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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___________)*
TRIANGLE PHARMACEUTICALS, INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
89589H 10 4
(CUSIP Number)
R.S.M. Baird Robin A. Painter
The Wellcome Trust Limited as Testa, Hurwitz & Thibeault, LLP
Trustee for The Wellcome Trust 125 High Street
183 Euston Road Boston, MA 02110
London NW1 2BE 617-248-7000
ENGLAND
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 1, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
- --------------------------- -------------------------
CUSIP NO. 89589H 10 4 PAGE 2 OF 5 PAGES
- --------------------------- -------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON THE WELLCOME TRUST LIMITED AS TRUSTEE FOR
THE WELLCOME TRUST S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
98 6038 021
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,300,000
SHARES -------- ------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH
REPORTING -------- ------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
1,300,000
-------- ------------------------------------------
10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,300,000
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES*
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *
OO
- ---------- ---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page _2_ of _5_ Pages
Item 1. SECURITY AND ISSUER:
This Statement relates to the common stock, par value $0.001 per
share, of Triangle Pharmaceuticals, Inc., whose principal executive
offices are located at 4 University Place, 4611 University Drive,
Durham, North Carolina 27707.
Item 2. IDENTITY AND BACKGROUND:
The Wellcome Trust Limited is Trustee for the Wellcome Trust (the
"Trust") which is an English charity registered with the Charity
Commissioners for England and Wales under number 210,183, the
principal objectives of which are the advancement of research in
human and animal medicine and the support of the history of medicine.
The Trust's principal business and office address is 183 Euston Road,
London NW1 2BE, England. During the last five years the Trust has not
been convicted in a criminal proceeding or been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which the Trust was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State
securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:
The Trust acquired the securities of the Issuer through the cash
purchase of 1,000,000 shares of Series B Convertible Preferred Stock
at a price of $5.00 per share on June 11, 1996 (the "Preferred
Shares") and the cash purchase of 300,000 shares of common stock at a
price of $10.00 per share in connection with the Issuer's initial
public offering (the "IPO"). Upon the effectiveness of the IPO, all
of the Trust's Preferred Shares were converted into the common stock
of the Issuer. As a consequence of such conversion and the purchase
of the common stock in connection with the IPO, the Trust's
beneficial ownership in the Issuer currently consists of 1,300,000
shares of common stock (the "Shares").
Item 4. PURPOSE OF TRANSACTION:
Shares reported as being beneficially owned by the Trust are held for
investment purposes. The Trust has no present plan or proposal or
purpose to effect substantial changes in the business, organization,
form or control of the Issuer.
Item 5. INTEREST IN SECURITIES OF THE ISSUER:
(a) On November 1, 1996, the aggregate number of shares of common
stock of the Issuer beneficially owned by the Trust was 1,300,000,
representing 7.5% of the issued and outstanding shares of the
Issuer's common stock (based on information provided to the filing
entity by the Issuer).
(b) The Trust has the sole power to vote and dispose of the Shares.
(c) On November 1, 1996 in connection with Issuer's IPO, the Trust
acquired 300,000 shares of the common stock of the Issuer as
described in Item 3 above.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Restated Investors' Rights Agreement.
Upon the effectiveness of the Issuer's IPO, shares of the Issuer's
preferred stock were converted into common stock (the "Converted
Shares"). The Trust and other holders of the Converted
Page _3_ of _5_ Pages
Shares (the "Holders") and the Issuer are parties to a certain
Restated Investors' Rights Agreement pursuant to which the Holders
are entitled to certain rights with respect to the registration of
the Converted Shares under the Securities Act of 1933, as amended
(the "Securities Act"). If the Issuer proposes to register any of its
securities under the Securities Act, either for its own account or
for the account of other Holders exercising registration rights, such
Holders are entitled to notice of such registration and are entitled
to include shares of common stock therein. A majority of such Holders
are also entitled to certain demand registration rights pursuant to
which they may require the Issuer to file a registration statement
under the Securities Act. Further, the Holders may require the Issuer
to file additional registration statements on Form S-3.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Restated Investors' Rights Agreement
Page _4_ of _5_ Pages
SCHEDULE 13D
- -------------------------------- ---------------------------
CUSIP NO. 89589H 10 4 PAGE 5 OF 5 PAGES
- ------------------------------- ---------------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 12, 1996 THE WELLCOME TRUST LIMITED AS
----------------------------- TRUSTEE OF THE WELLCOME TRUST
By:/s/ Robert Baird
---------------------------
Its: Investment Manager
Page _5_ of _5_ Pages
EXHIBIT 1
TRIANGLE PHARMACEUTICALS, INC.
