-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HardObUMzE6D2+kkR/gObDQnMyDHJA9lK6lDlGEacv9P5wrDhe6ZTfD7QmQvrpMA 9tPIrop+Xt2f6fFWehBAxQ== 0000921530-97-000114.txt : 19970617 0000921530-97-000114.hdr.sgml : 19970617 ACCESSION NUMBER: 0000921530-97-000114 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970616 SROS: NASD GROUP MEMBERS: DUQUESNE CAPITAL MANAGEMENT, L.L.C. GROUP MEMBERS: GEORGE SOROS GROUP MEMBERS: QIH MANAGEMENT INVESTOR, L.P. GROUP MEMBERS: QIH MANAGEMENT, INC. GROUP MEMBERS: QUANTUM INDUSTRIAL PARTNERS LDC GROUP MEMBERS: SOROS FUND MANAGEMENT LLC GROUP MEMBERS: STANLEY F. DRUCKENMILLER SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRIANGLE PHARMACEUTICALS INC CENTRAL INDEX KEY: 0001022622 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 561930728 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47359 FILM NUMBER: 97624644 BUSINESS ADDRESS: STREET 1: 4 UNIVERSITY PLACE STREET 2: 4611 UNIVERSITY DRIVE CITY: DURHAM STATE: NC ZIP: 27707 BUSINESS PHONE: 9194935980 MAIL ADDRESS: STREET 1: 4 UNIVERSITY PLACE STREET 2: 4611 UNIVERSITY DRIVE CITY: DURHAM STATE: NC ZIP: 27707 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SOROS FUND MANAGEMENT LLC CENTRAL INDEX KEY: 0001029160 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133914976 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10106 BUSINESS PHONE: 2128721054 MAIL ADDRESS: STREET 1: C/O AKIN, GUMP, STRAUSS,HAUER,FELD, STREET 2: 399 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 SCH 13D RE TRIANGLE PHARMACEUTICALS, INC. 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, $0.001 Par Value --------------------------------- (Title of Class of Securities) 89589H104 ------------------- (CUSIP Number) Stephen M. Vine, Esq. Akin, Gump, Strauss, Hauer & Feld, L.L.P. 590 Madison Avenue New York, New York 10022 (212) 872-1000 -------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 6, 1997 ---------------------- (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 [_]. 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 disclosure 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). Continued on following page(s) Page 1 of 50 Pages Exhibit Index: Page 23 Page 2 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person QUANTUM INDUSTRIAL PARTNERS LDC 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Cayman Islands 7 Sole Voting Power Number of 1,000,000 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 1,000,000 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,000,000 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 5.11% 14 Type of Reporting Person* OO; IV *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 3 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person QIH MANAGEMENT INVESTOR, L.P. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 1,000,000 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 1,000,000 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,000,000 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 5.11% 14 Type of Reporting Person* PN; IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 4 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person QIH MANAGEMENT, INC. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 1,000,000 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 1,000,000 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,000,000 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 5.11% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 5 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Soros Fund Management LLC 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 1,989,500 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 1,989,500 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,989,500 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 10.16% 14 Type of Reporting Person* OO; IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 6 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person George Soros (in the capacity described herein) 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization United States 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 1,989,500 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 1,989,500 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,989,500 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 10.16% 14 Type of Reporting Person* IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 7 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Stanley F. Druckenmiller (in the capacity described herein) 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization United States 7 Sole Voting Power Number of 800,000 Shares Beneficially 8 Shared Voting Power Owned By 1,989,500 Each Reporting 9 Sole Dispositive Power Person 800,000 With 10 Shared Dispositive Power 1,989,500 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,789,500 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 14.24% 14 Type of Reporting Person* IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 8 of 50 Pages SCHEDULE 13D CUSIP No. 89589H104 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Duquesne Capital Management, L.L.C. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [x] 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Pennsylvania 7 Sole Voting Power Number of 800,000 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 800,000 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 800,000 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [x] 13 Percent of Class Represented By Amount in Row (11) 4.08% 14 Type of Reporting Person* OO; IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 9 of 50 Pages This Statement on Schedule 13D relates to shares of Common Stock, $0.001 par value per share (the "Shares"), of Triangle Pharmaceuticals, Inc. (the "Issuer"). This Statement is being filed by the Reporting Persons (as defined herein) to report recent acquisitions of Shares of the Issuer as a result of which certain of the Reporting Persons may be deemed to be the beneficial owners of more than 5% of the total number of outstanding Shares. Item 1. Security and Issuer. This Statement relates to the Shares. The address of the principal executive office of the Issuer is 4 University Place, 4611 University Drive, Durham, North Carolina, 27707. Item 2. Identity and Background. This Statement is being filed on behalf of each of the following persons (collectively, the "Reporting Persons"): i) Quantum Industrial Partners LDC ("QIP"); ii) QIH Management Investor, L.P. ("QIHMI"); iii) QIH Management, Inc. ("QIH Management"); iv) Soros Fund Management LLC ("SFM LLC"); v) George Soros ("Mr. Soros"); vi) Stanley F. Druckenmiller ("Mr. Druckenmiller"); and vii) Duquesne Capital Management, L.L.C. ("Duquesne LLC"). This statement relates to Shares held for the accounts of Quantum Partners (as defined herein), Quasar Partners (as defined herein), QIP, and Duquesne Fund (as defined herein). The Reporting Persons --------------------- QIP, QIHMI and QIH Management - ----------------------------- QIP is a Cayman Islands exempted limited duration company with its principal address at Kaya Flamboyan 9, Willemstad, Curacao, Netherlands Antilles. The principal business of QIP is investment in securities. Current information concerning the identity and background of the directors and officers of QIP and QIH Management is set forth in Annex A hereto, which is incorporated by reference in response to this Item 2. QIHMI, an investment advisory firm organized as a Delaware limited partnership, is a minority shareholder of, and (pursuant to constituent documents of QIP) is vested with investment discretion with respect to the portfolio assets held for the account of, QIP. The principal business of QIHMI Page 10 of 50 Pages is to provide management and advisory services to, and to invest in, QIP. QIH Management, a Delaware corporation of which Mr. Soros is the sole shareholder, is the sole general partner of QIHMI. The principal business of QIH Management is to serve as the sole general partner of QIHMI. QIHMI and QIH Management have their principal offices at 888 Seventh Avenue, 33rd Floor, New York, New York 10106. QIHMI, by reason of its investment discretion over the securities owned by QIP, and QIH Management, as the sole general partner of QIHMI, may each be deemed the beneficial owner of the Shares held for the account of QIP for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Act"). Mr. Soros has entered into an agreement dated as of January 1, 1997 with SFM LLC pursuant to which Mr. Soros has, among other things, agreed to use his best efforts to cause QIH Management, as the general partner of QIHMI, to act at the direction of SFM LLC, which agreement to so act shall terminate upon the earlier of (a) the assignment to SFM LLC of the legal and beneficial ownership interest in QIH Management and (b) the assignment to SFM LLC of the general partnership interest in QIHMI (the "QIP Contract"). SFM LLC, Mr. Soros, Mr. Druckenmiller and Duquesne LLC - ------------------------------------------------------ The business of SFM LLC is managed through a Management Committee (the "Management Committee") comprised of Mr. Soros, Mr. Druckenmiller and Mr. Gary Gladstein. SFM LLC, a Delaware limited liability company, has its principal office at 888 Seventh Avenue, 33rd Floor, New York, New York 10106. Its principal business is to serve, pursuant to contract, as the principal investment manager to several foreign investment companies (the "SFM Clients"), including Quantum Fund (as defined herein), Quantum Partners, the principal operating subsidiary of Quantum Fund, and Quasar Partners. SFM LLC has been granted investment discretion over portfolio investments, including the Shares, held for the accounts of Quantum Partners LDC, a Cayman Islands exempted limited duration company ("Quantum Partners"), Quantum Fund N.V., a Netherlands Antilles company ("Quantum Fund") and Quasar International Partners C.V., a Netherlands Antilles limited partnership ("Quasar Partners"). Each of Quantum Fund, Quantum Partners and Quasar Partners has its principal office at Kaya Flamboyan 9, Willemstad, Curacao, Netherlands Antilles. SFM LLC's contracts with the SFM Clients generally provide that SFM LLC is responsible for designing and implementing the SFM Clients' overall investment strategies; for conducting direct portfolio management strategies to the extent that SFM LLC determines that it is appropriate to utilize its own portfolio management capabilities; for selecting, evaluating and monitoring other investment advisors who manage separate portfolios on behalf of the SFM Clients; and for allocating and reallocating the SFM Clients' assets among the outside managers and itself. Mr. Soros, as Chairman of SFM LLC, has the ability to direct the investment decisions of SFM LLC and as such may be deemed to have investment