the
aggregate number of shares of Registrable Securities and Other Shares which
may be so included, the number of shares of Registrable Securities and Other
Shares may be allocated among Purchaser and other selling stockholders
requesting inclusion of shares pro rata on the basis of the number of shares
of Registrable Securities and Other Shares that would be held by Purchaser
and other selling stockholders, assuming
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conversion; provided, however, that, so that such allocation shall not
operate to reduce the aggregate number of Registrable Securities and Other
Shares to be included in such registration, if Purchaser or any other selling
stockholder does not request inclusion of the maximum number of shares of
Registrable Securities and Other Shares allocated to it pursuant to the
above-described procedure, the remaining portion of its allocation shall be
reallocated among Purchaser, if applicable, and those other requesting
selling stockholders whose allocations did not satisfy their requests pro
rata on the basis of the number of shares of Registrable Securities and Other
Shares that would be held by Purchaser and such other selling stockholders,
assuming conversion, and this procedure shall be repeated until all of the
shares of Registrable Securities and Other Shares that may be included in the
registration on behalf of Purchaser and other selling stockholders have been
so allocated.
1.5 REGISTRATION EXPENSES. The Company shall pay all
Registration Expenses (as defined below) in connection with any registration,
qualification or compliance hereunder, and Purchaser shall pay all Selling
Expenses (as defined below) and other expenses that are not Registration
Expenses. "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 attest services incident to or required by any such
registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Shares and all
fees and disbursements of counsel for Purchaser.
1.6 COMPANY OBLIGATIONS. In the case of the registration
effected by the Company pursuant to this Section 1, the Company will use
reasonable efforts to: (i) keep such registration effective until the
earliest of (A) such date as all of the Shares have been resold or (B) if the
Company is not then eligible to effect such registration on Form S-3, one
hundred twenty (120) days after the effective date of the Registration
Statement or (C) termination of registration rights pursuant to Section 1.11
hereof; (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 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; (vi) otherwise
use reasonable efforts to comply with all applicable rules and regulations of
the SEC; and (vii) file the documents required of the Company and otherwise
use reasonable 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 Purchaser, provided as to clause (B),
however, that the Company shall not be required to qualify to do business or
consent to service of process in any state in which it is not now so
qualified or has not so consented.
1.7 PROSPECTUS SUPPLEMENTS. The Company shall furnish to
Purchaser upon request a reasonable number of copies of a supplement to or an
amendment of such prospectus as
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may be necessary in order to facilitate the public sale or other disposition
of all or any of the Shares held by Purchaser.
1.8 RULE 144. With a view to making available to
Purchaser the benefits of Rule 144 (or its successor rule) promulgated under
the Securities Act ("Rule 144") and any other rule or regulation of the SEC
that may at any time permit Purchaser to sell Shares to the public without
registration, 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) such date as all of the Shares may be resold
pursuant to Rule 144(k) or (B) such date as all of the Shares shall have been
resold; (ii) use reasonable efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities
Act and under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); and (iii) furnish to Purchaser upon request, as long as 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 report on form 10-K or quarterly report of the
Company on form 10-Q, and (C) such other information as may be reasonably
requested in order to avail Purchaser of any rule or regulation of the SEC
that permits the selling of any such Shares without registration.
1.9 SELLING PROCEDURES. In the event Purchaser intends
to sell the Shares pursuant to the Registration Statement, Purchaser shall
give the Company three (3) business days' notice of its intent to sell in
reliance on such Registration Statement (the "Notice of Sale"). The Company
may refuse to permit 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 within three (3)
business days following the Notice of Sale to Purchaser to the effect that
amendment 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 reasonable efforts to amend the Registration Statement if necessary and
take all other actions necessary to allow such sale under the federal
securities laws, and shall notify Purchaser 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 three (3) times in
any twelve (12) month period, and each such period during which sales in
reliance upon the Registration Statement may be prohibited shall not exceed
sixty (60) days. Purchaser hereby covenants and agrees that it will not sell
any Shares pursuant to the Registration Statement during the periods sales in
reliance upon the Registration Statement are prohibited as set forth in this
Section 1.9.
1.10 PURCHASER INFORMATION. Purchaser covenants that it
will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding Purchaser or its "Plan of
Distribution."
1.11 TERMINATION OF REGISTRATION RIGHTS. Purchaser shall
not be entitled to exercise any right provided for in, nor shall the Company
have any continuing obligation under, this Section 1 after the earlier of (a)
such time as Purchaser can sell all of the Shares within a given three-month
period without compliance with the registration requirements of the
Securities
4
Act pursuant to Rule 144 and (b) the date when the aggregate number of shares
of Common Stock of the Company held by Purchaser is less than 7.0% of the
total number of outstanding shares of the Common Stock of the Company
(assuming the full conversion and exercise of all convertible and exercisable
securities of the Company) (the "Minimum Purchaser Interest"), at which time
Purchaser's registration rights herein shall terminate and shall be of no
further force and effect regardless of any subsequent increases in
Purchaser's stock ownership interest in the Company. For purposes of
determining whether Purchaser owns the Minimum Purchaser Interest if (i)
Purchaser timely delivers to the Company a Purchase Election pursuant to
which Purchaser elects to purchase Offered Qualifying Securities and (ii) the
Purchase Right Settlement Date takes place after the Qualifying Closing for
any particular Qualifying Securities, then for the period commencing with the
Qualifying Closing and ending on the Purchase Right Settlement Date, the
calculation of the Minimum Purchaser Interest shall exclude the particular
Qualifying Securities purchased at such Qualifying Closing.