RESTATED INVESTORS' RIGHTS AGREEMENT
--------------------
June 11, 1996
TABLE OF CONTENTS
Page
----
l. Registration Rights 1
1.1 Definitions 1
1.2 Request for Registration 2
1.3 Company Registration 4
1.4 Obligations of the Company 4
1.5 Furnish Information 6
1.6 Expenses of Demand Registration 6
1.7 Expenses of Company Registration 6
1.8 Underwriting Requirements 7
1.9 Delay of Registration 7
1.10 Indemnification 7
1.11 Reports Under Securities Exchange Act of 1934 10
1.12 Form S-3 Registration 11
1.13 Assignment of Registration Rights 12
1.14 Limitations on Subsequent Registration Rights 12
1.15 "Market Stand-Off" Agreement 13
1.16 Termination of Registration Rights 13
2. Covenants of the Company 14
2.1 Delivery of Financial Statements 14
2.2 Inspection 14
2.3 Termination of Information, Inspection and First
Offer Covenants 14
2.4 Right of First Offer 15
2.5 Key-Person Insurance 16
2.6 Indemnification 17
3. Miscellaneous 17
3.1 Successors and Assigns 17
3.2 Governing Law 17
3.3 Counterparts 17
3.4 Titles and Subtitles 17
3.5 Notices 17
3.6 Expenses 17
3.7 Amendments and Waivers 18
3.8 Additional Investors 18
3.9 Severability 18
3.10 Aggregation of Stock 19
3.11 Entire Agreement 19
3.12 Representation 19
3.13 Board Representation 19
3.14 Restatement of Prior Agreement 20
SCHEDULE A Schedule of Investors
i.
RESTATED INVESTORS' RIGHTS AGREEMENT
THIS RESTATED INVESTORS' RIGHTS AGREEMENT is made as of the
11th day of June, 1996, by and among Triangle Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and each of the persons and entities listed on
Schedule A hereto, each of which is referred to herein individually as an
"Investor" and all of which are referred to herein collectively as the
"Investors."
RECITALS
WHEREAS, the Company and certain of the Investors (the "Series
A Investors") are parties to a certain Amended and Restated Investors' Rights
Agreement dated as of October 31, 1995 (the "Prior Agreement"), pursuant to
which the Company has granted to the Series A Investors certain rights to cause
the Company to register shares of Common Stock issuable to the Series A
Investors upon conversion of the Company's Series A Preferred Stock, and certain
other matters as set forth therein;
WHEREAS, the Company and certain of the Investors (the "Series
B Investors") are parties to the Series B Preferred Stock Purchase Agreement of
even date herewith (the "Series B Agreement"); and
WHEREAS, in order to induce the Company to enter into the
Series B Agreement and to induce the Series B Investors to purchase shares of
the Company's Series B Preferred Stock pursuant to the Series B Agreement, the
Investors and the Company hereby agree that this Agreement shall restate the
Prior Agreement so that this Agreement shall govern the rights of all of the
Investors to cause the Company to register shares of Common Stock issuable to
the Investors upon conversion of their shares of the Company's Preferred Stock,
and certain other matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended.
(e) The term "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, (ii)
the Common Stock issuable or issued upon conversion of the Series B Preferred
Stock and (iii) any Common Stock 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 in
replacement of the shares referenced in (i) and (ii) above, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which his rights under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then
outstanding" means the number of shares of Common Stock outstanding which are,
and the number of shares of Common Stock issuable pursuant to then exercisable
or convertible securities which are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier
of (i) July 19, 2000, or (ii) six (6) months after the effective date of the
first registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of securities
to participants in a Company stock plan or a SEC Rule 145 transaction), a
written request from the Holders of a majority of the Registrable Securities
then outstanding that the Company file a registration statement under the Act
covering the registration of at least thirty percent (30%) of the Registrable
Securities then outstanding (or a lesser percent of the Registrable Securities
if the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $10,000,000), then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
2.
