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This
Memorandum of Terms summarizes the principal terms of a proposed Common
Stock and Warrant Financing (the “Financing”) of Amarin
Corporation, plc. Except for the provisions set out under the
headings “Exclusivity and Expenses,” “Confidentiality,” “Governing Law”
and “Counterparts” below, this Memorandum of Terms is non-binding and
strictly for discussion purposes only; there is no obligation on the part
of any party unless and until definitive agreements are signed by all
parties. This Memorandum of Terms does not constitute either an
offer to sell or an offer to purchase
securities.
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Issuer:
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Amarin
Corporation, plc (the “Company”). All
references to the Company set forth herein would also be deemed to include
references to any subsidiary of the Company, where
applicable.
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Type
of Security;
Purchase
Price:
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Units
(each, a “Unit”
and collectively, the “Units”) consisting of
one ordinary share (the “Common Stock” and,
collectively, the “Common
Shares”) and a warrant (each, a “Warrant” and,
collectively, the “Warrants”) to purchase
0.50 of a share of Common Stock (collectively, the “Warrant
Shares”). The purchase price per Unit would be
$1.00.
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Amount
to be Raised:
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Pursuant
to a securities purchase agreement containing customary representations,
warranties and covenants (the “Purchase Agreement”),
the investors (the “Investors”) would
purchase Units from the Company in the aggregate amount of up to $55
million (the “Financing”). Longitude
Capital, Sofinnova Ventures, Orbimed Advisors and Fountain Healthcare
Partners (collectively, the “Lead Investors”) would
each be Investors in the Financing. The Lead Investors,
together with other potential investors that have expressed strong
interest are expected to invest an aggregate of approximately $35 million
in the Financing. Other Investors, mutually acceptable to the
Company and the Lead Investors, may also participate in the Financing
under the same terms as the Lead Investors. In connection with
the Financing, the option pool will also be expanded to yield 10%
unallocated options on a fully diluted basis in order to provide incentive
compensation to key employees in the Company.
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Signing
and Closing:
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The
Purchase Agreement is anticipated to be executed by all parties on or
before July 17, 2009, and will provide for multiple closings (“Additional Closings”) to
be completed not later than 90 days from the first closing (the “First Closing” and
together with the Additional Closings, the “Closings”) which is
anticipated to occur on or before July 24, 2009. The First
Closing must be for no less than $33 million or such other amount that is
agreed to by the Lead Investors as sufficient to complete the 016 clinical
protocol, plus adequate reserves.
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Warrants:
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The
exercise price per Warrant Share would be equal to $1.50 per
share. The Warrants would have a five-year term and may be
exercised for cash or net exercised if such a feature is
possible. The warrants will contain anti-dilution protection
customary for a transaction of this type. Each Warrant would
contain a clause specifying that there are no circumstances whereby such
Warrant could be required by the Company to be settled in cash, and such
other provisions deemed reasonably necessary in consultation with the
Company’s auditors to avoid the application of “liability accounting”
rules.
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Securities
Purchase Agreement:
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The
Purchase Agreement would include Company representations, warranties and
covenants (and would provide for indemnification of the Investors for the
breach of such representations, warranties and covenants) to the extent
customary in transactions of this kind by public companies.
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Conditions
to First Closing:
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1) Each
of the representations and warranties of the Company in the Securities
Purchase Agreement shall be true and correct and the Company shall have
performed in all material respects each of its covenants
therein.
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2) Any
necessary regulatory approvals and third party consents shall have been
obtained.
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3) Legal
opinions (opining to, among other things, the due authorization and
validity of the securities issued in the Financing) shall have been
delivered to the Investors.
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4) The
Board will have adopted and begun to implement a plan to consolidate
certain corporate functions in Mystic, Connecticut. Such plan,
including a detailed timeline and estimate of associated expenses, shall
require the prior approval of the Lead Investors.
5) The
Lead Investors shall be satisfied with the composition of the management
team of the Company at the time of the First Closing, which may require
severance agreements and/or resignations with waivers of rights for
certain members and certain members to enter into employment agreements
satisfactory to the Lead Investors.
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6) Prior
to the First Closing, the Investors shall have completed a review of the
budget and the budget shall be satisfactory to the Lead Investors (the
“Budget
Review”). The Budget Review shall utilize consultants
and independent experts representing the Lead Investors to confirm that
the size of the Financing is sufficient to execute the clinical
development plan.