1.12 REGISTRATION RIGHTS DATE. For purposes of this
Agreement, the Registration Rights Date shall be: (i) June 30, 2003, if the
Company has received approval from the U.S. Food and Drug Administration or
any successor entity thereto of a minimum of two Products (as hereinafter
defined) for the human clinical treatment of HIV (the "Minimum Product
Approvals") by January 1, 2002 or (ii) June 30, 2002 if Minimum Product
Approvals have not been obtained by January 1, 2002. "Products" shall have
the meaning set forth in that certain Collaboration Agreement between the
parties hereto, dated as of the date hereof (the "Collaboration Agreement").
SECTION 2
INDEMNIFICATION AND CONTRIBUTION
2.1 INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless Purchaser, each of Purchaser's directors,
officers and U.S. wholly-owned subsidiaries, and each person, if any, who
controls Purchaser within the meaning of the Act or the Exchange 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 any untrue statement of a material fact contained in a
Registration Statement delivered or circulated by Purchaser in connection
with a sale of Company securities by Purchaser, 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 Purchaser and such
persons for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim;
provided, however, that the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability 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 Purchaser specifically for use in preparation of
the Registration Statement, (ii) the failure of Purchaser to comply with the
covenants and agreements contained in Section 3.2 hereof, or (iii) any untrue
statement in any prospectus that is corrected in any subsequent prospectus
that was delivered to Purchaser prior to the pertinent sale or sales by
Purchaser.
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2.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to
indemnify and hold harmless the Company, each of the Company's Affiliates (as
defined below), directors and officers, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange 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
(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 Purchaser specifically for use in preparation of the Registration
Statement, (ii) the failure of Purchaser to comply with the covenants and
agreements contained in Section 3.2 hereof, or (iii) any untrue statement in
any prospectus that is corrected in any subsequent prospectus that was
delivered to Purchaser prior to the pertinent sale or sales by Purchaser, and
Purchaser will, as incurred, reimburse the Company and such persons for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided, however,
that Purchaser shall not be liable for any amount in excess of the amount by
which the net amount received by Purchaser from the sale of the Shares to
which such loss relates minus the amount of any damages which Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
2.3 INDEMNIFICATION PROCEDURES. 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 2, 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.
2.4 CONTRIBUTION. If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an
indemnified party under Section 2.1 or 2.2 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 Purchaser 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
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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
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 Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 2.4 were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 2.4. 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 Section 2.4 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. 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.
2.5 CONTINUING OBLIGATIONS. The obligations of the
Company and Purchaser under this Section 2 shall survive the completion of
the offering of the Shares pursuant to the Registration Statement and shall
be in addition to any liability which the Company and Purchaser may otherwise
have.
SECTION 3
RESTRICTIONS ON TRANSFERABILITY OF SHARES:
COMPLIANCE WITH SECURITIES ACT
3.1 RESTRICTIONS ON TRANSFERABILITY. "Restricted
Securities" (as hereinafter defined) shall not be transferable in the absence
of a registration under the Securities Act or an exemption therefrom or in
the absence of compliance with any term of this Agreement or the Stock
Purchase Agreement, including without limitation Sections 3.3 and 5 hereof.
The Company shall be entitled to give stop transfer instructions to its
transfer agent with respect to Restricted Securities in order to enforce the
foregoing restrictions.
3.2 COMPLIANCE WITH SECURITIES ACT. Purchaser hereby
covenants with the Company not to make any sale of Restricted Securities
except (A) in accordance with the terms of this Agreement, including without
limitation Sections 3.3 and 5 hereof and (B) either (i) in accordance with a
registration statement covering the resale of the applicable Restricted
Securities, as the case may be, that has been declared effective by the SEC,
in which case Purchaser covenants to comply with the requirement of
delivering a current prospectus, or (ii) in accordance with Rule 144, in
which case Purchaser covenants to comply with Rule 144, or (iii) subject to
this Section 3.2, in connection with a private placement by Purchaser made in
compliance with all applicable rules and regulations of the SEC in effect at
such time. Purchaser further acknowledges and agrees that such Restricted
Securities are not transferable on the books of the Company unless the
certificate submitted to the Company's transfer agent evidencing such
Restricted Securities is accompanied by a separate certificate executed by an
officer of, or other person duly authorized by, Purchaser in the form
attached hereto as Exhibit B.
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3.3 RIGHT OF FIRST REFUSAL.