(ii) effect as soon as practicable, and in any event
within ninety (90) days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be
registered, subject to the limitations of subsection 1.2(b).
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company shall be entitled to issue such a certificate only
once in any given twelve (12) month period.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 1.2:
3.
(i) After the Company has effected two
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period starting with the date
thirty (30) days prior to the Company's good faith estimate of the date of
filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration subject to Section 1.3 hereof; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iii) If the Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made pursuant to Section 1.12 below.
1.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, a registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities, a registration in connection with a SEC Rule 145
transaction or a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities which are also being
registered), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for a period of up to the earlier of one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and
4.
(ii) in the case of any registration of Registrable Securities on Form S-3 which
are intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Act, permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Act or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
5.
1.5 Furnish Information.
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to Section
1.2.
1.7 Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto and the reasonable fees and disbursements of
one counsel for the selling Holders, but excluding underwriting discounts and
commissions relating to Registrable Securities.
6.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata (as nearly as practicable) among the selling
stockholders according to the total amount of securities entitled to be included
therein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by such selling stockholders) but in no event shall (i)
the amount of securities of the selling Holders included in the offering be
reduced below thirty percent (30%) of the total amount of securities included in
such offering, unless such offering is the initial public offering of the
Company's securities in which case the selling stockholders may be excluded if
the underwriters make the determination described above and no other
stockholder's securities are included or (ii) notwithstanding (i) above, any
shares being sold by a stockholder exercising a demand registration right
similar to that granted in Section 1.2 be excluded from such offering. For
purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder," and any pro rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any partner or former partner of a Holder that is
a partnership, any shareholder or former shareholder of a Holder that is a
corporation, any
7.
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, or the 1934 Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) 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 (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, or any rule or regulation
promulgated under the Act, or the 1934 Act; and the Company will pay to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case to a Holder, underwriter or controlling person for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided further that in no
event shall any Holder's cumulative, aggregate liability under this subsection
1.10(b), or under subsection 1.10(d), or under
8.
such subsections together, exceed the gross proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnifying party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission; provided, however, that in no event shall any Holder's
cumulative, aggregate liability under this subsection 1.10(d), or under
subsection 1.10(b), or under such subsections together, exceed the gross
proceeds from the offering received by such Holder. Notwithstanding anything to
the contrary herein, no party shall be liable for contribution under this
subsection 1.10(d), except to the extent and under the circumstances as such
party would have been liable to indemnity under subsection
9.
1.10(a) or subsection 1.10(b), as the case may be, if such indemnification were
enforceable under applicable law.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control with respect to the rights and obligations of each of
the parties to such underwriting agreement.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the resale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 ACT (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing
10.
any Holder of any rule or regulation of the SEC which permits the selling of any
such securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive
a written request or requests from Holders of at least twenty percent (20%) of
the Registrable Securities outstanding that the Company effect a registration on
Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this section 1.12: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the Company and its
stockholders for such Form S-3 registration statement to be effected at such
time, in which event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than sixty (60) days
after receipt of the request of the Holder or Holders under this Section 1.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (iv) if the Company has, within the twelve (12)
month period preceding the date of such request, already effected two
registrations on Form S-3 for the Holders pursuant to this Section 1.12; or (v)
in any particular jurisdiction in which the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses other than underwriting
discounts and commissions incurred in connection with a registration requested
pursuant to Section 1.12, including (without limitation) all registration,
filing, qualification, printer's and accounting fees and the reasonable fees
11.
and disbursements of one counsel for the selling Holder or Holders, shall be
paid by the Company. Registrations effected pursuant to this Section 1.12 shall
not be counted as demands for registration or registrations effected pursuant to
Section 1.2.
1.13 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 99,000 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends, combinations and other recapitalizations),
provided: (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the Registrable Securities with respect to which such registration
rights are being assigned; (b) such transferee or assignee agrees in writing to
be bound by and subject to the terms and conditions of this Agreement, including
without limitation the provisions of Section 1.15 below; and (c) such assignment
shall be effective only if immediately following such transfer the further
disposition of such Registrable Securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership, and the holdings of transferees and assignees who are "affiliates"
(as defined in SEC Rule 405) of a Holder shall be aggregated together with such
Holder; provided, that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.