discretion over the Shares held for the accounts of Quantum Partners and Quasar Partners. Mr. Druckenmiller, as Lead Portfolio Manager of SFM LLC, has the ability to direct the investment decisions of SFM LLC and as such may be deemed to have investment discretion over the Shares held for the accounts of Quantum Partners and Quasar Partners. Set forth in Annex B hereto and incorporated by reference in response to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of the Managing Directors of SFM LLC. The principal occupation of Mr. Soros, a United States citizen, is his direction of the activities of SFM LLC, which is carried out in his capacity as Chairman of SFM LLC at SFM LLC's principal office. The principal occupation of Mr. Druckenmiller, a United States citizen, is his position as Lead Portfolio Manager and a Member of the Page 11 of 50 Pages Management Committee of SFM LLC, which is carried out at SFM LLC's principal office. Mr. Druckenmiller also owns a 75% interest in, and is the sole managing member of, Duquesne LLC, an investment advisory firm. Duquesne LLC, a Pennsylvania limited liability company, has its principal offices at 2579 Washington Road, Suite 322, Pittsburgh, Pennsylvania 15241-2591. Its principal business is to serve, pursuant to contract, as a discretionary investment advisor to a limited number of institutional clients (the "Duquesne LLC Clients"), including Duquesne Fund, L.P., a Delaware limited partnership ("Duquesne Fund"). Duquesne Fund has its principal office at c/o Duquesne Holdings LLC, Box N9204, Charlotte House, Charlotte Street, Nassau, Bahamas. Set forth in Annex C hereto and incorporated by reference in response to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of the executive officers of Duquesne LLC. Pursuant to regulations promulgated under Section 13(d) of the Act, SFM LLC, pursuant to the provisions of the QIP Contract, Mr. Soros, in his capacity as Chairman of SFM LLC, and Mr. Druckenmiller, in his capacity as Lead Portfolio Manager of SFM LLC, each may be deemed a beneficial owner of the Shares held for the account of QIP. Pursuant to regulations promulgated under Section 13(d) of the Act, SFM LLC, Mr. Soros, in his capacity as Chairman of SFM LLC, and Mr. Druckenmiller, in his capacity as Lead Portfolio Manager of SFM LLC, each may be deemed a beneficial owner of the Shares held for the account of Quantum Partners and Quasar Partners as a result of the contractual authority of SFM LLC to exercise voting and dispositive power with respect to such Shares. Pursuant to regulations promulgated under Section 13(d) of the Act, each of Duquesne LLC and Mr. Druckenmiller, by virtue of his interest in, and position as sole managing member of, Duquesne LLC, may be deemed a beneficial owner of the Shares held for the account of Duquesne Fund as a result of the contractual authority of Duquesne LLC to exercise voting and dispositive power with respect to such Shares. During the past five years, none of the Reporting Persons, Quantum Partners, Quasar Partners and, to the best of the Reporting Persons' knowledge, any other person identified in response to this Item 2 has been (a) convicted in a criminal proceeding, or (b) a party to any civil proceeding as a result of which it or he has been 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. On June 6, 1997 each of QIP, Quantum Partners and Duquesne Fund entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with the Issuer, a copy of which is attached hereto as Exhibit E and incorporated by reference in response to this Item 3. Pursuant to the terms of the Stock Purchase Agreement QIP expended $15,000,000 of its working capital to purchase 1,000,000 Shares, Quantum Partners expended $3,000,000 of its working capital to purchase 200,000 Shares and Duquesne LLC expended $12,000,000 of the working capital of Duquesne Fund to purchase 800,000 Shares. In addition, Quantum Partners expended approximately $224,852 to purchase Shares in the over-the-counter market in the last sixty days, as disclosed on Annex D hereto. The Shares held for the accounts of Quantum Partners, Quasar Partners, QIP, other SFM Clients, Duquesne Fund and/or other Duquesne LLC Clients may be held through margin accounts maintained with brokers, which extend margin credit as and when required to open or carry positions in their margin accounts, subject to applicable federal margin regulations, stock Page 12 of 50 Pages exchange rules and such firms' credit policies. The Shares which may be held in the margin accounts are pledged as collateral security for the repayment of debit balances in the respective accounts. Item 4. Purpose of Transaction. All of the Shares reported herein as having been acquired for or disposed of from the accounts of QIP, Quantum Partners, Quasar Partners and/or Duquesne Fund were acquired or disposed of for investment purposes. Except as described in Item 6, none of Quantum Partners, Quasar Partners, the Reporting Persons nor, to the best of their knowledge, any of the other individuals identified in response to Item 2, has any plans or proposals that relate to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Mr. Soros, Mr. Druckenmiller and SFM LLC reserve the right to acquire, or cause to be acquired, additional securities of the Issuer, to dispose, or cause to be disposed of, such securities at any time or to formulate other purposes, plans or proposals regarding the Issuer or any of its securities, to the extent deemed advisable in light of general investment and trading policies of the Reporting Persons and/or other SFM Clients, market conditions or other factors. Mr. Druckenmiller and Duquesne LLC reserve the right to acquire, or cause to be acquired, additional securities of the Issuer, to dispose, or cause to be disposed of, such securities at any time or to formulate other purposes, plans or proposals regarding the Issuer or any of its securities, to the extent deemed advisable in light of general investment and trading policies of the Duquesne LLC Clients, market conditions or other factors. Item 5. Interest in Securities of the Issuer. (a) (i) Each of QIP, QIHMI and QIH Management may be deemed the beneficial owner of the 1,000,000 Shares held for the account of QIP (approximately 5.11% of the total number of Shares outstanding). (ii) Each of SFM LLC and Mr. Soros may be deemed the beneficial owner of 1,989,500 Shares (approximately 10.16% of the total number of Shares outstanding). This number includes (A) 1,000,000 Shares held for the account of QIP, (B) 964,500 Shares held for the account of Quantum Partners and (C) 25,000 Shares held for the account of Quasar Partners. (iii)Mr. Druckenmiller may be deemed the beneficial owner of 2,789,500 Shares (approximately 14.24% of the total number of Shares outstanding). This number consists of (A) 1,000,000 Shares held for the account of QIP, (B) 964,500 Shares held for the account of Quantum Partners, (C) 25,000 Shares held for the account of Quasar Partners and (D) 800,000 Shares held for the account of Duquesne Fund. (iv) Duquesne LLC may be deemed the beneficial owner of the 800,000 Shares held for the account of Duquesne Fund (approximately 4.08% of the total number of Shares outstanding). (b) (i) Each of QIP, QIHMI (pursuant to QIP's constituent documents), QIH Management (by virtue of its position as sole general partner of QIHMI) and SFM LLC (pursuant to the terms of the QIP Contract) may be deemed to have the sole power to direct voting and disposition of the 1,000,000 Shares held for the account of QIP. Page 13 of 50 Pages (ii) Pursuant to the terms of the QIP Contract and as a result of the positions held by Mr. Soros and Mr. Druckenmiller with SFM LLC, each of Mr. Soros and Mr. Druckenmiller may be deemed to have shared power to direct the voting and disposition of the 1,000,000 Shares held for the account of QIP. (iii)Pursuant to the terms of the contract between Quantum Fund and SFM LLC, SFM LLC may be deemed to have sole power to direct the voting and disposition of the 964,500 Shares held for the account of Quantum Partners. (iv) Pursuant to the terms of the contract between Quantum Fund and SFM LLC and as a result of the positions held by Mr. Soros and Mr. Druckenmiller with SFM LLC, each of Mr. Soros and Mr. Druckenmiller may be deemed to have shared power to direct the voting and disposition of the 964,500 Shares held for the account of Quantum Partners. (v) Pursuant to the terms of the contract between Quasar Partners and SFM LLC, SFM LLC may be deemed to have sole power to direct the voting and disposition of the 25,000 Shares held for the account of Quasar Partners. (vi) Pursuant to the terms of the contract between Quasar Partners and SFM LLC and as a result of the positions held by Mr. Soros and Mr. Druckenmiller with SFM LLC, each of Mr. Soros and Mr. Druckenmiller may be deemed to have shared power to direct the voting and disposition of the 25,000 Shares held for the account of Quasar Partners. (vii)Pursuant to the terms of the contract between Duquesne LLC and Duquesne Fund and as a result of the position held by Mr. Druckenmiller with Duquesne LLC, each of Duquesne LLC and Mr. Druckenmiller may be deemed to have the sole power to direct the voting and disposition of the 800,000 Shares held for the account of Duquesne Fund. (c) Except for the transactions described in Item 3 and Item 6 and those disclosed on Annex D hereto, there have been no transactions with respect to the Shares since April 17, 1997 (60 days prior to the date hereof) by any of the Reporting Persons, Quantum Partners, Quasar Partners or Duquesne Fund. (d) (i) The shareholders of QIP, including Quantum Industrial Holdings, Ltd., a British Virgin Islands international business company, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the account of QIP in accordance with their ownership interests in QIP. (ii) The shareholders of Quantum Partners, including Quantum Fund, have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the account of Quantum Partners in accordance with their ownership interests in Quantum Partners. (iii)The partners of Quasar Partners, including Quasar International Fund N.V., a Netherlands Antilles corporation, have the right to participate in the receipt of dividends from, or proceeds from the sale of, securities held by Quasar Partners in accordance with their partnership interests in Quasar Partners. (iv) The investors in Duquesne Fund have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the account of Duquesne Fund. Page 14 of 50 Pages (e) Not applicable. Each of QIP, QIHMI and QIH Management expressly disclaims beneficial ownership of any Shares not held directly for the account of QIP. Each of SFM LLC and Mr. Soros expressly disclaims beneficial ownership of any Shares not held for the accounts of the SFM Clients and the account of QIP. Duquesne LLC expressly disclaims beneficial ownership of any Shares not held for the account of Duquesne Fund. