EXHIBIT 10.5
INFORMAX, INC.
NON-PREFERRED HOLDER RIGHTS AGREEMENT
THIS NON-PREFERRED HOLDER RIGHTS AGREEMENT (the "AGREEMENT") is entered
into as of the 29th day of March, 2000, by and between INFORMAX, INC., a
Delaware corporation (the "COMPANY") and WPG SOFTWARE FUND, L.P., WPG RAYTHEON
SOFTWARE FUND, L.P., WPG INSTITUTIONAL SOFTWARE FUND, L.P., WPG NETWORKING FUND,
L.P., WPG RAYTHEON NETWORKING FUND, L.P., WPG INSTITUTIONAL NETWORKING FUND,
L.P., AND RAJ MEHRA (the "NON-PREFERRED HOLDERS").
RECITALS
WHEREAS, Alexander Titomirov, Vadim Babenko (together, the "SELLERS") and
the Non-Preferred Holders are parties to a certain Stock Purchase Agreement (the
"PURCHASE AGREEMENT") of even date herewith, pursuant to which the Sellers
propose to sell to the Non-Preferred Holders Seven Hundred Fifty Thousand
(750,000) shares of non-voting common stock of the Company held by the Sellers
(the "NON-VOTING STOCK");
WHEREAS, pursuant to, and in consideration of, the Purchase Agreement: (a)
Sellers have exercised the option to purchase in the aggregate 750,000 shares
from the Corporation (the "OPTION SHARES") for an aggregate purchase price of
Three Hundred Seventy-Five Thousand Dollars ($375,000); and (b) the Corporation
and Non-Preferred Holders are entering into this Agreement;
WHEREAS, the Corporation has granted certain registration rights to the
holders of the Series A Convertible Preferred Stock of the Corporation pursuant
to that certain Investor Rights Agreement ("INVESTOR RIGHTS AGREEMENT") dated
June 22, 1999, by and among, the Corporation and the Investors (as defined
therein); and
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall be given the meanings ascribed to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the parties mutually agree as follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:
"COMMON STOCK" means the authorized Voting Common Stock and Nonvoting
Common Stock of the Company.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
"FAMILY MEMBER" means a person who is a spouse, child, parent or sibling of
the Holder or one or more trusts established for the exclusive benefit of such
Holder and/or one or more of such persons.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities that have
not been sold to the public or pursuant to Rule 144 any assignee of record of
such Registrable Securities to whom rights under Section 2 have been duly
assigned in accordance with Section 2.10 hereof, including the Non-Preferred
Holders.
"INITIAL OFFERING" means the Company's first firm commitment underwritten
public offering of its Common Stock registered under the Securities Act.
"PRINCIPAL SHAREHOLDERS" means the parties to that certain Shareholder's
Agreement by and among the Company and various individuals dated as of September
1, 1990.
"NON-PREFERRED HOLDERS" means, other than the Preferred Holders (as defined
below), any person owning of record Registrable Securities that have not been
sold to the public or pursuant to Rule 144 any assignee of record of such
Registrable Securities to whom rights under Section 2 have been duly assigned in
accordance with Section 2.10 hereof.
"PREFERRED HOLDERS" means any person owning of record preferred shares of
the Company which are Registrable Securities that have not been sold to the
public or pursuant to Rule 144 any assignee of record of such Registrable
Securities to whom rights under Section 2 of the Preferred Non-Preferred Holder
Rights Agreement have been duly assigned in accordance with Section 2.11 of the
Investor Rights Agreement.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued or
issuable upon conversion of the Shares; (b) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such above-described securities,
and (c) Registrable Securities as such term is defined in the Investor Rights
Agreement. Notwithstanding the foregoing, Registrable Securities shall not
include any
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securities sold by a person to the public or sold pursuant to Rule 144 or sold
in a transaction in which the transferor's rights under Section 2 of this
Agreement are not assigned in accordance with this Agreement.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
determined by calculating the total number of shares of the Common Stock that
are Registrable Securities and either (a) are then issued and outstanding or (b)
are issuable pursuant to then exercisable or convertible securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 2.2 and 2.3 hereof, including, without limitation, all
registration and filing fees, printing expenses, 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 (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).
"RULE 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"SEC" or "COMMISSION" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and any expenses
incurred by a Non-Preferred Holder in connection with a sale of Registrable
Securities, including any fees of counsel to such Preferred Holder.
"SHARES" shall mean the Company's Non-Voting Stock issued pursuant to the
Purchase Agreement and held by the Non-Preferred Holder and its permitted
assigns.