1.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 or Section 1.3 hereof, unless under the terms of such agreement, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subsection 1.2(a) or within one hundred twenty (120) days of the effective date
of any registration effected pursuant to Section 1.2. Each of the Investors (i)
acknowledges that the Company has granted registration and related rights to
certain individuals and entities pursuant to the terms of a certain Amended and
Restated Investors' Rights Agreement dated April 17, 1996, and a certain
Investors' Rights Agreement dated May 21, 1996 (the "Subordinate Rights
12.
Agreements"), (ii) acknowledges that it has had the opportunity to review the
Subordinate Rights Agreements and (iii) consents to the execution of the
Subordinate Rights Agreements by the Company and the grant of the rights
contained therein.
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees
that, during the period of duration specified by the Company and 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, it 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 (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) Such agreement shall not exceed one hundred eighty (180)
days for the first such registration statement of the Company which covers
Common Stock (or other securities) to be sold on its behalf to the public in an
underwritten offering;
(b) Such agreement shall not exceed ninety (90) days for any
subsequent registration statement of the Company which covers Common Stock (or
other securities) to be sold on its behalf to the public in an underwritten
offering; and
(c) An Investor shall not be subject to such agreement unless
all executive officers and directors of the Company enter into similar
agreements and all other Investors and holders of other registration rights are
subject to or obligated to enter into similar agreements.
In order to enforce the foregoing covenants, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right provided
for in this Section 1 after the earlier of (i) five (5) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public, or
(ii) such time as the Holder can sell all of such stock under Rule 144(k) (or
successor rule) promulgated by the SEC.
13.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall
deliver:
(a) to each Investor as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a schedule as
to the sources and applications of funds for such year, such year-end financial
reports to be in reasonable detail, prepared in accordance with generally
accepted accounting principles ("GAAP"), and audited and certified by
independent public accountants of nationally recognized standing selected by the
Company;
(b) to each Investor holding at least 99,000 shares of Series
A Preferred Stock and/or Series B Preferred Stock (together, the "Preferred
Stock") (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations) (each such Investor being a "Major
Investor" for purposes of Sections 2.1, 2.2 and 2.3) as soon as practicable, but
in any event within forty-five (45) days after the end of each of the first
three (3) quarters of each fiscal year of the Company, an unaudited profit or
loss statement, schedule as to the sources and application of funds for such
fiscal quarter and an unaudited balance sheet as of the end of such fiscal
quarter;
(c) to each Major Investor within thirty (30) days of the end
of each month, an unaudited income statement and schedule as to the sources and
application of funds and balance sheet for and as of the end of such month, in
reasonable detail;
(d) to each Major Investor as soon as practicable, but in any
event thirty (30) days prior to the end of each fiscal year, a budget and
business plan for the next fiscal year, prepared on a monthly basis, including
balance sheets and sources and applications of funds statements for such months
and, as soon as prepared, any other budgets or revised budgets prepared by the
Company.
2.2 Inspection. The Company shall permit each Major Investor,
at such Major Investor's expense, to visit and inspect the Company's properties,
to examine its books of account and records and to discuss the Company's
affairs, finances and accounts with its officers, all at such reasonable times
as may be requested by the Major Investor; provided, however, that the Company
shall not be obligated pursuant to this Section 2.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
2.3 Termination of Information Inspection and First Offer
Covenants. Subject to their earlier termination pursuant to the specific terms
of each Section, the covenants set forth in Sections 2.1, 2.2 and 2.4 shall
terminate as to Investors and Major
14.
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated or when the Company first becomes subject to
the periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
specified in this paragraph 2.4, the Company hereby grants to each Major
Investor (as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). For purposes of
this Section 2.4, a Major Investor shall mean any Investor who holds at least
99,000 shares of Registrable Securities (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other recapitalizations). For
purposes of this Section 2.4, Investor includes any partners and affiliates of
an Investor. An Investor shall be entitled to apportion the right of first offer
hereby granted it among itself and its partners and affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice ("Notice") in
accordance with Section 3.5 to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms, if any, upon which it proposes to offer such
Shares.
