EXHIBIT 10.6
SHAREHOLDER'S AGREEMENT
THIS SHAREHOLDER'S AGREEMENT, made as of this 1st day of September,
1990 by and among InforMax, Inc., a Delaware corporation (the "Corporation"),
and Alexander Titomirov ("Titomirov"), Valera Sagitov ("Sagitov"), James E.
Bernstein ("Bernstein"), C. Bowdoin Train ("Train"), Lewis Hecht ("Hecht") and
Brennan Klose ("Klose"), all of whom are sometimes hereinafter referred to
collectively as the "Shareholders."
WITNESSETH
WHEREAS, the Corporation has authorized Twenty Thousand (20,000) shares
of common stock, in two (2) classes, the first class consisting of Thirteen
Thousand Five Hundred (13,500) shares of voting common stock, par value One Cent
($.01) per share, and the second consisting of Six Thousand Five Hundred (6,500)
shares of non-voting common stock, par value One Cent ($.01) per share;
WHEREAS, Titomirov owns Seven Thousand (7,000) voting shares, Sagitov
owns One Thousand Five Hundred (1,500) each of voting and non-voting shares,
Train owns One Thousand (1,000) non-voting shares, Hecht owns One Thousand
(1,000) non-voting shares, Klose owns Fifty (50) non-voting shares, and
Bernstein, upon conversion of his Revenue Participation Certificate ("RPC"),
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shall receive One Thousand (1,000) voting shares and One Thousand (1,000)
non-voting shares;
WHEREAS, the Shareholders and the Corporation desire to make certain
arrangements with respect to such outstanding shares (and any shares hereafter
acquired by any Shareholder) and the business and management of the Corporation;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein, the parties agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the meanings
set forth in this Section 1:
(a) Shares - shares of voting or non-voting common stock of the
Corporation.
(b) Bona Fide Offer - a written offer made in good faith by an
individual or entity, unrelated to the Shareholder receiving the offer, and
having sufficient financial resources to purchase the Shares specified in the
offer on the terms stated therein, provided that (i) the name and residence and
business addresses of the offeror are stated in the offer, and (ii) the offer is
accompanied by a deposit in the form of a certified or cashier's check in an
amount equal to not less than ten percent (10%) of the proposed purchase price.
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(c) Disability - the inability of a Shareholder, due to illness
or injury, to perform at least fifteen (15) eight-hour days of work at an office
outside his home during any six (6) month period. The date of Disability shall
be determined in good faith by the Board of Directors of the Corporation.
(d) Fair Market Value Per Share - the fair market value per Share
shall be determined as of the date of an event of Separation (or, in the event
of Separation due to the death of a Shareholder, if the Corporation and the
Shareholders have failed to exercise their option to purchase the Shares of the
deceased Shareholder and the eighteen month period during which the estate may
seek a buyer pursuant hereto has expired, then the fair market value per Share
shall be determined as of the date that the estate's legal representative shall
have offered such Shares to the Corporation for purchase pursuant to Section
5(a)(ii)) by agreement between the relevant parties within thirty (30) days of
the effective notice of such event of Separation (or, in the event of the offer
to the Corporation by the legal representative of a Shareholder's estate
described above, within thirty (30) days of the effective notice of such offer
to the Corporation), or if such parties cannot agree within such thirty (30) day
period, then by an appraiser approved in good faith by the Board of Directors of
this Corporation and experienced in valuations of companies substantially
similar to the Corporation. The determination of such appraiser shall be
conclusive and binding upon the
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parties hereto, and shall not be subject to review by any arbitral, judicial or
other tribunal or authority.
(e) Family - a Shareholder's spouse, children, parents, siblings
or one or more trusts established for the exclusive benefit of such Shareholder
and/or one or more of such persons.
(f) Separation - the following events: Disability, death,
Termination For Cause or any other event by which a Shareholder ceases to
perform services for the Corporation.
(g) Termination For Cause - shall mean termination for one or
more of the following:
(i) The commission of an act of fraud upon the
Corporation, its directors or shareholders, or any of its clients
or customers, or the commission of any other act that jeopardizes
the Corporation's right or ability to operate its business;
(ii) The repeated failure or refusal of a party hereto
to perform the legitimate duties assigned to him by the Board of
Directors of the Corporation in its reasonable discretion;
(iii) Incompetence, misconduct or negligence in the
performance of the legitimate duties and
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responsibilities from time to time assigned to a party by the
Board of Directors in its reasonable discretion;
(iv) The conviction of a party for a felony;
(v) The undue dependency of a party on alcohol or
drugs; or
(vi) The material breach of any of the provisions hereof
by any party hereto.