SECTION 2. RESTRICTIONS ON TRANSFER; REGISTRATION
2.1 RESTRICTIONS ON TRANSFER.
(A) Each Non-Preferred Holder agrees not to make any disposition of all or
any portion of the Shares or Registrable Securities:
(I) unless and until there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
(II) in the event that any underwriting arrangements described herein
require the Non-Preferred Holders to refrain from making any such
disposition;
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(III) unless and until (A) the transferee of such Shares or
Registrable Securities has agreed with the Company in writing to be bound
by and comply with the terms of this Agreement, (B) such Non-Preferred
Holder shall have notified the Company of the proposed disposition and
shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (C) if reasonably
requested by the Company, such Non-Preferred Holder shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Securities Act; or
(IV) to any Competitor of the Company. For the purposes of this
Agreement, the term "COMPETITOR" means any person, partnership, limited
liability company, corporation or other entity (other than the Company)
which is engaged as its principal line of business, in the Company's
Business." For the purposes of this Agreement, the term "COMPANY'S
BUSINESS" means the business of the development and licensing of
pharma-informactic software tools of the type developed by the Company.
(V) Notwithstanding the provisions of paragraphs (i) and (iv) above,
no such registration statement under the Securities Act or opinion of
counsel shall be necessary for a transfer by a Non-Preferred Holder which
is (A) a partnership to its partners or former partners in accordance with
partnership interests, (B) a limited liability company to its members or
former members in accordance with their interest in the limited liability
company, or (C) to the Holder's Family Member or trust for the benefit of
an individual Holder; provided that in each case the transferee will be
subject to the terms of this Agreement to the same extent as if he were an
original Holder hereunder.
(B) Each certificate representing Shares or Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with legends substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES SHALL NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
THE TRANSFER OF SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE RESTRICTIONS SET FORTH IN A NON-PREFERRED HOLDER RIGHTS
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AGREEMENT WHICH CONTAINS RESTRICTIONS ON TRANSFER OTHER THOSE IMPOSED
BY SECURITIES LAWS. COPIES OF THE NON-PREFERRED HOLDER RIGHTS
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY
AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS.
(C) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(D) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 PIGGYBACK REGISTRATIONS. The Company shall notify all Non-Preferred
Holders of Registrable Securities in writing at least fifteen (15) days prior to
the filing of any registration statement under the Securities Act for purposes
of a public offering of securities of the Company in which one or more of the
Company's Principal Shareholders are also offering securities for sale
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to employee benefit plans or with respect to corporate reorganizations
or other transactions under Rule 145 of the Securities Act) and will afford each
such Non-Preferred Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Preferred
Holder. Each Non-Preferred Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by it shall, within
fifteen (15) days after the above-described notice from the Company, so notify
the Company in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by such Non-Preferred Holder. If a
Non-Preferred Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Non-Preferred
Holder shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement in which Company's Principal
Shareholders also offer securities for sale as may be filed by the Company with
respect to offerings of its securities, all upon the terms and conditions set
forth herein.
(A) UNDERWRITING. If the registration statement under which the Company
gives notice under this Section 2.2 is for an underwritten offering, the Company
shall so advise the Non-Preferred Holders of Registrable Securities. In such
event, the right of any such Non-Preferred Holder to be included in a
registration pursuant to this Section 2.2 shall be conditioned upon such
Non-Preferred Holder's participation in such underwriting and the inclusion of
such
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Non-Preferred Holder's Registrable Securities in the underwriting to the extent
provided herein. All Non-Preferred Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
pursuant to this Section 2.2 shall be allocated, first, to the Company and
Preferred Holders as provided by the terms of Investor Rights Agreement; and
second to all other shareholders including securities including the
Non-Preferred Holders, on a pro rata basis. If any Non-Preferred Holder
disapproves of the terms of any such underwriting, such Non-Preferred Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Non-Preferred Holder which is a partnership or
corporation, the partners, retired partners and shareholders of such
Non-Preferred Holder, or the estates and Family Members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing person
shall be deemed to be a single "NON-PREFERRED HOLDER", and any pro rata
reduction with respect to such "NON-PREFERRED HOLDER" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "NON-PREFERRED HOLDER," as defined in this
sentence.
(B) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 2.2
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.4 hereof.