Except as otherwise expressly provided in this Section 3.3,
in the event Purchaser desires to transfer any or all of its Restricted
Securities, Purchaser must deliver a notice in writing by certified mail
("Notice") to the Company stating (A) its bona fide intention to sell or
transfer such securities, (B) the number of such Restricted Securities to be
sold or transferred, (C) the price, if any, for which Purchaser proposes to
sell or transfer such Restricted Securities, and (D) the name of the proposed
purchaser or transferee. In the event the proposed transfer is partially or
completely in exchange for assets other than cash, then such assets shall be
deemed to have a cash value in the amount determined by the Company's Board
of Directors in its sole good faith opinion, in which case such cash value
ascertained by the Board, when added to any cash to be exchanged and then
divided by the number of Restricted Securities to be transferred, shall be
deemed the price per security set forth in the Notice.
The Company shall then have an exclusive, irrevocable
option (the "Company Option"), at any time within thirty (30) days of receipt
of the Notice, to purchase some or all of the Restricted Securities to which
the Notice refers at the price per security specified in the Notice (as
determined above). The Company shall exercise the Company Option by written
notice signed by an officer of the Company and delivered or mailed to the
Purchaser (the "Company Settlement Notice"), which notice shall specify the
time, place and date for settlement of such purchase.
Within thirty (30) days of receipt of the Company
Settlement Notice, the Purchaser must deliver to the Company all certificates
or other related documentation for the securities being acquired by the
Company which are not already in the Company's custody, together with proper
assignments in blank of the Restricted Securities with signatures properly
guaranteed and with such other documents as may be required by the Company to
provide reasonable assurance that each necessary endorsement is genuine and
effective, and the Company must thereupon deliver to the Purchaser full cash
payment for the Restricted Securities being acquired, provided that if the
terms of payment set forth in the Notice were other than cash against
delivery, the Company shall pay for said securities as described above. In
the event the Company notifies Purchaser that it is not interested in the
purchase of the Restricted Securities or fails to give Purchaser timely
notice of its interest, Purchaser shall be free to sell or transfer the
Restricted Securities to any third party, subject to the restrictions in this
Agreement. The Company may at any time freely assign the Company Option to
any third party.
Notwithstanding anything to the contrary herein, the
Company Option shall not apply with respect to Permitted Sales (as defined
below) which (i) to Purchaser's knowledge are not made to any one purchaser
(including any Affiliates of such Purchaser, if any) in an amount exceeding
the lesser of (x) an aggregate of five million dollars ($5,000,000) in
Company securities and (z) 300,000 Shares (the "Maximum Purchase Amount") and
(ii) with respect to which Purchaser has obtained a written agreement from
the appropriate broker or representative to allocate no more than the Maximum
Purchase Amount to any one purchaser (including any Affiliates of such
purchaser, if any). For purposes of this Section 3.3, "Permitted Sales" shall
mean sales registered under the Securities Act or pursuant to Rule 144.
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3.4 MARKET STAND-OFF AGREEMENT.
Purchaser hereby agrees that, during the period of duration
specified by the Company pursuant to the request of an underwriter of Common
Stock or other securities of the Company following the effective date of a
registration statement of the Company filed under the Act, Purchaser shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of any securities of the Company held by it at any time
during such period except Common Stock included in such registration (a
"Black-Out"); provided, however, the duration of any such Black-Out shall not
exceed ninety (90) consecutive days; and provided further that there shall be
a minimum of ninety (90) consecutive days per calendar year during which
Purchaser shall not be subject to a Black-Out pursuant to this Section 3.4.
The foregoing notwithstanding, Purchaser shall not be subject to any
Black-Out unless all executive officers and directors (with the exception of
any Purchaser Representative or Purchaser Designee) of the Company who own
shares of Common Stock of the Company enter into similar agreements and all
other holders of registration rights granted by the Company are subject to or
obligated to enter into similar agreements providing for such Black-Out.