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. In connection with their acquisition of certain of the Shares reported herein, QIP, Quantum Partners and Duquesne Fund entered into the Stock Purchase Agreement which is incorporated herein by reference. The description of the terms of the Stock Purchase Agreement below is qualified in its entirety by reference to the specific provisions of such agreement, which is attached hereto as Exhibit E. Pursuant to Section 7.2(a) of the Stock Purchase Agreement, as soon as practicable after the Issuer becomes eligible to file a registration statement on Form S-3 registering the resale of the Shares issued pursuant to the Stock Purchase Agreement, or, in the event that the Issuer is not eligible to file a registration statement on Form S-3 registering the resale of such Shares by November 1, 1997, then on a subsequent date as soon as practicable after QIP, Quantum Partners and/or Duquesne Fund (defined therein to be the "Purchasers") holding more than fifty percent (50%) of such Shares may request in writing, the Issuer shall prepare and file a registration statement with the Securities and Exchange Commission under the Securities Act of 1933 to register the resale of such Shares (and the additional 789,500 Shares held by the Purchasers as of the date of execution of the Stock Purchase Agreement) by the Purchasers and use its best efforts to cause such registration statement to be declared effective. Pursuant to Section 7.2(f) of the Stock Purchase Agreement, in the event any of the Purchasers desire to sell such Purchaser's Shares, issued pursuant to the Stock Purchase Agreement, pursuant to the Registration Statement (as defined therein), the Purchaser shall give the Issuer three (3) business days' notice of its desire to sell in reliance on such Registration Statement including an estimate of whether its desire is to sell more than 50,000 of such Shares (the "Notice of Sale," as defined thereto). The Issuer may refuse to permit a Purchaser to resell any such Shares pursuant to the Registration Statement if the Issuer delivers a certificate in writing to the Purchaser within three (3) business days following the Issuer's receipt of the Notice of Sale to the effect that withdrawal of such Registration Statement is necessary because a sale pursuant to the Registration Statement in its then-current form could constitute a violation of the federal securities laws. In such an event, the Issuer shall use its best efforts to amend the Registration Statement if necessary as soon as practicable and in any event within sixty (60) days after the Issuer's receipt of the Notice of Sale, and shall notify the Purchasers promptly after it has determined that such sale has become permissible under the federal securities laws. Certain limitations on the Issuer's ability to refuse to permit such a resale are set forth in Section 7.2(f). Pursuant to Section 7.4 of the Stock Purchase Agreement, subject to certain conditions, upon the request of holders of more than 50% of the Shares issued pursuant to the Stock Purchase Agreement, the Issuer shall use its best efforts to cause its Board of Directors to nominate and elect an individual designated in writing by such holders, to serve on the Issuer's Board of Directors, which individual must be acceptable to the Chairman of the Issuer's Board of Directors. Page 15 of 50 Pages On June 11, 1996, the Issuer entered into a Restated Investors' Rights Agreement (the "Rights Agreement") with the Investors (as defined therein), a copy of which is incorporated by reference as Exhibit F and the provisions of which are incorporated herein by reference. On June 6, 1997 the Issuer entered into a First Amendment to Restated Investors' Rights Agreement (the "Amended Rights Agreement") with the Investors (as defined therein) and QIP, Quantum Partners and Duquesne Fund, a copy of which is attached hereto as Exhibit G and incorporated herein by reference. Subject to certain conditions and pursuant to Section 1.3 of the Registration Rights Agreement, QIP, Quantum Partners and Duquesne Fund have been granted certain "piggy-back" registration rights. If the Issuer proposes to register any of its stock or other securities it shall give each Holder (as defined therein, including each of QIP, Quantum Partners and Duquesne Fund) notice of such registration. Thereafter, and upon the written request of each Holder, given within twenty (20) days, the Issuer shall cause to be registered, subject to certain cut-back provisions, all of the Registrable Securities (as defined therein) that each Holder has requested to be registered. In connection with the transaction pursuant to which Shares were issued pursuant to the Stock Purchase Agreement, SFM LLC has agreed that, among other things and subject to certain exceptions, neither it nor its affiliates or controlling persons will acquire or offer to acquire any voting securities, or rights to acquire voting securities, of the Issuer for a period of six months from June 4, 1997, subject to the shortening of such period in certain circumstances. From time to time each of the Reporting Persons, Quantum Partners, Quasar Partners, other SFM Clients, Duquesne Fund and/or other Duquesne LLC Clients may lend portfolio securities to brokers, banks or other financial institutions. These loans typically obligate the borrower to return the securities, or an equal amount of securities of the same class, to the lender and typically provide that the borrower is entitled to exercise voting rights and to retain dividends during the term of the loan. From time to time to the extent permitted by applicable law, each of such persons or entities may borrow the Shares for the purpose of effecting, and may effect, short sale transactions, and may purchase securities for the purpose of closing out short positions in such securities. Except as set forth above and as described in Items 3 hereto, which is incorporated in this Item 6 by reference, the Reporting Persons, Quantum Partners, Quasar Partners and Duquesne Fund do not have any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer. Page 16 of 50 Pages Item 7. Material to be Filed as Exhibits. A. Power of Attorney dated as of January 1, 1997 granted by Mr. Soros in favor of Mr. Sean C. Warren and Mr. Michael C. Neus. B. Power of Attorney dated as of January 1, 1997 granted by Mr. Druckenmiller in favor of Mr. Sean C. Warren and Mr. Michael C. Neus. C. Joint Filing Agreement dated June 16, 1997 by and among QIP, QIHMI, QIH Management, SFM LLC, Mr. Soros, Mr. Druckenmiller and Duquesne LLC. D. Power of Attorney dated May 23, 1996 granted by QIP in favor of Mr. Gary Gladstein, Mr. Sean Warren and Mr. Michael Neus. E. Common Stock Purchase Agreement dated as of June 6, 1997 by and among the Issuer and the Purchasers (as defined therein). F. Restated Investors' Rights Agreement dated as of June 11, 1996 by and among the Issuer and the Investors (as defined therein) (filed as Exhibit 10.29 to the Issuer's Form S-1 Registration No. 333-11793). G. First Amendment to Restated Investors' Rights Agreement dated as of June 6, 1997 by and among the Issuer, the Investors (as defined therein), QIP, Quantum Partners and Duquesne Fund. Page 17 of 50 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: June 16, 1997 QUANTUM INDUSTRIAL PARTNERS LDC By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact QIH MANAGEMENT INVESTOR, L.P. By: QIH Management, Inc., its General Partner By: /S/ SEAN C. WARREN ------------------------ Sean C. Warren Vice President QIH MANAGEMENT, INC. By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Vice President SOROS FUND MANAGEMENT LLC By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Managing Director Page 18 of 50 Pages GEORGE SOROS By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact STANLEY F. DRUCKENMILLER By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact DUQUESNE CAPITAL MANAGEMENT, L.L.C. By: /S/ GERALD KERNER ----------------------------- Gerald Kerner Managing Director Page 19 of 50 Pages ANNEX A Directors and Officers of Quantum Industrial Partners LDC Name/Title/Citizenship Principal Occupation Business Address - ---------------------- -------------------- ---------------- Curacao Corporation Managing Director of Kaya Flamboyan 9 Company N.V. Netherlands Antilles Willemstad Managing Director corporations Curacao, (Netherlands Antilles) Netherlands Antilles Inter Caribbean Services Adminstrative services Citco Building Limited Wickhams Cay Secretary Road Town (British Virgin Islands) Tortola British Virgin Islands Directors and Officers of QIH Management, Inc. Name/Title/Citizenship Principal Occupation Business Address - ---------------------- -------------------- ---------------- Gary Gladstein Managing Director of 888 Seventh Avenue Director and President SFM LLC 33rd Floor (United States) New York, NY 10106 Sean C. Warren Managing Director of 888 Seventh Avenue Director, Vice President SFM LLC 33rd Floor and Secretary New York, NY 10106 (United States) Peter Streinger Chief Financial Officer of 888 Seventh Avenue Treasurer SFM LLC 33rd Floor (United States) New York, NY 10106 Michael C. Neus Assistant General Counsel 888 Seventh Avenue Vice President and of SFM LLC 33rd Floor Assistant Secretary New York, NY 10106 (United States) To the best of the Reporting Persons' knowledge: (a) None of the above persons holds any Shares. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Shares. Page 20 of 50 Pages ANNEX B The following is a list of all of the persons (other than Stanley Druckenmiller) who serve as Managing Directors of SFM LLC: Scott K. H. Bessent Walter Burlock Brian J. Corvese Jeffrey L. Feinberg Arminio Fraga Gary Gladstein Ron Hiram Robert K. Jermain David N. Kowitz Alexander C. McAree Paul McNulty Gabriel S. Nechamkin Steven Okin Dale Precoda Lief D. Rosenblatt Mark D. Sonnino Filiberto H. Verticelli Sean C. Warren Each of the above-listed persons is a United States citizen whose principal occupation is serving as Managing Director of SFM LLC, and each has a business address c/o Soros Fund Management LLC, 888 Seventh Avenue, 33rd Floor, New York, New York 10106. To the best of the Reporting Persons' knowledge: (a) None of the above persons holds any Shares. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Shares. Page 21 of 50 Pages ANNEX C The following is a list of all of the persons who serve as executive officers of Duquesne LLC (other than Stanley F. Druckenmiller): Michael A. Shay ("Mr. Shay") Gerald Kerner ("Mr. Kerner") Mr. Shay is a United States citizen whose principal occupation is serving as a Managing Director of Duquesne LLC. Mr. Shay's business address is Duquesne Capital Management, L.L.C., 2579 Washington Road, Suite 322, Pittsburgh, Pennsylvania 15241. Mr. Kerner is a United States citizen whose principal occupation is serving as a Managing Director of Duquesne LLC. Mr. Kerner's business address is Duquesne Capital Management, L.L.C., 888 Seventh Avenue, 32nd Floor, New York, New York 10106. To the best of the Reporting Persons' knowledge: (a) None of the above persons hold any Shares. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Shares. Page 22 of 50 Pages ANNEX D RECENT TRANSACTIONS IN THE COMMON STOCK OF TRIANGLE PHARMACEUTICALS, INC.