2.3 FORM S-3 REGISTRATION. In case the Company shall receive from any
Non-Preferred Holder or Non-Preferred Holders of Registrable Securities holding
at least forty percent (40%) of the Registrable Securities (except that for
purposes of calculating such number Registrable Securities as defined in the
Investor Rights Agreement shall not be included in such number) a written
request or requests that the Company effect a registration on Form S-3 (or any
successor to Form S-3) or any similar short-form registration statement and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, which notice shall
specify the manner of distribution of such Registrable Securities, the Company
will:
(A) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders of Registrable
Securities; and
(B) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any
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other Holder or Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance pursuant to this
Section 2.3:
(I) if Form S-3 (or any successor to Form S-3) is not available for
such offering by the Non-Preferred Holders;
(II) if the Non-Preferred Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any)
at an aggregate price to the public of less than Five Hundred Thousand
dollars ($500,000);
(III) if within thirty (30) days of receipt of a written request to
effect such Form S-3 registration, the Company gives notice to the
Non-Preferred Holders of the Company's intention to make a public offering
within ninety (90) days of the Company's notice to the Holders or to file a
registration statement upon a request of the Preferred Holders pursuant to
the Investor Rights Agreement;
(IV) if the Company shall furnish to the Holders a certificate signed
by the Chairman of the Board of Directors of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for such Form
S-3 registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of
the request of the Holder or Holders under this Section 2.3; provided, that
such right to delay a request shall be exercised by the Company not more
than once in any twelve (12) month period;
(V) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected either (a) one (1) registration
on Form S-3 for the Non-Preferred Holders pursuant to this Section 2.3, or
(b) a registration statement at the request of the Preferred Holders
pursuant to the Investor Rights Agreement;
(VI) if the Non-Preferred Holders intend to use an underwriter for
such offering and the holders of sixty-six and two-thirds percent (66 2/3%)
of the holders of the Registrable Securities fail to consent to such
Registriation within fifteen (15) days of receiving notice provided for in
Section 2.
(VII) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or
compliance.
(C) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Non-Preferred Holders.
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(D) Notwithstanding the foregoing, the Company shall not be required to
effect a registration pursuant to this Section 2.3 after the Company has
effected two (2) registrations on Form S-3 pursuant to this Section 2.3, and
such registrations have been declared or ordered effective.
2.4 EXPENSES OF REGISTRATION. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration under Section
2.2 or Section 2.3 herein shall be borne by the Company. All Selling Expenses
incurred in connection with any registrations hereunder, shall be borne by the
Holders of the securities so registered pro rata on the basis of the number of
shares so registered. The Company shall not, however, be required to pay for the
expenses of any registration proceeding begun pursuant to Section 2.3, the
request of which has been subsequently withdrawn by the Initiating Holders,
unless (a) the withdrawal is based upon material adverse information concerning
the Company of which the Company was aware and of which the Initiating Holders
were not aware at the time of such request; or (b) the Non-Preferred Holders of
a majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 2.3 (in which event such right shall
be forfeited by all Non-Preferred Holders). If the Non-Preferred Holders are
required to pay the Registration Expenses, such expenses shall be borne by the
holders of securities (including Registrable Securities) requesting such
registration in proportion to the number of shares for which registration was
requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.3 to a Form S-3 registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(A) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to sixty (60) days or, if earlier, until
the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(B) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in Section 2.6(a) above.
(C) Furnish to the Holders such number of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other
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documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.
(D) Use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(E) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Non-Preferred
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(F) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(G) Use its best efforts to furnish, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under Section 2.2 or Section 2.3 shall terminate and be of no further force and
effect five (5) years after the date of the Company's Initial Offering. In
addition, a Non-Preferred Holder's registration rights shall expire if (a) such
Holder (together with its affiliates, partners and former partners) holds less
than 1% of the Registrable Securities, or (b) all Registrable Securities held by
and issuable to such Non-Preferred Holder (and its affiliates, partners, former
partners, members and former members) may be sold under Rule 144 during any
ninety (90) day period.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(A) No Non-Preferred Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(B) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Sections 2.2 or 2.3 that the selling Holders shall
furnish to the Company
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such information regarding themselves, the Registrable Securities held by them
and the intended method of disposition of such securities as shall be required
to effect the registration of their Registrable Securities.
(C) The Company shall have no obligation with respect to any registration
requested pursuant to Section 2.3 if, due to the operation of Section 2.3(b),
the number of shares or the anticipated aggregate offering price of the
Registrable Securities to be included in the registration does not equal or
exceed the anticipated aggregate offering price required to trigger the
Company's obligation to initiate such registration as specified in Section 2.3.