(b) Within twenty (20) calendar days after receipt of the
Notice, the Major Investor may elect to purchase or obtain, at the price and on
the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion of Preferred Stock then held, by such Major Investor
bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion of all convertible securities). The
Company shall promptly, in writing, inform each Major Investor which purchases
all the shares available to it ("Fully-Exercising Major Investor") of any other
Major Investor's failure to do likewise. During the ten-day period commencing
after receipt of such information, each Fully-Exercising Major Investor shall be
entitled to obtain that portion of the Shares for which Major Investors were
entitled to subscribe but which were not subscribed for by the Major Investors
which is equal to the proportion that the number of shares of Common Stock
issued and held, or issuable upon conversion of Preferred Stock then held, by
such Fully-Exercising Major Investor bears to the total number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by all Fully-Exercising Major Investors who wish to purchase some of
the unsubscribed shares.
15.
(c) If all Shares which Major Investors are entitled to obtain
pursuant to subsection 2.4(b) are not elected to be obtained as provided in
subsection 2.4(b) hereof, the Company may, during the 60-day period following
the expiration of the period provided in subsection 2.4(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the person or persons
than those specified in the Notice. If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement is
not consummated within 30 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.4 shall not be
applicable (i) to the issuance or sale of no more than 1,500,000 shares of
Common Stock (or options therefor) to employees, consultants, directors or
officers of the Company (and not repurchased at cost by the Company in
connection with the termination of employment or service relationship)
subsequent to the date of this Agreement, (ii) to the issuance or sale of no
more than 1,000,000 shares of Common Stock (or options therefor) to third
parties in connection with the license of rights by the Company from such third
parties subsequent to the date of this Agreement, (iii) to or after consummation
of a bona fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act pursuant to a registration statement on Form S-1 or
similar successor form, (iv) to the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (v) to the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise or (vi) to the issuance of stock, warrants or
other securities or rights to persons or entities with which the Company has or
is establishing business relationships, provided such issuances are for other
than primarily equity financing purposes.
(e) The right of first offer set forth in this Section 2.4 may
not be assigned or transferred, except that (i) such right is assignable by each
Major Investor to any wholly-owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Major Investor or to any
partner or shareholder of such Major Investor, provided that such partner or
shareholder holds at least 99,000 shares of Registrable Securities at the time
of or immediately after such assignment, (ii) such right is assignable by each
Major Investor that is a trust to any successor trustee of such trust, and (ii)
such right is assignable between and among any of the Major Investors.
2.5 Key-Person Insurance. The Company has as of the date
hereof or shall within ninety (90) days of the date hereof use its best efforts
to obtain from financially sound and reputable insurers term life insurance on
the life of Dr. David Barry in the amount of $10,000,000 (subject to review by
the Company's board of
16.
directors based upon the amount of the premium) with proceeds payable to the
Company.
2.6 Indemnification. The Company shall take all actions
necessary to indemnify its directors to the maximum extent permitted by
applicable law, including, without limitation, amending the Company's
Certificate of Incorporation and Bylaws and entering into contracts with the
directors to provide such indemnification; provided, however, that the Company
shall not be required to obtain directors insurance unless directed by the Board
of Directors.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
3.3 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be sent to the address indicated for such
party on the signature page hereof (provided that any party at any time may
change its address by ten (10) days' advance written notice to the other
parties), and shall be deemed effectively given upon (i) personal delivery to
the party to be notified, (ii) the time of successful facsimile transmission to
the party to be notified, (iii) sending by reputable overnight delivery service,
or (iv) upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid.
3.6 Expenses. 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
17.
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and (i) the holders
of a majority of the Common Stock then issuable or issued upon conversion of the
Series A Preferred Stock and any Common Stock 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 in replacement of such shares of Common Stock and (ii) the
holders of a majority of the Common Stock then issuable or issued upon
conversion of the Series B Preferred Stock and any Common Stock 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 in replacement of such shares of Common Stock. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
3.8 Additional Investors. After obtaining the written consent
of the Company, any individuals and/or entities that hold or purchase any shares
of the Preferred Stock of the Company shall be entitled to become a party to
this Agreement, and the addition of such individuals and/or entities as parties
to this Agreement and any required amendment of Schedule A in connection
therewith shall not be considered an amendment of this Agreement requiring the
consent of the Investors. Upon execution of a counterpart signature page to this
Agreement by the Company and any of such individuals and/or entities, such
individuals and/or entities shall become parties to this Agreement to the same
extent as if they had executed this Agreement as of the date hereof and shall be
included in the definition of "Investor" under this Agreement for all purposes.