Date of Nature of For the Account of Transaction Transaction Number of Shares Price Per Share - ------------------ --------------- ----------- ---------------- --------------- Quantum Partners/1/ 5/05/97 PURCHASE 2,000 $15.08/2/ 5/05/97 PURCHASE 2,500 $15.38/2/ 5/06/97 PURCHASE 10,000 $15.63/2/ 6/06/97 PURCHASE 200,000 $15.00/3/ QIP/1/ 6/06/97 PURCHASE 1,000,000 $15.00/3/ Duquesne Fund/4/ 6/06/97 PURCHASE 800,000 $15.00/3/
- --------------------------------- /1/ All of these transactions were effected at the direction of SFM LLC. /2/ These Shares were acquired in the over-the-counter market in routine brokerage transactions. /3/ These Shares were acquired pursuant to the Stock Purchase Agreement. /4/ This transaction was effected at the direction of Duquesne LLC. Page 23 of 50 Pages EXHIBIT INDEX Page No. -------- A. Power of Attorney dated as of January 1, 1997 granted by Mr. George Soros in favor of Mr. Sean C. Warren and Mr. Michael C. Neus............................................................. 24 B. Power of Attorney dated as of January 1, 1997 granted by Mr. Stanley F. Druckenmiller in favor of Mr. Sean C. Warren and Mr. Michael C. Neus................................................. 25 C. Joint Filing Agreement dated June 16, 1997 by and among Quantum Industrial Partners LDC, QIH Management Investor, L.P., QIH Management, Inc., Soros Fund Management LLC, Mr. George Soros, Mr. Stanley F. Druckenmiller and Duquesne Capital Management, L.L.C........................................... 26 D. Power of Attorney dated May 23, 1996 granted by Quantum Industrial Partners LDC in favor of Mr. Gary Gladstein, Mr. Sean Warren and Mr. Michael Neus.................................... 28 E. Common Stock Purchase Agreement dated as of June 6, 1997 by and among Triangle Pharmaceuticals, Inc. and the Purchasers (as defined therein) ............................................... 29 G. First Amendment to Restated Investors' Rights Agreement dated as of June 6, 1997 by and among Triangle Pharmaceuticals, Inc., the Investors (as defined therein), Quantum Industrial Partners LDC, Quantum Partners LDC and Duquesne Fund, L.P.................................................. 46 EX-24 2 EXHIBIT A - POWER OF ATTORNEY Page 24 of 50 Pages EXHIBIT A POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, GEORGE SOROS, hereby make, constitute and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting individually, as my agent and attorney-in-fact for the purpose of executing in my name, (a) in my personal capacity or (b) in my capacity as Chairman of, member of or in other capacities with Soros Fund Management LLC, all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the United States Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including: (1) all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any acquisition statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and (2) any information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. All past acts of the attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. This power of attorney shall be valid from the date hereof until revoked by me. IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of January, 1997. /s/ George Soros ------------------------ GEORGE SOROS EX-24 3 EXHIBIT B - POWER OF ATTORNEY Page 25 of 50 Pages EXHIBIT B POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, STANLEY F. DRUCKENMILLER, hereby make, constitute and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting individually, as my agent and attorney-in-fact for the purpose of executing in my name, (a) in my personal capacity or (b) in my capacity as Lead Portfolio Manager of, member of or in other capacities with Soros Fund Management LLC, all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the United States Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including: (1) all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any acquisition statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and (2) any information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. All past acts of the attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. This power of attorney shall be valid from the date hereof until revoked by me. IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of January, 1997. /s/ Stanley F. Druckenmiller ------------------------------------ STANLEY F. DRUCKENMILLER EX-99.C 4 EXHIBIT C - JOINT FILING AGREEMENT Page 26 of 50 Pages EXHIBIT C JOINT FILING AGREEMENT The undersigned hereby agree that the statement on Schedule 13D with respect to the Common Stock of Triangle Pharmaceuticals, Inc. dated June 16, 1997 is, and any amendments thereto signed by each of the undersigned shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(f) under the Securities Exchange Act of 1934. Date: June 16, 1997 QUANTUM INDUSTRIAL PARTNERS LDC By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact QIH MANAGEMENT INVESTOR, L.P. By: QIH Management, Inc., its General Partner By: /S/ SEAN C. WARREN ------------------------ Sean C. Warren Vice President QIH MANAGEMENT, INC. By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Vice President SOROS FUND MANAGEMENT LLC By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Managing Director Page 27 of 50 Pages GEORGE SOROS By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact STANLEY F. DRUCKENMILLER By: /S/ SEAN C. WARREN ----------------------------- Sean C. Warren Attorney-in-Fact DUQUESNE CAPITAL MANAGEMENT, L.L.C. By: /S/ GERALD KERNER ----------------------------- Gerald Kerner Managing Director EX-24 5 EXHIBIT D - POWER OF ATTORNEY Page 28 of 50 Pages EXHIBIT D QUANTUM INDUSTRIAL PARTNERS LDC POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENT, that the undersigned QUANTUM INDUSTRIAL PARTNERS LDC (the "Company"), an exempted limited duration company existing and operating under the laws of the Cayman Islands does, pursuant to a duly adopted resolution of its Managing Director, hereby designate, constitute and appoint: GARY GLADSTEIN, SEAN WARREN and MICHAEL NEUS acting, singly and not jointly, as its true and lawful agent and attorney in fact for the purpose of executing in its name, all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the United States Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including: (1) all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any acquisition statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and (2) any information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. Each attorney-in-fact is hereby authorized and empowered to perform all other acts and deeds, which he or she in his or her sole discretion deems necessary or appropriate to carry out to the fullest extent the terms and the intent of the foregoing. All prior acts of each attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. IN WITNESS WHEREOF, the Company has caused this document to be execute this 23rd day of May, 1996. QUANTUM INDUSTRIAL PARTNERS LDC --------------------------------------- Curacao Corporation Company N.V. Managing Director EX-99.E 6 EXHIBIT E - COMMON STOCK PURCHASE AGREEMENT Page 29 of 50 Pages EXHIBIT E TRIANGLE PHARMACEUTICALS, INC. COMMON STOCK PURCHASE AGREEMENT This Common Stock Purchase Agreement (the "Agreement") is made as of June __, 1997, by and among Triangle Pharmaceuticals, Inc., a Delaware corporation (the "Company") with its principal office at 4 University Place, 4611 University Drive, Durham, North Carolina, 27707, (919) 493-5925 (fax), and the entities listed on the Schedule of Investors attached hereto as Exhibit A --------- (the "Purchasers"). Unless otherwise defined herein, capitalized terms used herein and not defined herein shall have the meanings given to them in Regulation S ("Regulation S") under the Securities Act of 1933, as amended (the "Securities Act"). Section 1 Authorization and Sale of Common Stock -------------------------------------- 1.1 Authorization. The Company has authorized the sale and ------------- issuance of 2,000,000 shares of its Common Stock pursuant to this Agreement (the "Shares"). 1.2 Sale of Common. Subject to the terms and conditions of this -------------- Agreement, the Company agrees to issue and sell to each Purchaser and each Purchaser severally agrees to purchase from the Company the number of Shares set forth opposite each Purchaser's name on Exhibit A for $15.00 per share. The --------- Company shall be responsible for any transfer or stamp taxes in respect of issuing the Shares. Section 2 Closing Date; Delivery ---------------------- 2.1 Closing Date. The closing of the purchase and sale of the ------------- Shares hereunder (the "Closing") shall be held at the offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway, 47th Floor, New York, New York 10019 at 2:00 p.m. Eastern Daylight Savings Time on June ___, 1997, or at such other time and place upon which the Company and the Purchasers purchasing the majority of the Shares shall agree. The date of the Closing is hereinafter referred to as the "Closing Date." 2.2 Delivery. At the Closing, the Company will deliver to each -------- Purchaser a certificate, registered in the Purchaser's name as shown on Exhibit ------- A, representing the number of Shares to be purchased by the Purchaser. Such - - delivery shall be against payment of the purchase price therefor by check or wire transfer to the Company in the amount set forth on Exhibit A. It is agreed --------- among all parties that the issuance and sale of the Shares to the Purchasers shall occur as one simultaneous transaction at the Closing. Page 30 of 50 Pages Section 3 Representations and Warranties of the Company --------------------------------------------- The Company represents and warrants to the Purchasers as of the Closing as follows: 3.1 Organization and Standing. The Company is a corporation duly ------------------------- organized and validly existing under, and by virtue of, the laws of the State of Delaware and is in good standing as a domestic corporation under the laws of said state. 