2.9 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 2.2 or 2.3:
(A) To the extent permitted by law, the Company will indemnify and hold
harmless each Non-Preferred Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(B) To the extent permitted by law, each Non-Preferred Holder will, if
Registrable Securities held by such Non-Preferred Holder are included in the
securities as to which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Company, each of its directors, its
officers and each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Non-Preferred
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Holder selling securities under such registration statement or any of such other
Non-Preferred Holder's partners, directors or officers or any person who
controls such Non-Preferred Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Non-Preferred Holder, or
partner, director, officer or controlling person of such other Non-Preferred
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Non-Preferred Holder under an instrument duly executed by such Non-Preferred
Holder and stated to be specifically for use in connection with such
registration; and each such Non-Preferred Holder will pay as incurred any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Non-Preferred Holder, or
partner, officer, director or controlling person of such other Non-Preferred
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 2.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Non-Preferred Holder, which consent shall not be unreasonably
withheld; provided further, that in no event shall any indemnity under this
Section 2.9 exceed the net proceeds from the offering received by such
Non-Preferred Holder.
(C) Promptly after receipt by an indemnified party under this Section 2.9
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.9, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.
(D) If the indemnification provided for in this Section 2.9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
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liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder.
(E) The obligations of the Company and Non-Preferred Holders under this
Section 2.9 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(F) The foregoing indemnity agreements of the Company and Non-Preferred
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "FINAL PROSPECTUS"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Non-Preferred Holder to a transferee or assignee of Registrable Securities which
(a) is a subsidiary, parent, general partner, limited partner, retired partner,
member or retired member of a Non-Preferred Holder; provided, however, (i) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (ii) such transferee shall agree in writing with the Company to be
subject to all restrictions set forth in this Agreement. Notwithstanding the
foregoing, the rights to cause the Company to register Registrable Securities
pursuant to this Section 2 may not be assigned by a Non-Preferred Holder to a
transferee or assignee who is a Competitor of the Company. Notwithstanding
anything to the contrary, no transfer of shares will require the Company to
effect a registration of shares in excess of the limitations set forth in
Section 2.3 of this Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may
be amended and the observance thereof 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
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Non-Preferred Holders holding at least sixty six and two-thirds percent (66
2/3%) of the Registrable Securities then outstanding (excluding any Registrable
Securities as defined in the Investor Rights Agreement). Any amendment or waiver
effected in accordance with this Section 2.11 shall be binding upon each Holder
and the Company. By acceptance of any benefits under this Section 2,
Non-Preferred Holders of Registrable Securities hereby agree to be bound by the
provisions hereunder.
2.12 AGREEMENT TO FURNISH INFORMATION. Each Non-Preferred Holder agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. In addition, if requested by the
Company or the representative of the underwriters of Common Stock (or other
securities) of the Company, each Holder shall provide, within ten (10) days of
such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company's securities pursuant to a registration statement filed under the
Securities Act. The obligations described in this Section 2.12 shall not apply
to a registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said
one-hundred eighty (180) day period.
2.13 MARKET STAND-OFF.
(a) Each Non-Preferred Holder agrees that, without the prior written
consent of the representative designated by the underwriters any Public Offering
(the "REPRESENTATIVE"), such Non-Preferred Holder will not, during the one
hundred eighty (180) day period following the effective date of a registration
statement of the Company relating to each of the Initial Offering and the first
Public Offering subsequent to the Initial Offering (the "SECOND PUBLIC
OFFERING"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for any shares of Common Stock (whether such shares
or any such securities are now owned by the undersigned or are hereafter
acquired), or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise; provided, however, this Section 2.13(a) shall not limit the
ability of any Non-Preferred Holder to participate as a selling stockholder in
any Public Offering to the extent a Non-Preferred Holder holds any registration
rights or is otherwise permitted to sell stock by the Company and the
Representative in a Public Offering. Notwithstanding the preceding, the
Non-Preferred Holders may transfer as permitted by and in accordance with
Section 2.10. In furtherance of the foregoing, the Company and any transfer
agent are hereby authorized by each Non-Preferred Holder to decline to make any
transfer of securities if such transfer would constitute a violation or breach
of this Section 2.13(a).
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(b) The provisions of Section 2.13(a) shall terminate upon the earlier to
occur of (i) 180 days following the consummation of the Second Public Offering,
or (ii) June 30, 2009.
SECTION 3. COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
As soon as practicable after the end of each fiscal year of the Company,
and in any event within ninety (90) days thereafter, the Company will furnish
each Non-Preferred Holder a balance sheet of the Company, as at the end of such
fiscal year, and a statement of income and a statement of cash flows of the
Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion
thereon by independent public accountants of national standing selected by the
Company's Board of Directors.
3.2 CONFIDENTIALITY OF RECORDS. Each Non-Preferred Holder agrees to use,
and to use its best efforts to insure that its authorized representatives use,
the same degree of care as such Non-Preferred Holder uses to protect its own
confidential information to keep confidential any information furnished to it
which the Company identifies as being confidential or proprietary (so long as
such information is not in the public domain), except that such Non-Preferred
Holder may disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Non-Preferred Holder for the purpose of evaluating
its investment in the Company as long as such partner, subsidiary or parent is
advised of, and agrees to comply with, the confidentiality provisions of this
Section 3.2.