SECTION 4
ADDITIONAL PURCHASE RIGHT
4.1 PURCHASE RIGHT. If, prior to the Termination Date
(as defined below), the Company sells Qualifying Securities (as defined
below), then the Company will offer to Purchaser the right to purchase that
number of Qualifying Securities (the "Offered Qualifying Securities") that
are necessary to prevent a reduction in Purchaser's percentage ownership of
the Company's capital stock, calculated on a fully-diluted basis (assuming
full conversion and exercise of all convertible and exercisable securities)
immediately prior to the closing (the "Qualifying Closing") of such sale of
Qualifying Securities. The Company shall deliver written notice to Purchaser
describing the material terms of such Qualifying Securities and the number of
Offered Qualifying Securities Purchaser is entitled to purchase 45 days prior
to or within fifteen (15) days after the Qualifying Closing (the "Company
Notice"). Purchaser shall be permitted to purchase all or any portion of such
Offered Qualifying Securities by delivering written notice to the Company of
its election to purchase (a "Purchase Election") within thirty (30) days
after receipt of the Company Notice, and the closing of the sale of the
Offered Qualifying Securities to Purchaser shall occur on the "Purchase Right
Settlement Date". For purposes of this Agreement, the Purchase Right
Settlement Date shall be the fifth business day following the later to occur
of (i) the date of the Qualifying Closing and (ii) the date Purchaser
delivers the Purchase Election to the Company. The Company shall notify
Purchaser in writing that the Qualifying Closing has taken place (including
the date on which the Qualifying Closing took place) no later than three
business days prior to the applicable Purchase Right Settlement Date. Neither
the Company nor Purchaser will be obligated to effect the sale and purchase
of the Offered Qualifying Securities unless the Qualifying Closing shall have
occurred. If purchaser makes a Purchase Election, the Qualifying Closing
occurs and purchaser nevertheless fails to purchase the Offered Qualifying
Securities on the Purchase Right Settlement Date, Purchaser's purchase rights
under this Section 4.1 arising out of the sale of the Qualifying Securities
sold at
9
such Qualifying Closing shall terminate and be of no further force and effect
under this Agreement, unless the reason for such failure to purchase the
Offered Qualifying Securities is a breach by the Company of its obligations
hereunder. If Purchaser shall elect to purchase any such Offered Qualifying
Securities, the Offered Qualifying Securities which it shall have elected to
purchase shall be issued and sold to Purchaser on the same terms and
conditions and at the same price as the Qualifying Securities are issued and
sold to third parties except that (i) if such Qualifying Securities are
issued for consideration other than cash, Purchaser shall pay the fair market
value thereof, as determined in good faith by the Board of Directors of the
Company, in cash, (ii) if such Qualifying Securities are issued in connection
with a Non-Standard Issuance of Stock (as defined below) of the Company, then
Purchaser shall pay the fair market value of the Offered Qualifying
Securities upon the date of purchase as determined in good faith by the Board
of Directors of the Company, and (iii) if such Qualifying Securities include
securities convertible into or exercisable for any shares of any class of
capital stock of the Company, then Purchaser shall be able to purchase
Offered Qualifying Securities at fair market value of the respective
securities at the date of purchase, as determined in good faith by the Board
of Directors of the Company, only upon the exercise of the security by the
respective security holder. In the latter case, Company shall provide
Purchaser with prompt notice of such exercise, at which time Purchaser shall
have thirty (30) days after the date of such notice to make a full cash
payment to Company for the Offered Qualifying Securities. If Purchaser fails
to make a full cash payment to Company by such date, Purchaser's purchase
rights under this Section 4.1 shall terminate and be of no further force and
effect under this Agreement.
4.2 DEFINITIONS. For purposes of this Section 4, the
following terms shall have the following meanings:
(a) "Non-Standard Issuance of Stock" of the Company
shall mean Qualifying Securities that are (i) securities issued pursuant to
the acquisition of another business entity or business segment of any such
entity by the Company by merger, purchase of substantially all the assets or
other reorganization, including without limitation securities that may in the
future be issued in connection with the Company's August 28, 1997 acquisition
of Avid Corporation; (ii) securities issued in connection with any
borrowings, direct or indirect, from financial institutions or other persons
by the Company, whether or not presently authorized, including any type of
loan or payment evidenced by any type of debt instrument, provided such
borrowings do not have any equity features including warrants, options or
other rights to purchase capital stock and are not convertible into capital
stock of the Company; (iii) securities issued to vendors, customers,
licensors or to other persons in similar commercial situations with the
Company if such issuance is approved by the Company's Board of Directors,
including without limitation securities subject to issuance in connection
with that certain License Agreement by and between the Company and Mitsubishi
Chemical Corporation, dated June 17, 1997; (iv) securities issued in
connection with obtaining lease financing, whether issued to a lessor,
guarantor or other person; or (v) securities issued in a firm commitment
underwritten public offering pursuant to a registration under the 1933 Act.
(b) "Qualifying Securities" shall mean all shares
of, or securities convertible into or exercisable for any shares of, any
class of capital stock of the Company other than: (i) securities issued to
employees, consultants, officers or directors of the Company pursuant to any
stock option, stock purchase or stock bonus plan, agreement or arrangement
10
approved by the Company's Board of Directors; (ii) securities issued pursuant
to the conversion or exercise of convertible or exercisable securities
outstanding on the date of this Agreement; (iii) securities that may in the
future be issued in connection with that certain Rights Agreement by and
between the Company and American Stock Transfer & Trust Company, dated
February 1, 1999 (the "Rights Agreement"), and (iv) securities issued in
connection with any stock split, stock dividend or recapitalization of the
Company which does not alter Purchaser's percentage ownership of the voting
securities of the Company.
(c) "Termination Date" shall mean the first to occur
of (i) the date that Purchaser holds less than the Minimum Purchaser
Interest, and (ii) the date that Purchaser exercises registration rights
pursuant to Section 1 hereof.