3.2 Corporate Power; Authorization. The Company has all requisite ------------------------------ legal and corporate power and has taken all requisite corporate action to execute and deliver this Agreement, to sell and issue the Shares and to carry out and perform all of its obligations under this Agreement. This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally and (ii) as limited by equitable principles generally. The execution and delivery of this Agreement does not, and the performance of this Agreement and the compliance with the provisions hereof and the issuance, sale and delivery of the Shares by the Company will not, materially conflict with, or result in a material breach or violation of the terms, conditions or provisions of, or constitute a material default under, or result in the creation or imposition of any material lien pursuant to the terms of, the Certificate of Incorporation or Bylaws of the Company or any statute, law, rule or regulation or any state or federal order, judgment or decree or any indenture, mortgage, lease or other material agreement or instrument to which the Company or any of its properties is subject. 3.3 Issuance and Delivery of the Shares. The Shares, when issued ----------------------------------- and paid for in accordance with the provisions of this Agreement, will be validly issued and outstanding, fully paid and nonassessable. The issuance and delivery of the Shares is not subject to preemptive or any other similar rights of the stockholders of the Company or any liens or encumbrances. 3.4 SEC Documents; Financial Statements. Each report or proxy -------------------------------------- statement delivered to the Purchasers is a true and complete copy of such document as filed by the Company with the Securities and Exchange Commission (the "SEC"). The Company has delivered to each Purchaser its Annual Report on Form 10-K for the year ended December 31, 1996 (the "1996 10-K") and its Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (the "March 10-Q"). The Company has filed in a timely manner all documents that the Company was required to file with the SEC under Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since its initial public offering. As of their respective filing dates, all documents filed by the Company with the SEC (the "SEC Documents") complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable. None of the SEC Documents as of their respective dates contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light 2 Page 31 of 50 Pages of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents (the "Financial Statements") comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto. The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied and fairly present the consolidated financial position of the Company and any subsidiaries at the dates thereof and the consolidated results of their operations and consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring adjustments). 3.5 Governmental Consents. No consent, approval, order or ---------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement except for (a) such filings as have been made prior to the Closing, except that any notices of sale required to be filed with the SEC under Regulation D of the Securities Act, or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods therefor, and (b) the filing of the Nasdaq National Market Notification Form with the Nasdaq National Market. 3.6 No Material Adverse Change. Except as otherwise disclosed ---------------------------- herein or as disclosed to the Purchasers in writing prior to the Closing, since March 31, 1997, there have not been any changes in the assets, liabilities, financial condition, business prospects or operations of the Company from that reflected in the March 10-Q and the Financial Statements except changes in the ordinary course of business which have not been, either individually or in the aggregate, materially adverse. 3.7 Authorized Capital Stock. The authorized capital stock of the ------------------------ Company consists of (i) 75,000,000 shares of Common Stock, of which 17,585,108 shares are outstanding, and (ii) 5,000,000 shares of Preferred Stock, none of which is outstanding. Except as set forth in the March 10-Q or the 1996 10-K or as disclosed to the Purchasers in writing prior to the Closing, and except for the grant of options to purchase a total of 15,500 shares of Common Stock granted on May 1, 1997, there are no outstanding options, warrants or other securities exercisable for, or convertible into, or commitments to issue securities exercisable for or convertible into, capital stock of the Company, or other commitments to issue any capital stock of the Company. 3.8 No Dividends. The Company has not declared or paid any ------------- dividends, or authorized or made any distribution or established any record date for the issuance of any dividend or other distribution upon or with respect to any class or series of its capital stock and will not do any of the foregoing until after Purchasers have been listed as record holders of the Shares purchased at the Closing. 3.9 Litigation. Except as disclosed in the SEC Documents, there ---------- are no actions, suits, proceedings or investigations pending or, to the best of 3 Page 32 of 50 Pages the Company's knowledge, threatened against the Company or any of its properties before or by any court or arbitrator or any governmental body, agency or official in which there is a reasonable likelihood (in the judgment of the Company) of an adverse decision that (a) could have a material adverse effect on the Company's properties or assets or the business of the Company as presently conducted or proposed to be conducted or (b) could impair the ability of the Company to perform in any material respect its obligations under this Agreement. 3.10 Real Property Holding Corporation. The Company is not and ----------------------------------- will not voluntarily become a real property holding corporation within the meaning of Internal Revenue Code Section 897(c)(2) and any regulations promulgated thereunder. 3.11 Regulation S Representations. ---------------------------- (a) Neither the Company nor any of its affiliates (within the meaning of Rule 144 under the Securities Act) nor any person acting on its or their behalf has engaged or will engage in any Directed Selling Efforts in connection with the offer and sale of the Shares. (b) The Company is a Reporting Issuer within the meaning of Regulation S. (c) The Company has not offered the Shares to any persons other than the Purchasers. (d) The offer and sale of the Shares to the Purchasers are not part of a plan or scheme on the part of the Company, any of its affiliates (within the meaning of Rule 144 under the Securities Act) or any person acting on its or their behalf to evade the registration provisions of the Securities Act. 3.12 Amendment to Rights Agreement. The First Amendment to -------------------------------- Restated Investors' Rights Agreement (the "Rights Amendment") in the form attached hereto as Exhibit B. has been executed by the persons and entities that --------- are required to effectively amend the Restated Investors' Rights Agreement dated June 11, 1996 among the Company and the persons listed in Schedule A attached ---------- thereto (the "Rights Agreement"), and the Rights Amendment constitutes a legal, valid and binding obligation of the Company. Section 4 Representations, Warranties and Covenants of the Purchasers ----------------------------------------------------------- Each Purchaser hereby severally represents and warrants to the Company as of the Closing Date, and agrees in favor of the Company, as follows, except that Duquesne Fund, L.P. ("Duquesne") does not make any of the representations or warranties contained in Section 4.5(a), (b) or (f): 4.1 Authorization. Purchaser represents and warrants to the ------------- Company that: (i) Purchaser has been duly formed and is validly existing in good 4 Page 33 of 50 Pages standing under the laws of the jurisdiction of its formation; (ii) Purchaser has all requisite legal and corporate or other power and capacity and has taken all requisite corporate or other action to execute and deliver this Agreement, to purchase the Shares to be purchased by it and to carry out and perform all of its obligations under this Agreement; and (iii) this Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors' rights generally and (b) as limited by equitable principles generally. 4.2 Independent Investment Decision. Purchaser understands that -------------------------------- no United States federal or state agency has passed on, reviewed or made any recommendation or endorsement of the Shares. In making the decision to purchase the Shares in accordance with this Agreement, Purchaser has relied solely upon independent investigations made by it and not upon any representations made by the Company other than those made pursuant to this Agreement. 4.3 Investment Intent. Purchaser is purchasing the Shares for its ----------------- own account, for investment purposes only, and not with a view to a distribution thereof. Purchaser further understands that its acquisition of the Shares has not been registered under the Securities Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. Duquesne is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Shares to be made by it hereunder. 4.4 Registration or Exemption Requirements. Purchaser further --------------------------------------- acknowledges and understands that the Shares have not been registered under the Securities Act and may not be resold or otherwise transferred except in a transaction registered under the Securities Act or unless an exemption from such registration is available. 4.5 Regulation S Representations. ---------------------------- (a) Purchaser is not a U.S. Person and is not acquiring the Shares for the account or benefit of any U.S. Person, and Purchaser is not an affiliate (within the meaning of Rule 144 under the Securities Act) of the Company. (b) At the time the buy orders for the Shares were originated, Purchaser was located outside the United States. (c) Neither Purchaser nor any of its affiliates nor anyone acting on its or their behalf has engaged or will engage in any Directed Selling Efforts in connection with the offer and sale of the Shares. 