2. Term of Agreement.
This Agreement shall continue in full force and effect until the
earliest of (i) the date that only one Shareholder owns, directly or indirectly,
all of the Shares, (ii) the date as of which the Agreement is terminated by
unanimous written agreement among the Corporation, those parties hereto who are
shareholders at the time of such agreement and Bernstein so long as he has the
right to own Shares upon conversion of the RPC at the time of such agreement or
(iii) the date on which more than 50% of the Corporation's issued and
outstanding Shares have been registered under the Securities Act of 1933, as
amended. Except as may otherwise by expressly provided herein, upon termination
of this Agreement, each Shareholder shall surrender to the Corporation the
certificates representing his Shares, and the Corporation shall issue to him in
lieu thereof new certificates which shall
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bear no reference to this Agreement or to any of the restrictions on transfer
set forth herein.
3. Voting of Shares.
Unless Titomirov shall have ceased to own Shares of the Corporation's
common stock or shall have experienced an event of Separation, each Shareholder
hereby agrees to vote all voting Shares now or hereafter owned by him, either in
person or by proxy, at each election of directors of the Corporation, to elect
Titomirov. Unless Bernstein shall have ceased to hold the RPC or any Shares of
the Corporation's common stock into which the RPC has been converted, or unless
he shall have experienced an event of Separation, then each Shareholder hereby
agrees to vote all voting Shares now or hereafter owned by him, either in person
or by proxy, at each election of directors of the Corporation, to elect
Bernstein. Additional directors shall be elected from time to time in accordance
with the By-laws of the Corporation.
4. Restrictions on Transfer of Shares.
(a) Restrictions. All Shares now or hereafter owned by a
Shareholder shall be subject to an option to purchase, a right of first refusal
and certain restrictions on transfer, all as set forth in this Agreement, and no
Shareholder shall sell, assign, transfer, pledge or hypothecate any Shares
except in accordance with the terms of this Agreement. No Shareholder
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shall pledge or hypothecate any Shares without the prior consent of the
Corporation. Any sale, assignment, transfer, pledge or hypothecation of any
Shares in violation of this Agreement shall be void, and the Corporation shall
not be obligated either to transfer such Shares on its books or to recognize any
such unauthorized transaction in any manner whatsoever.
(b) Securities Laws. No Shareholder shall assign, deliver, pledge
or otherwise transfer any Shares, nor will any assignee, pledgee or endorsee of
any Shares be recognized as an owner of any Shares by the Corporation for any
purpose, unless a Registration Statement under the Securities Act of 1933 with
respect to such Shares shall then be in effect or unless any such assignment,
delivery, pledge or transfer may be made without registration under the
Securities Act of 1933, as amended, and under any applicable state securities
laws, and such assignment or transfer will not adversely affect the exemptions
from securities registration on which the Corporation relied in selling Shares
to the Shareholders, all to the satisfaction of counsel to the Corporation.
(c) Restrictive Legend. Each certificate representing Shares
subject to this Agreement shall contain a legend on the fact thereof indicating
that transferability of such stock is restricted and an endorsement on the back
thereof which includes language in substantially the following form:
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Any sale, pledge or other disposition of the
shares of stock represented by this certificate is
restricted by and subject to the terms and provisions of
the Shareholders' Agreement, dated as of
_________________, 1990, as such Agreement may be
amended from time to time, by and among the Corporation,
the holder of this certificate and certain other
shareholders of the Corporation.
5. Option to Purchase Shares.
(a) Exercise of Option in the Event of Death of a Shareholder.
(i) In the event of death of a Shareholder, his
representative shall notify the Corporation and the surviving Shareholders (the
"Surviving Shareholders"), within ten (10) days after the appointment of such
representative, that an event of Separation has occurred. The Corporation and
the Surviving Shareholders shall have the exclusive option for six (6) months
from the earlier of (A) the date that notice of Separation is given to the
Corporation and the Surviving Shareholders by the deceased Shareholder's
representative or (B) the date that the Corporation notifies the deceased
Shareholder's representative that the Corporation is taking note of the
Separation, to purchase all (but not less than all) of the deceased
Shareholder's Shares in such proportion as the Corporation and the Surviving
Shareholders shall agree. If the Corporation and the Surviving Shareholders are
unable to so agree, then each Surviving Shareholder who wishes to participate in
such purchase shall have priority to purchase up to that fraction of the
deceased.