SECTION 5
COVENANTS OF PURCHASER
5.1 TRANSFER RESTRICTION. Purchaser hereby agrees that
during the time period commencing as of the Effective Date until the
Registration Rights Date (with such time period being referred to as the
"Initial Restricted Period"), that neither it nor any affiliate (as defined
in Rule 144) (each an "Affiliate") of Purchaser shall, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any
short sale), grant any option to purchase or otherwise transfer or dispose of
any Restricted Securities. For so long as the aggregate number of shares of
Common Stock of the Company held by Purchaser exceeds the Minimum Purchaser
Interest, Purchaser hereby also agrees that during the time period commencing
as of the last day of the Initial Restricted Period until the second
anniversary of the Registration Rights Date (with such time period being
referred to as the "Follow-On Restricted Period"), that neither it nor any
Affiliate shall, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase
or otherwise transfer or dispose of any of the Restricted Securities at any
time during the Follow-On Restricted Period other than in compliance with the
volume restrictions then set forth under Rule 144 (even if such volume
limitations are not applicable to Purchaser under such rule). In order to
enforce the foregoing covenant, the Company may impose legends and/or
stop-transfer instructions with respect to the Restricted Securities held by
Purchaser (and the Restricted Securities of every other person subject to the
foregoing restriction) until the end of such periods. Following the last day
of the Follow-On Restricted Period, any restrictions under this Section 5.1
shall terminate and be of no further force and effect.
5.2 STANDSTILL PROVISIONS.
Except as provided in Section 5.3 below:
(a) Commencing as of the Effective Date and through
June 30, 2005 (the "Standstill Period"), Purchaser (including all Affiliates)
shall not acquire "Beneficial Ownership" (as hereinafter defined) of any
additional shares of Common Stock of the Company, any securities convertible
into or exchangeable for Common Stock, or any other right to acquire Common
Stock, except by way of stock dividends or other distributions or offerings
made available to holders of Common Stock generally, from the Company or any
other person or
11
entity, if after giving effect to such acquisition of additional shares, the
total Beneficial Ownership of Purchaser (together with all of its Affiliates)
shall be greater than twenty one percent (21%) (the "Beneficial Ownership
Limitation") of the Company's total Common Stock from time to time
outstanding without the prior written consent of the Company, which consent
may be withheld in its sole discretion; PROVIDED, HOWEVER, that in no event
shall the Company's sale or issuance to Purchaser of Restricted Securities
constitute a violation of this Section 5.2 .
(b) It shall not be a violation of the prohibition
contained in Section 5.2(a) if Purchaser or any of its Affiliates shall
exceed the Beneficial Ownership Limitation solely as a result of an
acquisition or retirement of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares of Common Stock Beneficially Owned by Purchaser or any of its
Affiliates, provided that Purchaser and its Affiliates do not thereafter
acquire Beneficial Ownership of additional shares of Common Stock while still
exceeding the Beneficial Ownership Limitation.
(c) Beneficial Ownership by Purchaser's benefit
plans or any of Purchaser's Affiliates' benefit plans that are maintained for
Purchaser's employees or Purchaser's Affiliates' employees of up to an
aggregate of two percent (2%) of the total outstanding shares of Common Stock
from time to time outstanding shall not be considered to constitute
Beneficial Ownership by Purchaser and shall be excluded from the calculation
of the Beneficial Ownership Limitation.
(d) During the Standstill Period, neither Purchaser
nor any Affiliate shall (i) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to vote (as such terms are
used in the proxy rules of the SEC) or seek to advise, encourage or influence
any person or entity with respect to the voting of any shares of capital
stock of the Company, initiate, propose or otherwise solicit stockholders of
the Company for the approval of one or more stockholder proposals or induce
or attempt to induce any other individual, firm, corporation, partnership or
other entity to initiate any stockholder proposal or (ii) deposit any
securities of the Company having the right to vote generally in any election
of directors of the Company ("Voting Stock") into a voting trust or subject
any shares of Voting Stock to any arrangement or agreement with respect to
the voting of such securities or (iii) form, join or in any way participate
in or otherwise encourage the formation of a "13D Group" (as defined below)
with respect to any securities of the Company.
(e) During the Standstill Period, the Company shall
notify Purchaser in writing within forty-eight (48) hours in the event that
the Company becomes aware that any person or 13D Group has acquired
Beneficial Ownership of shares of Common Stock representing 5% or more of the
then total outstanding shares of Common Stock.
5.3 TOLLING; TERMINATION UPON CERTAIN EVENTS.
Notwithstanding the foregoing, in the event that:
(a) a "Person" (as defined below) has taken all
steps legally required to commence a formal tender offer, or has publicly
announced its intention to commence a formal tender offer; or
12
(b) the Board of Directors of the Company has made a
decision to dispose of all or substantially all of the assets of the Company,
or to merge or consolidate with another entity (other than a merger or
consolidation effected for tax purposes or to change the domicile of the
Company to any state in the United States) (an event described in either
5.3(a) or (b) shall be a "Tolling Event") then:
(i) the Company shall immediately notify
Purchaser in writing of the occurrence of such Tolling Event and the facts
and circumstances of such Tolling Event (a "Tolling Notice"); and
(ii) Section 5.2 shall toll and have no force
and effect beginning immediately upon the occurrence of such Tolling Event
(whether or not Purchaser has received a Tolling Notice) and ending on the
Reset Date. The "Reset Date" shall be (A) if Purchaser has not commenced a
formal tender offer or has not participated directly in the "solicitation" of
"proxies" to vote (as such terms are used in the proxy rules of the SEC) for
a business combination transaction involving the Company during the pendency
of such Tolling Event, the date that the Company notifies Purchaser in
writing that such Tolling Event has been terminated or abandoned (a
"Termination Notice"); and (B) if Purchaser has commenced a formal tender
offer or has participated directly in the "solicitation" of "proxies" to vote
(as such terms are used in the proxy rules of the SEC) for a business
combination transaction involving the Company (such commencement or
participation referred to herein as a "Purchaser Proposal") prior to receipt
by Purchaser of a Termination Notice, the date that is the earlier of (x) six
(6) months following the date of Purchaser's receipt of a Termination Notice
and (y) the date Purchaser withdraws or ceases to actively pursue any
Purchaser Proposal.