Schedule A to this Agreement shall be automatically amended as appropriate to
reflect the addition of such individuals and/or entities as Investors under this
Agreement. The definition of "Registrable Securities" shall also be
automatically amended to include the shares of Common Stock issuable upon
conversion of the Preferred Stock issued to such individuals and/or entities
without the need to obtain the consent or signature of the Investors.
3.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
18.
3.10 Aggregation of Stock. All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
3.11 Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subject hereof.
3.12 Representation. By executing this Agreement, each
Investor acknowledges and agrees that Brobeck, Phleger & Harrison represents the
Company solely and that such Investor has been advised to, and has had an
opportunity to, consult with its own attorney in connection with this Agreement.
3.13 Board Representation.
(a) The Investors that own Series A Preferred Stock of the
Company agree that they shall cooperate and use their best efforts, including,
without limitation, voting their shares of Series A Preferred Stock of the
Company (but not voting their shares of Common Stock or any other securities of
the Company held by them other than shares of Series A Preferred Stock owned by
them) so that
(i) One member of the Company's Board of Directors
shall be a person designated from time to time by a majority in interest held by
Venrock Associates and Venrock Associates II, L.P.; and
(ii) One member of the Company's Board of Directors
shall be a person designated from time to time by a majority in interest held by
Forward Ventures II, L.P. and Forward Ventures Vanguard Fund.
(b) The Investors that own Series B Preferred Stock of the
Company as of the closing agree that they shall cooperate and use their best
efforts, including, without limitation, voting their shares of Series B
Preferred Stock of the Company (but not voting their shares of Common Stock or
any other securities of the Company held by them other than shares of Series B
Preferred Stock owned by them) so that
(i) One member of the Company's Board of Directors
shall be a person designated from time to time by The Wellcome Trust Limited as
trustee of The Wellcome Trust; and
(ii) One member of the Company's Board of Directors
shall be a person designated from time to time by a majority in interest held by
George McFadden, John H. McFadden, Carol McFadden, Lesley Taylor, George &
Lesley Taylor McFadden Trustees, U/A DTD 9/22/71 F/B/O Elizabeth Cutting
McFadden Trust, Alexander B.
19.
McFadden deceased, Mellon Bank N.A., Alexander Cushing & George McFadden U/W and
McFadden Brothers.
The cooperation and use of best efforts required of each
Investor pursuant to subitems (a) and (b) above shall include, without
limitation, the voting of each Investor's Series A Preferred Stock and/or Series
B Preferred Stock, as the case may be, to remove the designee of the party or
parties that designated such person if requested to do so by such party or
parties. The right of any of the entities identified in subitems (a) or (b)
above to designate a member to the Company's Board of Directors and, as to that
Board position, the obligations of the Investors to vote for a person designated
by such entities, shall cease forever when the total number of shares of "Stock"
(as defined below) collectively held by the parties identified in subitem
(a)(i), or collectively held by the parties identified in subitem (a)(ii), or
held by the party identified in subitem (b)(i), or collectively held by the
parties identified in subitem (b)(ii), as the case may be, becomes at any time
less than five hundred thousand (500,000) shares (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations). The term "Stock" shall mean the shares of Common Stock of
the Company issued and/or issuable upon the conversion or exchange of any
outstanding convertible or exchangeable securities of the Company. Investors are
subject to the terms of this Section 3.13 only to the extent that they own
Series A Preferred Stock and/or Series B Preferred Stock of the Company, and
shall be free to vote any other voting securities of the Company held by them
unencumbered by the terms of this Section 3.13. Subitem (a) of this Section 3.13
and all obligations under subitem (a) of this Section 3.13 shall automatically
terminate forever if and when the number of directors that the holders of Series
A Preferred Stock are entitled to elect under the Company's Certificate of
Incorporation (as it may be amended) is less than two (2). Subitem (b) of this
Section 3.13 and all obligations under subitem (b) of this Section 3.13 shall
automatically terminate forever if and when the number of directors that the
holders of Series B Preferred Stock are entitled to elect under the Company's
Certificate of Incorporation (as it may be amended) is less than two (2).