5 Page 34 of 50 Pages (d) Purchaser: will not, prior to the later of the end of the Restricted Period and November 1, 1997, offer or sell any of the Shares (or create or maintain any derivative position equivalent thereto) in reliance on Regulation S and will only offer or sell any of the Shares (or create or maintain any derivative position equivalent thereto) during such period pursuant to registration under the Securities Act or pursuant to an available exemption from registration other than Regulation S and, in any case, in accordance with applicable state securities laws and the provisions of this Agreement; and will, after November 1, 1997, offer or sell the Shares (or create or maintain any derivative position equivalent thereto) only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration and, in any case, in accordance with applicable state securities laws and the provisions of this Agreement. Purchaser further agrees that unless the transfer is pursuant to a registration under the Securities Act, prior to the transfer (A) Purchaser will notify the Company of the proposed transfer and will furnish the Company with a detailed statement of the circumstances surrounding the proposed transfer, and (B) if reasonably requested by the Company, Purchaser will furnish the Company with an opinion of counsel, reasonably satisfactory to the Company and its counsel, that such transfer will not require registration of the Shares under the Securities Act. Purchaser agrees to provide an opinion of counsel for all transfers pursuant to Regulation S. (e) Neither Purchaser's offer to buy the Shares nor Purchaser's acquisition of the Shares is part of a plan or scheme on the part of Purchaser, any of its affiliates or any person acting on its or their behalf to evade the registration requirements of the Securities Act. (f) Purchaser's offer to buy the Shares constituted, and Purchaser's acquisition of the Shares will constitute, an Offshore Transaction. (g) In addition to, and without in any way limiting, the other restrictions contained in this Agreement, during any Restricted Period applicable to the Shares, neither Purchaser nor any of its affiliates nor any person acting on its or their behalf will engage in any Directed Selling Efforts with respect to such Shares. 4.6 No Legal, Tax or Investment Advice. Purchaser understands ------------------------------------ that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. 4.7 Legends. To the extent applicable, each certificate or other ------- document evidencing any of the Shares shall be endorsed with the legends set forth in Sections 4.7(a) and (b) below (other than the Shares purchased by Duquesne, which shall be endorsed with the legends set forth in Sections 4.7(b) and (c) below), and the Purchaser covenants that, except to the extent such 6 Page 35 of 50 Pages restrictions are waived by the Company, the Purchaser shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in the legends endorsed on such certificate: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"). PRIOR TO NOVEMBER 1, 1997, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION OTHER THAN REGULATION S. AFTER NOVEMBER 1, 1997, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION." "THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER CONTAINED IN A CERTAIN COMMON STOCK PURCHASE AGREEMENT, AS AMENDED FROM TIME TO TIME. THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE." "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER THE SECURITIES ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE SECURITIES ACT OR ANOTHER AVAILABLE EXEMPTION THEREFROM, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED." (d) Any other legend required by law. 4.8 HSR Filings. No filing under the Hart-Scott-Rodino Antitrust ----------- Improvements Act of 1976, as amended, is or will be required by any of the Purchasers in connection with the acquisition of the Shares by the Purchasers. 7 Page 36 of 50 Pages Section 5 Conditions to Closing of Purchasers ----------------------------------- Each Purchaser's obligation to purchase the Shares at the Closing is, at the option of such Purchaser, subject to the fulfillment or waiver (in its sole discretion) on or before the Closing Date of the following conditions: 5.1 Representations and Warranties. The representations and -------------------------------- warranties of the Company contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 Covenants. The Company shall have performed and complied with --------- all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 5.3 Qualifications. All authorizations, approvals, or permits, if -------------- any, of any governmental authority or regulatory body of the United States or of any state that are required as of the Closing in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective as of the Closing. 5.4 Amendment to Rights Agreement. The Company and the persons ------------------------------ whose signatures are required to effectively amend the Rights Agreement shall have executed the First Amendment to Restated Investors' Rights Agreement in the form attached hereto as Exhibit B. Section 6 Conditions to Closing of Company -------------------------------- The Company's obligation to sell and issue the Shares at the Closing is, at the option of the Company, subject to the fulfillment or waiver of the following conditions: 6.1 Representations and Warranties. The representations and -------------------------------- warranties of the Purchasers contained in Section 4 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 6.2 Covenants. The Purchasers shall have performed and complied --------- with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Purchasers on or before the Closing. 6.3 Qualifications. All authorizations, approvals, or permits, if -------------- any, of any governmental authority or regulatory body of the United States or of 8 Page 37 of 50 Pages any state that are required as of the Closing in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective as of the Closing. 6.4 Amendment to Rights Agreement. The Purchasers and the persons ----------------------------- whose signatures are required to effectively amend the Rights Agreement shall have executed the First Amendment to Restated Investors' Rights Agreement in the form attached hereto as Exhibit B. Section 7 Affirmative Covenants of the Company ------------------------------------ The Company hereby covenants and agrees as follows: 7.1 Financial Information. The Company will mail the following ---------------------- reports to each Purchaser until such Purchaser transfers, assigns or sells the Shares purchased by such Purchaser pursuant to this Agreement: (a) Within one hundred (100) days after the end of each fiscal year, a copy of its Annual Report on Form 10-K. (b) Within fifty-five (55) days after the end of the first, second and third quarterly accounting periods of each fiscal year of the Company, a copy of its Quarterly Report on Form 10-Q. (c) Within ten (10) days after the Company files any Current Report on Form 8-K with the SEC, such Current Report on Form 8-K. 7.2 Registration Requirements. ------------------------- (a) As soon as practicable after the Company becomes eligible to file a registration statement on Form S-3 registering the resale of the Shares, or, in the event that the Company is not eligible to file a registration statement on Form S-3 registering the resale of the Shares by November 1, 1997, then on a subsequent date as soon as practicable after the Purchasers holding more than fifty percent (50%) of the Shares then outstanding may request in writing, the Company shall prepare and file a registration statement with the SEC under the Securities Act to register the resale of the Shares (and the additional 789,500 shares of the Company's Common Stock held by the Purchasers as of the date hereof) by the Purchasers (the "Registration Statement") and use its best efforts to cause such registration statement to be declared effective. All Purchasers shall deliver to the Company an executed copy of the Registration Statement Questionnaire in the form attached hereto as Exhibit C as a condition precedent to the Company's obligation to file the Registration Statement with the SEC and in any event within ten (10) days of the Company's request therefor. Each Purchaser will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding such Purchaser or such Purchaser's "Plan of Distribution." 9 Page 38 of 50 Pages (b) The Company shall pay all Registration Expenses (as defined below) in connection with any registration, qualification or compliance hereunder, and each Purchaser shall pay all Selling Expenses (as defined below) and other expenses that are not Registration Expenses relating to the Shares resold by such Purchaser. "Registration Expenses" shall mean all expenses, except for Selling Expenses, incurred by the Company in complying with the registration provisions herein described, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration. "Selling Expenses" shall mean all selling commissions, underwriting discounts and stock transfer taxes applicable to the Shares and all fees and disbursements of counsel for any Purchaser. (c) In the case of the registration effected by the Company pursuant to these registration provisions, the Company will use its best efforts to: (i) keep such registration effective until the earliest of (A) nineteen (19) months after the initial effective date of the Registration Statement, which date shall be extended by the period (not to exceed five (5) months) equal to the period, if any, that the Purchasers are unable to sell any Shares as a result of any withdrawal of the Registration Statement by the Company pursuant to Section 7.2(f) below (other than a withdrawal in response to any Notice of Sale (as defined in Section 7.2(f) below) that indicates any Purchaser desires to sell no more than 50,000 Shares)(the "Effective Period"), and (B) such date as all of the Shares have been resold in transactions in which the Purchasers have not assigned their benefits and obligations under Section 7 in accordance with the provisions of Section 8.5 below; (ii) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement; (iii) furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Purchaser from time to time may reasonably request; (iv) cause all Shares registered as described herein to be listed on each securities exchange and quoted on each quotation service on which similar securities issued by the Company are then listed or quoted; (v) provide a transfer agent and registrar for all Shares registered pursuant to the Registration Statement and a CUSIP number for all such Shares; and (vi) file the documents required of the Company and otherwise use its best efforts to maintain requisite blue sky clearance in (A) all jurisdictions in which any of the Shares are originally sold and (B) all other states specified in writing by a Purchaser, provided as to clause (B), however, that the Company shall not be required to qualify to do business or to file a general consent to service of process in any state in which it is not now so qualified or has not so consented. (d) The Company shall furnish to each Purchaser upon request a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary in order to facilitate the public sale or other disposition of all or any of the Shares held by the Purchaser. 