On the Reset Date, Section 5.2 shall immediately apply to Purchaser and its
Affiliates with full force and effect, except that the Beneficial Ownership
Limitation shall be adjusted to equal Purchaser's Beneficial Ownership
interest as of the Reset Date. Notwithstanding anything to the contrary in
this Agreement, except as specifically provided in Section 7 of this
Agreement nothing in this Agreement shall be deemed to be a waiver of any of
the Company's rights under the Rights Agreement, which shall at all times
remain in full force and effect.
5.4 DEFINITIONS.
(a) A Person, Purchaser or an Affiliate shall be
deemed to be the "Beneficial Owner" of or to have acquired "Beneficial
Ownership" of and shall be deemed to "beneficially own" any securities:
(i) which such Person or any such Person's
Affiliates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates has (A) the right to acquire, exercisable immediately, pursuant to
any agreement, arrangement or understanding (other than customary
arrangements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the exercise
of conversion rights or exchange rights, warrants or options or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, securities tendered
13
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; PROVIDED, HOWEVER, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to
a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso to Section 5.4(a)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase, "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially under Rule 13d-3 of the Exchange
Act.
(b) "Person" as used herein shall mean any
individual, corporation, partnership, firm, association, unincorporated
organization, joint venture, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity, or any of the foregoing
acting together as a group, but shall specifically exclude Purchaser (or any
Affiliate of Purchaser or any 13D Group of which Purchaser is a member).
(c) "Restricted Securities" as used herein shall
mean the Shares and any Offered Qualifying Securities issued to Purchaser, as
well as any securities of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or replacement of such Shares or Offered Qualifying Securities.
(d) "13D Group" as used herein shall mean any group
of Persons formed for the purpose of acquiring, holding, voting or disposing
of Voting Stock, which would be required under Section 13(d) of the Exchange
Act, and the rules and regulations thereunder (as in effect, and based on
legal interpretations thereof existing, on the date hereof), to file a
statement on Schedule 13D with the SEC as a "person" within the meaning of
Section 13(d)(3) of the Exchange Act if such group beneficially owned Voting
Stock representing more than 5% of any class of Voting Stock then outstanding.
SECTION 6
NOMINATION FOR ELECTION TO COMPANY BOARD OF DIRECTORS
14
6.1 INITIAL BOARD DESIGNEE. Promptly following the
Effective Date, the Company shall (i) increase to eight the number of members
constituting the Board of Directors of the Company and (ii) nominate and
support for election to the Company's Board of Directors an individual
designated to the Company in writing by Purchaser on or before the Effective
Date (the "Purchaser Representative"), to the class of directors whose term
expires at the 2002 annual meeting of stockholders of the Company, to fill
the vacancy resulting from the expansion of the Board of Directors.
6.2 CONTINUING RIGHTS.
(a) From and after the Effective Date, subject to
the terms and conditions of this Section 6, upon the request of Purchaser,
the Company shall use its reasonable efforts to cause its Board of Directors
to nominate and support for election such number of individuals designated in
writing by Purchaser ("Purchaser Designees"), if any, which together with the
Purchaser Representative does not exceed the "Permitted Number of Purchaser
Representatives," as defined in Section 6.2 (b) hereof. Notwithstanding the
foregoing, the Company shall have no obligation under this Section 6 with
respect to any Purchaser Designee or Purchaser Representative who is not
approved by the Company's Board of Directors to serve on the Company's Board
of Directors, which approval shall not be unreasonably withheld. Should a
Purchaser Representative or Purchaser Designee be approved by the Company's
Board of Directors, the Company hereby agrees that, with the exception of any
matters or materials addressing matters which in the good faith judgment of
the Company's Board of Directors (excluding any Purchaser Representative or
Purchaser Designee) may give rise to a potential or actual conflict of
interest, during the tenure of such Purchaser Representative's or Purchaser
Designee's service on the Company's Board, such Purchaser Representative or
Purchaser Designee shall be included in all Board meetings in which all other
non-executive members of the Company's Board are invited to attend in person
or by telephone and shall be provided with all copies of materials, whether
in paper, electronic or other format, that are provided to all other
non-executive members of the Company's Board.