3.3 CONVERSION OF SHARES. If the Company converts any other shares of
Nonvoting Common Stock into shares of Voting Common Stock, each Non-Preferred
Holder will have the right to have its shares of Nonvoting Common Stock
converted into fully paid and assessable shares of Voting Common Stock, on the
same terms and conditions as are applicable to such conversion of other shares
of Nonvoting Common Stock.
3.4 TERMINATION OF COVENANTS. All covenants of the Company contained in
this Section 3 of the Agreement shall expire and terminate as to each
Non-Preferred Holder upon the earlier to occur of (i) the effective date of the
registration statement pertaining to the Initial Offering; (ii) upon (a) the
sale, lease or other disposition of all or substantially all of the assets of
the Company or (b) an acquisition of the Company by another corporation or
entity by consolidation, merger or other reorganization in which the holders of
the Company's outstanding voting stock immediately prior to such transaction
own, immediately after such transaction, securities representing less than fifty
percent (50%) of the voting power of the corporation or other entity surviving
such transaction, provided that this Section 3.4 shall not apply to a merger
effected exclusively for the purpose of changing the domicile of the Company (a
"CHANGE IN CONTROL"); or (iii) the termination of this Agreement.
SECTION 4. MISCELLANEOUS
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4.1 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware (without
regard to the conflicts of laws principles thereof).
4.2 SURVIVAL. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee of such Registrable Securities, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment of dividends
or any redemption price.
4.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
4.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
4.6 AMENDMENT AND WAIVER.
(A) Except as otherwise expressly provided, this Agreement may be amended
or modified only upon the written consent of the Company and the holders of at
least sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities
held by the Non-Preferred Holders.
(B) Except as otherwise expressly provided, the obligations of the Company
and the rights of the Non-Preferred Holders under this Agreement may be waived
only with the written consent of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities.
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(C) Notwithstanding the foregoing, this Agreement may be amended with only
the written consent of the Company to include additional purchasers of Shares as
"NON-PREFERRED HOLDERS," "HOLDERS" and parties hereto.
4.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any Non-Preferred Holder, upon any
breach, default or noncompliance of the Company under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or approval of
any kind or character on any Holder's part of any breach, default or
noncompliance under the Agreement or any waiver on such Holder's part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to Holders,
shall be cumulative and not alternative.
4.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
Exhibit A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.
4.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
4.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
4.11 ADDITIONAL NON-PREFERRED HOLDER. Notwithstanding anything to the
contrary contained herein, if the Company, any holder of Common Stock may, with
the consent of the Company, become a party to this Agreement by executing and
delivering an additional counterpart signature page to this Agreement and shall
be deemed an "NON-PREFERRED HOLDER" hereunder.
4.12 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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this NON-PREFERRED
HOLDER RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY:
INFORMAX, INC.
By: /s/ Alexander Titomirov
-------------------------------------------
Name: Alexander Titomirov
-----------------------------------------
Title: CEO and President
----------------------------------------
NON-PREFERRED HOLDERS:
WPG SOFTWARE FUND, L.P.,
BY ITS GENERAL PARTNER
By: /s/ Benjamin Taylor BT/RM
-------------------------------------------
Benjamin Taylor, in his individual capacity
WPG RAYTHEON SOFTWARE FUND,
L.P., BY ITS GENERAL PARTNER
By: /s/ Benjamin Taylor BT/RM
-------------------------------------------
Benjamin Taylor, in his individual capacity
WPG INSTITUTIONAL SOFTWARE
FUND, L.P., BY ITS GENERAL PARTNER
By: /s/ Benjamin Taylor BT/RM
-------------------------------------------
Benjamin Taylor, in his individual capacity
WPG NETWORKING FUND, L.P., BY ITS
GENERAL PARTNER
<PAGE>
By: /s/ Raj Mehra
-------------------------------------------
Raj Mehra, in his individual capacity
WPG RAYTHEON NETWORKING FUND,
L.P., BY ITS GENERAL PARTNER
By: /s/ Raj Mehra
-------------------------------------------
Raj Mehra, in his individual capacity
WPG INSTITUTIONAL NETWORKING
FUND, L.P., BY ITS GENERAL PARTNER
By: /s/ Raj Mehra
-------------------------------------------
Raj Mehra, in his individual capacity
RAJ MEHRA
/s/ Raj Mehra
----------------------------------------------