10 Page 39 of 50 Pages (e) With a view to making available to the Purchasers the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any other rule or regulation of the SEC that may at any time permit a Purchaser to sell Shares to the public without registration or pursuant to the Registration Statement, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) the end of the Effective Period or (B) such date as all of the Shares have been resold in transactions in which the Purchasers have not assigned their benefits and obligations under Section 7 in accordance with the provisions of Section 8.5 below; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and Exchange Act; and (iii) furnish to any Purchaser upon request, as long as the Purchaser owns any Shares, (A) a written statement by the Company that it has complied with the reporting requirements of the Securities Act and the Exchange Act, (B) a copy of the most recent annual or quarterly report of the Company, and (C) such other information as may be reasonably requested in order to avail any Purchaser of any rule or regulation of the SEC that permits the selling of any such Shares without registration or pursuant to the Registration Statement. (f) In the event any Purchaser desires to sell the Purchaser's Shares pursuant to the Registration Statement, the Purchaser shall give the Company three (3) business days' notice (which notice, if given orally, will be confirmed in writing within 24 hours) of its desire to sell in reliance on such Registration Statement including an estimate of whether its desire is to sell more than 50,000 Shares (the "Notice of Sale"). The Company may refuse to permit a Purchaser to resell any Shares pursuant to the Registration Statement; provided, however, that in order to exercise this right, the Company must deliver a certificate in writing to the Purchaser within three (3) business days following the Company's receipt of the Notice of Sale to the effect that withdrawal of such Registration Statement is necessary because a sale pursuant to the Registration Statement in its then-current form could constitute a violation of the federal securities laws. In such an event, the Company shall use its best efforts to amend the Registration Statement if necessary as soon as practicable and in any event within sixty (60) days after the Company's receipt of the Notice of Sale, and shall notify the Purchasers promptly after it has determined that such sale has become permissible under the federal securities laws. Notwithstanding the foregoing, the Company shall not under any circumstances be entitled to exercise its right to refuse to permit the resale of any Shares pursuant to the Registration Statement more than two (2) times in any twelve (12) month period, except that the Company's exercise of its right to refuse to permit the resale of any Shares pursuant to the Registration Statement in response to any Notice of Sale that indicates the Purchaser desires to sell no more than 50,000 Shares shall not count toward its limit of two (2) refusals in any twelve (12) month period. The period during which such Registration Statement may be withdrawn shall not exceed sixty (60) days. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during the periods the Registration Statement is withdrawn as set forth in this Section 7.2(f). 11 Page 40 of 50 Pages 7.3 Indemnification and Contribution. -------------------------------- (a) The Company agrees to indemnify and hold harmless each Purchaser and its affiliates (within the meaning of Rule 144 under the Securities Act) from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which they may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (x) any untrue statement of a material fact contained in the Registration Statement, on the effective date thereof, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (y) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (z) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, or any rule or regulation promulgated under the Securities Act or the Exchange Act, or arise out of any failure by the Company to fulfill any undertaking included in the Registration Statement, and the Company will, as incurred, reimburse such Purchaser for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such loss, claim, damage or liability (or action or proceeding in respect thereof); provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability (or action or proceeding in respect thereof) arises out of, or is based upon (i) an untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Purchaser specifically for use in preparation of the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Section 7.3 hereof, or (iii) any untrue statement in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser. (b) Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and its affiliates (within the meaning of Rule 144 under the Securities Act) from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which the Company may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon (i) an untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Purchaser specifically for use in preparation of the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, provided, however, that no Purchaser shall be liable in any such case for any untrue statement included in any Prospectus which statement has been corrected, in writing, by such Purchaser and delivered to the Company before the sale from which such loss occurred, (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Section 7.3 hereof, or (iii) any untrue statement in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser, and each Purchaser, severally and not jointly, 12 Page 41 of 50 Pages will, as incurred, reimburse the Company for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such loss, claim, damage or liability (or action or proceeding in respect thereof); provided, however, that no Purchaser shall be liable for any amount in excess of the amount by which the net amount received by the Purchaser from the sale of the Shares to which such loss relates exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 7.3, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, and, subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person and the indemnifying person shall have been notified thereof, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to the indemnified person. After notice from the indemnifying person to such indemnified person of the indemnifying person's election to assume the defense thereof, the indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate in the reasonable judgment of the indemnified person for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person. (d) If the indemnification provided for in this Section 7.3 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or a Purchaser on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Purchasers agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating 13 Page 42 of 50 Pages or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the net amount received by the Purchaser from the sale of the Shares to which such loss relates exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective sales of Shares to which such loss relates and not joint. (e) The obligations of the Company and the Purchasers under this Section 7.3 shall be in addition to any liability which the Company and the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company or any Purchaser within the meaning of the Act. 7.4 Nomination for Election to Company Board of Directors. Upon ------------------------------------------------------ the request of the record holders of more than fifty percent (50%) of the Shares then outstanding and held by Purchasers (the "Majority Holders"), the Company shall use its best efforts to cause its Board of Directors to nominate and elect or have elected after June 24, 1997, an individual designated in writing by the Majority Holders, which individual must also be acceptable to the Chairman of the Company's Board of Directors, to serve on the Company's Board of Directors; provided, however, that the Company's obligation pursuant to this Section 7.4 shall terminate on the earlier of (i) the second anniversary of the Closing Date and (ii) the date when the aggregate number of shares of the Company's Common Stock held by the Purchasers is less than ten percent (10%) of the total number of outstanding shares of the Company's Common Stock. 7.5 Public Statements. Neither the Company nor the Purchasers ------------------ shall use the name of the other in any press release or filing with the SEC (excluding Schedule 13Ds and Forms 3, 4 and 5) without the prior approval of the other party, which approval may not be unreasonably withheld or delayed; provided, however, that to the extent such prior approval is impracticable, the - -------- ------- party issuing the press release or making the filing with the SEC shall provide a copy of such press release or SEC filing to the other party as promptly as practicable thereafter; and provided, further, that if the other party does not -------- ------- approve such press release or SEC filing, the party issuing the press release or making the filing with the SEC may still use the name of the other party in any press release or SEC filing without the prior written approval of the other party, if the party issuing the press release or making the filing with the SEC is advised by counsel that such disclosure is required to comply with applicable law. 14 Page 43 of 50 Pages Section 8 Miscellaneous ------------- 8.1 Waivers and Amendments. With the exception of Section 7 ------------------------ hereof, the terms of this Agreement may be waived or amended with the written consent of the Company and each Purchaser. With respect to Section 7 hereof, with the written consent of the Company and the record holders of more than fifty percent (50%) of the Shares then outstanding and held by Purchasers, the terms of Section 7 of this Agreement may be waived or amended and any such amendment or waiver shall be binding upon the Company and all holders of Shares. 8.2 Placement Agent's Fee. Each Purchaser acknowledges that the ---------------------- Company intends to pay to George McFadden or an entity designated by him a fee of $500,000 in respect of the sale of the Shares. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchasers. 8.3 Governing Law. This Agreement shall be governed in all -------------- respects by and construed in accordance with the laws of the State of Delaware without any regard to conflicts of laws principles. 8.4 Survival. The representations, warranties, covenants and -------- agreements made in this Agreement shall survive any investigation made by the Company or the Purchasers and the Closing. 