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7) There
shall not have been a material adverse event to the Company.
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8) The holders of the notes from the
June 2009 bridge financing
agree to convert their notes into
equity in the Financing.
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9) The shareholders in the May 2008
financing (i) either exercise or waive their pre-emptive rights, (ii) agree to
convert their Series A Preference Shares into Common Stock on a one-for-one
basis and (iii) agree to cancel the
second tranche of the May 2008 financing.
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10) Other customary closing
conditions, including without limitation, the approval of each Investor’s
investment committee.
The
conditions set forth under clauses 4, 5, 6 and 8 will be satisfied prior
to the execution of the Purchase Agreement.
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Board
Composition and Representation:
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The
Company’s board of directors will be set at nine members. As of
the First Closing, each of
Longitude Capital, Sofinnova Ventures and Orbimed Advisors will be
entitled to nominate one member of the Company’s board of
directors. Such designees initially will be Patrick Enright,
James I. Healy, MD, PhD. and Carl Gordon,
Ph.D. The Company will covenant that for as long as each such
Investor holds in the aggregate at least 50% of the number of Common
Shares it purchased in the First Closing, the Company will nominate the
designee determined by such Investor and use its best efforts to have such
designee elected.
As
of the First Closing and for so long as they beneficially own in the
aggregate 25% or more of the issued and outstanding Common Stock of the
Company, the Lead Investors will also be entitled to nominate five other
members of the board of directors, four of whom will be
independent.
The
remaining seat will be occupied by the CEO.
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So
long as not prohibited by applicable governmental and NASDAQ requirements,
the investor director representing Longitude Capital will be entitled to
seats on the audit and compensation committees and will also be the chair
of the compensation committee.
The
Company will enter into standard indemnification agreements with each
member of the board of
directors.
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Directors’
and Officers’ Liability Insurance:
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The
Company would use its reasonable efforts to obtain and maintain directors’
and officers’ liability insurance in an amount reasonably acceptable to
the board of directors and consistent with industry practice.
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Registration
Rights:
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The
Common Shares and the Warrant Shares acquired by the Investors at each
Closing (the “Registrable
Securities”) will be registered for resale promptly following each
Closing. Accordingly, the Purchase Agreement will provide that,
among other things, a registration statement would be filed within 60 days
following each Closing, and the Company would use its best efforts to
cause the registration statement to become effective within 90 days
following the date of filing of the relevant registration
statement. The Company will cause the registration statement to
remain effective until all of the Registrable Securities registered under
such registration statement are available for resale through Rule 144
under the Securities Act of 1933, as amended, or any successor provision
thereto, without any volume limitations.
The
holders of Registrable Securities will be entitled to unlimited piggyback
registration rights, subject to pro rata cutback, if
applicable. All expenses (including reasonable expenses of one
counsel to the selling Investors) will be paid by the Company (excluding
underwriting commissions).
Until
the Registrable Securities are registered, the Company will not grant any
additional registration rights without the approval of the holders of a
majority of the Registrable Securities unless such rights are subordinate
to the rights of the Investors.
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Participation
Rights:
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Each
Lead Investor, for so long as it holds at least 50% of the original number
of Common Shares that it purchased in the Financing, will have the right
to purchase its pro rata share (based on its ownership of the Company’s
outstanding Common Stock on a fully diluted basis) of any future equity
offering by the Company. Underwritten public offerings
will be excluded from this right. The Company will be
prohibited from offering participation rights, rights of first refusal,
rights of first offer or similar rights to any holder or prospective
holder of any Company securities on terms more favorable than, or in
preference to, the rights granted to the Lead Investors without the prior
approval of the Lead Investors.
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Access
to Information:
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From
the date hereof until the final Closing, the Company will permit access
to, and will make available to the Investors’ representatives, consultants
and their respective counsels for inspection, such information and
documents as the Investors reasonably request, and will make available at
reasonable times and to a reasonable extent officers and employees of the
Company to discuss the business and affairs of the Company; provided that,
the Company will not be obligated to share material non-public information
with any Investor in the absence of a suitable confidentiality
agreement.
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Financing
Fee:
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The
Lead Investors will not be entitled to any fee for arranging the Financing
nor will any fee be payable to a third party in connection with the
Financing; provided that, a financial expert may be retained by the board
of directors to provide a fairness opinion.