(b) For purposes of this Section 6 the "Permitted
Number of Purchaser Representatives" shall equal the greater of (a) the
product rounded to the nearest whole number of (x) the total number of board
seats constituting the Company's Board of Directors and (y) the percentage of
the total number of outstanding shares of the Common Stock of the Company
held by Purchaser (assuming the full conversion and exercise of all
convertible and exercisable securities of the Company), and (b) one. When
rounding to the nearest whole number, the parties shall round down for
fractions greater than zero but less than one-half and shall round up for
fractions equal to or greater than one-half but less than one. If at any time
the total number of Purchaser Designees and Purchaser Representatives serving
on the Company's Board of Directors exceeds the Permitted Number of Purchaser
Representatives, Purchaser shall promptly take all appropriate action to
cause to resign that number of Purchaser Designees or Purchaser
Representatives as is required to make the remaining number of Purchaser
Representatives and Purchaser Designees conform to this Section 6.2 (b).
(c) Subject to the conditions set forth herein,
Purchaser shall have the right to designate any replacement for a Purchaser
Representative or Purchaser Designee, upon the death, resignation,
retirement, disqualification or removal from office for other cause of such
15
director. Such replacement must conform to the standards and conditions set
forth in this Section 6.
(d) Any and all of the Company's obligations
pursuant to this Section 6 shall terminate on the date when the aggregate
number of shares of Common Stock of the Company held by Purchaser is less
than the Minimum Purchaser Interest. At such time of termination of the
Company's obligations under this Section 6, Purchaser shall promptly take all
appropriate action to cause to resign all Purchaser Representatives and
Purchaser Designees constituting the Company's Board of Directors at such
time.
SECTION 7
NO RESTRICTIONS
7.1 RIGHTS AGREEMENT.
(a) From the Effective Date up until such time as
Purchaser holds less than the Minimum Purchaser Interest, the Company will
take all necessary steps to ensure that neither Purchaser nor any of its U.S.
wholly-owned subsidiaries, will be deemed to be an Acquiring Person (as
defined in the Rights Agreement), that the Distribution Date (as defined in
the Rights Agreement) will not be deemed to occur and that the Rights (as
defined in the Rights Agreement) will not separate from the Common Stock as a
result of entering into this Agreement, the Stock Purchase Agreement or any
of the Related Agreements (as defined in the Stock Purchase Agreement) or the
consummation of the transactions contemplated hereby or thereby (other than
any purchases permitted under Section 5.3 hereof or otherwise which cause
Purchaser's Beneficial Ownership of shares of Common Stock to exceed 21% of
the total shares of Common Stock of the Company outstanding from time to time
hereafter) or as a result of the acquisition by Purchaser of Beneficial
Ownership of shares of Common Stock not exceeding twenty-one percent (21%) of
the total shares of Common Stock outstanding from time to time hereafter.
(b) From the Effective Date up until such time as
Purchaser holds less than the Minimum Purchaser Interest, the Company will
not amend, interpret or enforce the Rights Agreement or adopt any new
stockholder rights agreement or similar agreement, plan or measure, if such
amendment, interpretation, enforcement or adoption would prevent Purchaser or
any of its U.S. wholly-owned subsidiaries from acquiring or holding
Beneficial Ownership of shares of Common Stock not exceeding twenty-one
percent (21%) of the total shares of Common Stock outstanding from time to
time hereafter.
(c) For the period commencing as of the date of this
Agreement and ending on the earlier of (x) the Effective Date and (y)
termination of this Agreement (the "Interim Period"), neither Purchaser nor
its U.S. wholly-owned subsidiaries shall be deemed to be an Acquiring Person
(as defined in the Rights Agreement), the Distribution Date (as defined in
the Rights Agreement) will not be deemed to occur and the Rights (as defined
in the Rights Agreement) will not separate from the Common Stock as a result
solely of Purchaser entering into this Agreement and being deemed the
Beneficial Owner (as defined in the Rights
16
Agreement) of the Shares; provided that Purchaser does not become the
Beneficial Owner of any securities of the Company in addition to the Shares
during the Interim Period.
17
SECTION 8
MISCELLANEOUS
8.1 WAIVERS AND AMENDMENTS. The terms of this Agreement
may be waived or amended only with the written consent of the Company and
Purchaser.
8.2 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.
8.3 DISPUTE RESOLUTION. The parties hereto agree that
any disputes which may arise during the term of this Agreement which relate
to either party's rights and/or obligations hereunder shall be resolved in
accordance with the ADR provisions contained in Exhibit 8.3 hereto (the "ADR
Provisions"), except that either party may seek judicial relief or
enforcement to pursue equitable remedies not addressed by the ADR Provisions,
including without limitation specific performance or injunctive relief, to
pursue a claim of fraudulent or otherwise inequitable treatment under the ADR
proceedings or to otherwise enforce a judgment under the ADR proceedings.
8.4 SUCCESSORS AND ASSIGNS. The provisions hereof shall
inure to the benefit of, and be binding upon, the successors and permitted
assigns of the parties to this Agreement. Notwithstanding the foregoing,
neither party shall assign this Agreement without the prior written consent
of the other party, except that (i) Purchaser may assign this Agreement to
any direct or indirect wholly-owned domestic (i.e., incorporated in a state
in the U.S.) subsidiary of Purchaser provided, however, that no such
assignment shall relieve or limit Purchaser's obligations hereunder, and (ii)
this Agreement may be assigned by either party without such prior written
consent to any entity that acquires all or substantially all of its business,
whether by merger, consolidation, sale of assets or other similar transaction.