8.5 Successors and Assigns. The provisions hereof shall inure to ---------------------- the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties to this Agreement. Notwithstanding the foregoing, no Purchaser shall assign this Agreement without the prior written consent of the Company, which consent may be withheld by the Company in its sole discretion for any or no reason; provided, that the benefits and obligations of any Purchaser under Section 7 may be transferred by a Purchaser without the prior written consent of the Company to any person that acquires at least 51% of the Shares acquired by such Purchaser at the Closing, so long as the transferee agrees in writing to be bound by the provisions of Section 7 to the same extent as the Purchaser from whom it acquired the Shares. 8.6 Entire Agreement. This Agreement constitutes the full and ----------------- entire understanding and agreement between the parties with regard to the subjects hereof. 8.7 Notices, etc. All notices and other communications required ------------- or permitted under this Agreement shall be in writing and may be delivered in person, by facsimile, overnight delivery service or registered or certified United States mail, addressed to the Company or the Purchasers, as the case may be, at their respective addresses set forth at the beginning of this Agreement or on Exhibit A, and in the case of all notices and other communications to the --------- Purchasers, a copy will be delivered to Soros Fund Management LLC, 888 Seventh 15 Page 44 of 50 Pages Avenue, Suite 3300, New York, New York 10106, Attn: Sean Warren, (212) 541-7751 (fax), or at such other address as the Company or the Purchasers shall have furnished to the other party in writing. All notices and other communications shall be effective upon the earlier of actual receipt thereof by the person to whom notice is directed or (i) in the case of notices and communications sent by personal delivery or facsimile, one business day after such notice or communication arrives at the applicable address or was successfully sent to the applicable facsimile number, (ii) in the case of notices and communications sent by overnight delivery service, at noon (local time) on the second business day following the day such notice or communication was sent, and (iii) in the case of notices and communications sent by United States mail, seven days after such notice or communication shall have been deposited in the United States mail. 8.8 Severability of this Agreement. If any provision of this -------------------------------- Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 8.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 8.10 Further Assurances. Each party to this Agreement shall use ------------------- its best efforts to cause the Closing to occur and shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 8.11 Expenses. The Company shall bear its own expenses incurred ------- on its behalf with respect to the execution of this Agreement and the Closing of the transactions contemplated hereby, including fees of its legal counsel, and will, promptly after receipt of an invoice therefor, reimburse the reasonable fees and costs of one special counsel for the Purchasers up to a maximum amount of $15,000. 8.12 Currency. All references to "dollars" or "$" in this -------- Agreement shall be deemed to refer to United States dollars. 16 Page 45 of 50 Pages 8.13 Attorneys' Fees. If any action at law or in equity is ---------------- necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. The foregoing agreement is hereby executed as of the date first above written. "COMPANY" TRIANGLE PHARMACEUTICALS, INC., a Delaware corporation By: /S/ DAVID W. BARRY --------------------------------------- Title:Chairman and Chief Executive Officer "PURCHASERS" QUANTUM PARTNERS LDC, a Cayman Islands limited duration company By: /S/ SEAN C. WARREN --------------------------------------- Title: Attorney-in-Fact QUANTUM INDUSTRIAL PARTNERS LDC, a Cayman Islands limited duration company By: /S/ SEAN C. WARREN --------------------------------------- Title: Attorney-in-Fact DUQUESNE FUND, L.P. By: Duquesne Capital Management, L.L.C., its investment advisor By: /S/ GERLAD KERNER ---------------------------------- Gerald Kerner, Managing Director 17 EX-99.G 7 FIRST AMENDED TO RESTATED INVESTORS' RIGHTS AGREE Page 46 of 50 Pages EXHIBIT G FIRST AMENDMENT TO RESTATED INVESTORS' RIGHTS AGREEMENT This First Amendment to Restated Investors' Rights Agreement (the "Amendment") is made as of this ____ day of June, 1997, by and among Triangle Pharmaceuticals, Inc., a Delaware corporation (the "Company"), the investors executing this Amendment on the signature pages hereto under the heading "The Investors," and the investors executing this Amendment on the signature pages hereto under the heading "The New Investors" (the "Soros Funds"), and amends certain portions of the Restated Investors' Rights Agreement dated June 11, 1996 (the "Agreement"), among the Company and the individuals and entities listed on Schedule A to the Agreement (the "Existing Investors"). Capitalized terms not - ---------- otherwise defined herein will have the meanings given to them in the Agreement. RECITALS WHEREAS, the Company desires to sell and issue to the Soros Funds, and the Soros Funds desire to purchase from the Company, 2,000,000 shares of the Company's Common Stock (the "Shares") pursuant to the Common Stock Purchase Agreement dated of even date herewith (the "Stock Purchase Agreement"), the form of which is attached hereto as Exhibit A. --------- WHEREAS, the Existing Investors desire for the Soros Funds to purchase the Shares and, as a condition thereof and to induce such investment, the Existing Investors are willing to enter into this Amendment to permit the Soros Funds to become parties to certain sections of the Agreement, as amended by this Amendment (the "Amended Agreement"). WHEREAS, the Existing Investors are holders of a sufficient number of Registrable Securities to effectively amend the Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendments to Agreement. The Agreement is hereby amended as ----------------------- follows: 1.1 Section 1.1(f). Section 1.1(f) is hereby amended and --------------- restated in its entirety to read as follows: "(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, (iii) the 2,000,000 shares of Common Stock purchased by the Soros Funds on June ___, 1997 (the "Soros Shares"), and (iv) 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), (ii) or (iii) above; excluding in all cases, however, any Registrable Securities sold by a person or entity in a transaction in which its rights under this Section 1 are not assigned; and provided, however, -------- ------- that notwithstanding anything herein to the contrary, the Soros Shares and any shares of Common Stock referenced in (iv) above that are issued in respect of any Soros Shares shall not be "Registrable Securities" for purposes of Sections 1.2, 1.6, 1.11, 1.12 (only as it relates to the right of the Holders to request that the Company effect a registration on Form S-3) or 1.14." Page 47 of 50 Pages 1.2 Section 1.1(g). Section 1.1(g) is hereby amended and --------------- restated in its entirety to read as follows: "(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 for purposes of the Section of this Agreement pursuant to which such calculation is made." 1.3 Section 1.1(i). A new section 1.1(i) is hereby added to the -------------- Agreement as follows: "(i) The term "Soros Funds" shall mean the entities that acquired the Soros Shares pursuant to a certain Common Stock Purchase Agreement dated as of June ___, 1997." 1.4 Section 3.7. Section 3.7 is hereby amended and restated in ------------ its entirety to read as follows: "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 the holders of a majority of the Registrable Securities then outstanding for purposes of the Section of the Agreement to which the amendment or waiver relates. 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." 1.5 Schedule A. Schedule A to the Agreement is hereby amended and ---------- ---------- restated in its entirety with Schedule A attached to this Amendment. ---------- 2 Page 48 of 50 Pages 2. Consent and Waiver. Pursuant to Sections 1.14 and 3.7 of the ------------------ Agreement, each Existing Investor, on behalf of itself and all of the other Existing Investors under the Agreement, hereby (a) consents to (i) adding the Soros Funds as parties to the Amended Agreement, (ii) granting the registration rights to the Soros Funds as set forth in the Amended Agreement and (iii) granting the registration rights to the Soros Funds as set forth in the Stock Purchase Agreement (including preparing, filing and having declared effective the registration statement contemplated thereby at the time contemplated thereby), and (b) waives any rights the Existing Investors may have under the Agreement or otherwise to cause the Company to register any of the Investors' Registrable Securities as part of the registration of the resale of the Soros Shares in accordance with the provisions of the Stock Purchase Agreement. Notwithstanding Section 3.7 of the Amended Agreement, the consent and waiver contained in this Section 2 may not be amended, modified or restricted without the written consent of each Purchaser. 3. Effect of Amendment; Conflicts. Except as specifically amended ------------------------------ by this Amendment, the Agreement shall continue in full force and effect. In the event of any conflict between the terms of the Agreement and the terms of this Amendment, the terms of this Amendment shall govern and control. 4. Counterparts. This Amendment may be executed in any number of ------------ counterparts, each of which will be deemed an original, and all of which together shall constitute one instrument. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 Page 49 of 50 Pages IN WITNESS WHEREOF, this Amendment is hereby executed as of the date first above written. THE COMPANY: TRIANGLE PHARMACEUTICALS, INC., a Delaware corporation By: /S/ DAVID W. BARRY --------------------------------------- Its: Chairman and Chief Executive Officer --------------------------------------- THE NEW INVESTORS: QUANTUM PARTNERS LDC, a Cayman Islands limited duration company By: /S/ SEAN C. WARREN --------------------------------------- Title: Attorney-in-Fact --------------------------------------- QUANTUM INDUSTRIAL PARTNERS LDC, a Cayman Islands limited duration company By: /S/ SEAN C. WARREN --------------------------------------- Title: Attorney-in-Fact --------------------------------------- DUQUESNE FUND, L.P. By: Duquesne Capital Management, L.L.C., its investment advisor By: /S/ GERALD KERNER ---------------------------------- Gerald Kerner, Managing Director [SIGNATURE PAGE TO FIRST AMENDMENT TO RESTATED INVESTORS' RIGHTS AGREEMENT] 4 Page 50 of 50 Pages THE INVESTORS: By: /S/ [EACH INVESTOR] --------------------------------------- Its: --------------------------------------- [SIGNATURE PAGE TO FIRST AMENDMENT TO RESTATED INVESTORS' RIGHTS AGREEMENT] 5 -----END PRIVACY-ENHANCED MESSAGE-----