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Exclusivity
and Expenses:
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As
an inducement to the Lead Investors to arrange the proposed Financing and
in consideration of the time and expense devoted and to be devoted by the
Lead Investors to the Financing, the Company shall not (and will not permit any affiliate,
employee, officer, director, stockholder, agent or other person acting on
its behalf (each a “Representative”) to), from the date hereof
until August 1, 2009 and thereafter until the First Closing (if it has not
theretofore occurred) pursuant to the terms of the Purchase Agreement if
executed by the Company and the Investors (the “Exclusivity Period”),
solicit or knowingly encourage any offers, engage in any discussions
(other than to inform any initiating party that it is subject to this
provision), entertain, or enter into any agreements or commitments with
respect to the issuance of or a possible
sale of all or any part of the Company’s securities, whether such
transaction takes the form of a sale of stock, merger, scheme of arrangement, liquidation, dissolution, reorganization,
investment, recapitalization, consolidation, or otherwise, or with respect
to the possible sale of all or substantially all of the assets, or any
material assets, of the Company or any subsidiary thereof (each a
“Competitive
Transaction”); provided,
however, that: (i) during the Exclusivity Period the
Company and its Representatives shall have the right to entertain and
engage in discussions with respect to unsolicited offers for Competitive
Transactions to the limited extent
necessary for the Board to comply with its fiduciary duties under
applicable law; and (ii) so long as the Company has not breached
its obligations under clause (i) above, the Company shall have the right
to terminate the Purchase Agreement, if executed, to permit the Company to
enter into a binding agreement with persons other than the Investors if
such termination is necessary for the Board
to comply with its fiduciary duties under applicable law (a “Fiduciary Out
Termination”).\
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As
an inducement to the Lead Investors to arrange the proposed Financing and
in consideration of the time and expense devoted and to be devoted by the
Lead Investors to the Financing, the Company will pay to the Lead
Investors: (A) regardless of whether the Purchase Agreement shall be
executed or the proposed Financing shall close, the amount equal to the
Lead Investors’ out-of-pocket expenses (including for legal, accounting
and other third party expert fees and expenses) incurred in connection
with the proposed Financing; and (ii) if the Purchase Agreement is
executed and the Company effects a Fiduciary Out Termination, by way of a
genuine pre-estimate of loss, compensation in the amount equal to $2.0
million or, if less, the amount equal to 2% of the Company’s net assets
determined at the time of the Fiduciary Out Termination or the closing of
a binding agreement with persons other than the investors following such
Fiduciary Out Termination, whichever date will yield the higher
amount.
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Confidentiality:
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Subject
to required disclosure to governmental agencies and other disclosure
required as a matter of law, the existence of this Memorandum of Terms,
the identity of the Investors and the provisions contained herein, as well
as the discussions between the parties hereto and their respective agents,
will be held in confidence by the parties hereto and their agents and
representatives, and each party will provide such information only to
those third parties that a party hereto reasonably determines has a need
to know of the existence of this Memorandum of Terms and the provisions
herein (such receiving parties to be similarly subject to confidentiality
agreements or duties). The Investors and the Company further
agree they will not use any portion of the information and data provided
to such party by the other party for any purpose other than the
consummation of the transaction contemplated by this Memorandum of
Terms. The existing confidentiality agreements between the
parties shall remain in force. Except as already disclosed or
as permitted by this Memorandum of Terms, no party hereto will make any
public disclosure concerning the existence of this Memorandum of Terms,
its contents or the status of the negotiations between the Investors and
the Company with respect to the proposed investment without obtaining the
prior written consent of the Company.
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Binding
Effect and Governing Law:
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Except
for the provisions set out under the headings “Exclusivity and Expenses,”
“Confidentiality,” “Binding Effect and Governing Law” and “Counterparts”,
this Memorandum of Terms is non-binding and strictly for discussion
purposes only; there is no obligation on the part of any party unless and
until definitive agreements are signed by all parties. This
Memorandum of Terms does not constitute either an offer to sell or an
offer to purchase securities. This Memorandum of Terms will be governed by
the internal laws of the State of New York.
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Counterparts:
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The
Memorandum of Terms may be executed in counterparts, each of which will be
deemed to constitute an original but all of which together will constitute
one and the same instrument.
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