3.14 Restatement of Prior Agreement. This Agreement
constitutes a restatement in its entirety of the Prior Agreement. Upon the
effectiveness of this Agreement, the Prior Agreement shall be terminated and of
no further force or effect, and neither the Company nor any other party to such
Prior Agreement shall have any further rights or obligations under such Prior
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ David Barry
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
/s/ David Barry
---------------------------------------
Dr. David Barry
Address: 1810 South Lakeshore Drive
Chapel Hill, North Carolina 27514
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ David Barry
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
/s/ M. Nixon Ellis
---------------------------------------
Dr. M. Nixon Ellis
Address: 5915 St. Mary's Road
Hillsborough, North Carolina 27278
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By
----------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
/s/ Karl Y. Hostetler
-----------------------------------------
Dr. Karl Y. Hostetler, Co-Trustee of the
Hostetler Family Trust UTD March 18, 1992
/s/ Margaretha Hostetler
-----------------------------------------
Margaretha Hostetler, Co-Trustee of the
Hostetler Family Trust UTD March 18, 1992
Address: 14024 Rue St. Raphael
Del Mar, California 92014
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
FORWARD VENTURES II, L.P.
By: /s/ Standish M.Fleming
---------------------------------------
Standish M. Fleming, General Partner
Address: 10975 Torreyana Road, Suite 230
San Diego, California 92121
FORWARD VENTURES VANGUARD
FUND
By: Forward III Associates L.L.C.
By: /s/ Standish M. Fleming
---------------------------------------
Standish M. Fleming, Member
Address: 10975 Torreyana Road, Suite 230
San Diego, California 92121
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
/s/ Sandra Lehrman
---------------------------------------
Sandra Lehrman
Address: 60 Watch Hill
East Greenwich, Rhode Island 02818
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
GS TRIANGLE HOLDINGS
By: illegible
---------------------------------------
Its: Attorney-in-fact
---------------------------------------
Address: 85 Broad Street
New York, New York 10004
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
/s/ George McFadden
---------------------------------------
George McFadden
Address: c/o McFadden Brothers
745 Fifth Avenue
New York, New York 10151-0050
/s/ John H. McFadden
---------------------------------------
John H. McFadden
Attorney-in-fact
Address: c/o McFadden Brothers
745 Fifth Avenue
New York, New York 10151-0050
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
McFADDEN BROTHERS
By: illegible
---------------------------------------
Its: Partner
---------------------------------------
Address: c/o McFadden Brothers
745 Fifth Avenue
New York, New York 10151-0050
/s/ Lesley Taylor
---------------------------------------
Lesley Taylor
Attorney-in-fact
Address: c/o McFadden Brothers
745 Fifth Avenue
New York, New York 10151-0050
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
SCHRODER VENTURE MANAGERS
LIMITED, as manager for
Schroder Ventures International Life
Sciences Fund LPI,
Schroder Ventures International Life
Sciences Fund LP2,
Schroder Ventures International Life
Sciences Fund Trust and
Schroder Venture Managers Inc., as
investment manager for the Schroder
Ventures International Life Sciences
Co-investment Scheme
By: illegible
---------------------------------------
Its: Director
---------------------------------------
Address: 22 Church Street
Hamilton HM 11, Bermuda
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
VENROCK ASSOCIATES
By: /s/ Anthony Evnin
---------------------------------------
Anthony Evnin, General Partner
Address: 30 Rockefeller Plaza
New York, NY 10112
VENROCK ASSOCIATES II, L.P.
By: /s/ Anthony Evnin
----------------------------------------
Anthony Evnin, General Partner
Address: 30 Rockefeller Plaza
New York, NY 10112
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
TRIANGLE PHARMACEUTICALS, INC.
By:
---------------------------------------
Dr. David Barry, Chairman and Chief
Executive Officer
Address: 4 University Place
4611 University Drive
Durham, NC 27707
THE INVESTORS:
THE WELCOMED TRUST LIMITED as
trustee of THE WELCOME TRUST
By: /s/ illegible
---------------------------------------
Its: Company Secretary
---------------------------------------
Address: 183 Euston Road
London, England NW1 2BE
[SIGNATURE PAGE TO RESTATED INVESTORS' RIGHTS AGREEMENT]