8.5 ENTIRE AGREEMENT. This Agreement, the Stock Purchase
Agreement and the Related Agreements constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof. Upon the Effective Date, this Agreement shall completely supersede
the Confidentiality Agreement dated October 28, 1998, as amended on May 20,
1999 ("Confidentiality Agreement"), between the Company and Purchaser, which
shall as of the Effective Date be of no further force and effect. The
Confidentiality Agreement shall remain in full force and effect through the
earlier of: (i) the Effective Date, and (ii) the date the Confidentiality
Agreement expires or terminates pursuant to the terms thereof. The parties
hereto hereby agree to maintain as confidential the existence and terms of
this Agreement unless written consent is obtained by the other regarding the
proposed disclosure. Notwithstanding the foregoing, should disclosure be
otherwise required by law or by any regulatory agency, the parties hereby
agree to cooperate in good faith to limit disclosure to a mutually agreeable
extent and to obtain confidential treatment or a protective order.
8.6 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
18
Purchaser, as the case may be, at their respective addresses set forth below,
or at such other address as the Company or the Purchaser shall have furnished
to the other party in writing:
If to the Company:
Triangle Pharmaceuticals, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Executive Officer and
General Counsel
Copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to the Purchaser:
▇▇▇▇▇▇ Laboratories
Dept. 309; Bldg. AP30
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President, Pharmaceutical
Operations and
Senior Vice President, International Operations
Copy to:
General Counsel
▇▇▇▇▇▇ Laboratories
Dept. 364; Building AP6D
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications shall be effective
upon actual receipt thereof by the person to whom notice is directed.
19
8.7 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.
8.8 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.
8.9 EXPENSES. Except as set forth in the ADR Provisions
and Section 8.12 hereof, the Company and Purchaser shall each bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel; provided,
however, that the Company and Purchaser shall share equally the fee(s)
required to be paid in connection with the filing(s) required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, in
connection with the transactions contemplated by this Agreement and the other
Triangle-Abbott Alliance Agreements.
8.10 NO THIRD PARTY RIGHTS. Except where expressly
provided to the contrary, nothing in this Agreement shall create or be deemed
to create any rights in any person or entity not a party of this Agreement.
8.11 SEC RULE CHANGES. To the extent necessary to give
effect to the agreements and understandings of the parties set forth in this
Agreement, any reference in this Agreement to any forms, rules, regulations
or procedures of the SEC or any provision of the Securities Act or the
Exchange Act existing as of the date of this Agreement shall be deemed to
refer to any modifying, supplementing or succeeding rules, regulations,
procedures or provisions as may exist from time to time after the date of
this Agreement.
8.12 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.
8.13 TERMINATION.
(a) OUTSIDE DATE. If the Effective Date has not
occurred within ninety (90) days from the execution of this Agreement (other
than through the failure of the party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement or any of the other
Triangle-Abbott Alliance Agreements (as defined in the Collaboration
Agreement)) or such later date as the parties hereto may agree, either party
may terminate this Agreement by written notice to the other.
(b) TERMINATION OF COLLABORATION AGREEMENT. This
Agreement is subject to termination upon termination of the Collaboration
Agreement pursuant to the terms of Sections 16.5(b) and 16.5(c) of the
Collaboration Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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The foregoing agreement is hereby executed as of the date
first above written.
"COMPANY"
TRIANGLE PHARMACEUTICALS, INC., a
Delaware corporation
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
"PURCHASER"
▇▇▇▇▇▇ LABORATORIES, an Illinois
corporation
Name: ____________________________________
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
21
Exhibit A
SYMBOL
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration
Statement, please provide us with the following information regarding
Purchaser.
1. Please state your organization's name exactly as it
should appear in the Registration Statement:
2. Have you or your organization had any position, office
or other material relationship within the past three years with the Company
or its affiliates other than as disclosed in the Prospectus included in the
Registration Statement?
_________ Yes _________ No
If yes, please indicate the nature of any such relationships below:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Exhibit B
SYMBOL
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: _____________________________
_____________________________
_____________________________
Attention: [__________]
The undersigned, Purchaser or an officer of, or other
person duly authorized by, Purchaser, hereby certifies that __________________
___________________________________ was Purchaser of the shares evidenced by
the attached certificate, and as such, proposes to transfer such shares on or
about ________ either (i) in accordance with the registration statement, file
number [__________], in which case Purchaser certifies that the requirement
of delivering a current prospectus has been complied with or will be complied
with in connection with such sale, or (ii) in accordance with Rule 144 under
the Securities Act of 1933, as amended ("Rule 144"), in which case Purchaser
certifies that it has complied with or will comply with the requirements of
Rule 144.
Print or type:
Name of Purchaser: ____________________________________________
Name of Individual
representing Purchaser
(if an Institution): ____________________________________________
Title of Individual
representing Purchaser
(if an Institution): ____________________________________________
Signature by: ____________________________________________
Purchaser or Individual
representing Purchaser: ____________________________________________