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Shareholder's Shares in which the numerator is the number of Shares of the
Corporation's common stock owned by such Surviving Shareholder and the
denominator is the number of Shares of the Corporation's common stock owned by
the Surviving Shareholders who desire to participate in such purchase. In the
event that not all of the deceased Shareholder's Shares would be purchased
pursuant to the priority allocations set forth in the previous sentence, then
the Corporation may first elect to purchase up to all of the remaining Shares of
the deceased Shareholder. If the Corporation fails to elect to purchase all of
such remaining Shares, then the Surviving Shareholders who desire to purchase
the remaining Shares shall deliver written notice to the Corporation stating
therein the number of such remaining Shares each such Surviving Shareholder
desires to purchase. The remaining Shares shall be allocated in one or more
successive allocations to those Surviving Shareholders who wish to purchase
additional Shares and each such allocation shall be determined by a fraction,
the numerator of which is the number of Shares owned by each such Surviving
Shareholder and the denominator which is the number of Shares owned by all such
Surviving Shareholders. Bernstein shall not be considered a Surviving
Shareholder for purposes hereof unless he shall have first converted his RPC
into Shares pursuant to the terms thereof; provided, however, that if not all of
the deceased Shareholder's Shares would be purchased pursuant to the provisions
hereof, then at the Corporation's
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option in its sole discretion Bernstein may elect to purchase any such remaining
Shares. If within fifteen (15) days prior to the expiration of the six (6) month
option provided herein the Board of Directors of the Corporation has not been
reasonably satisfied that all and not less than all of the deceased
Shareholder's Shares will be purchased at a single closing pursuant to the terms
hereof, the Corporation may elect to purchase any remaining Shares. If the
Corporation and/or the Surviving Shareholders fail to tender the purchase price
for all of the Shares pursuant to the terms provided in subsection and (d) of
this Section 5, the option of the Corporation and/or the Surviving Shareholders
to purchase the deceased Shareholder's Shares shall expire.
(ii) In the event that the Corporation and/or the Surviving
Shareholders fail to exercise the option to purchase the deceased Shareholder's
Shares in accordance with paragraph (i) of this Section 5(a), the deceased
Shareholder's representative shall be free, for a period of up to eighteen (18)
months, to seek a buyer for the Shares, subject to the right of first refusal
provided for in Section 6 hereof. At the end of such eighteen (18) month period,
the representative shall offer all of such Shares to the Corporation and the
Corporation shall purchase all of such Shares. The price and terms of payment
for such Shares shall be as provided in subjection (d) of this Section 5, except
that the schedule of payments of principal and interest to be made over the
applicable five (5) year period
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shall be determined by the Corporation at the time the Corporation purchases the
Shares; provided, however, that the schedule of payments of principal and
interest shall not be less advantageous to the estate of the deceased
Shareholder than is reasonably practicable for the Corporation considering the
Corporation's financial condition at the time of the purchase. The Corporation
may permit the Surviving Shareholders to participate in any purchase required by
this paragraph (ii) of this Section 5(a) on the same terms as the Corporation,
and in such proportion as are consonant with the priority allocation mechanism
set forth in paragraph (i) of this Section 5(a).
(b) Exercise of Option in the Event of Separation Other Than Death or
Termination For Cause Within Two Years of the Effective Date of
This Agreement.
(i) A Shareholder or his representative shall notify the
Corporation, and the other Shareholders (the "Remaining Shareholders") who have
not been subject to an event of Separation, that an event of Separation with
respect to such Shareholder (other than death or Termination For Cause within
two years of the effective date of this Agreement) has occurred within ten (10)
days after such event, except that if such event (for example, Disability)
requires the appointment of a representative for the selling Shareholder, such
notice shall be given within ten (10) days after the appointment of such
representative. The Corporation and the Remaining Shareholders shall have
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the exclusive option for six (6) months from the earlier of (A) the date that
notice of the Separation is given to the Corporation and the Remaining
Shareholders by the selling Shareholder or his representative, or (B) the date
that the Corporation notifies the selling Shareholder or his representative that
the Corporation is taking note of the occurrence of the event of Separation, to
purchase all (but not less than all, except in the event of Separation resulting
from Termination For Cause) of the selling Shareholder's Shares in such
proportion as the Corporation and the Remaining Shareholders shall agree. If the
Corporation and the Remaining Shareholders are unable to so agree, then the
opportunity to exercise the option shall be allocated and conducted in the same
manner as is set forth in Section 5(a)(i) above (including the provisions
thereof relating to Bernstein) as if the Remaining Shareholders were Surviving
Shareholders.
(ii) If the Corporation, and/or the Remaining Shareholders
fail to tender at the Closing (as that term is defined below in Section 5(e))
the purchase price for all the Shares of the selling Shareholder pursuant to the
terms provided in Section 5(d) (except in the case of Termination For Cause in
which event the option may be exercised in respect of any or all of the Shares
of the selling Shareholder), the option of the Corporation and/or the Remaining
Shareholders to purchase the selling Shareholder's Shares as a result of the
particular event of Separation described in the selling Shareholder's notice
shall
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expire. However, the selling Shareholder's Shares shall continue to be subject
to the right of first refusal set forth in Section 6 of this Agreement.
(c) Exercise of Option in the Event of Separation Resulting From
Termination For Cause. In the event of Termination For Cause of a Shareholder
within one year of the effective date of this Agreement, the Corporation shall
have the exclusive option for six (6) months from the date of such termination
to purchase all of the terminated Shareholder's shares on the terms set forth in
Section 5(d) below. In the event of Termination For Cause of a Shareholder more
than one year, but less than two years, after the effective date of this
Agreement, the Corporation shall have the exclusive option to purchase fifty
percent (50%) of the terminated Shareholder's shares on the terms set forth in
Section 5(d) below, and the remaining fifty percent (50%) of such Shareholder's
shares shall be subject to the option described in Section 5(b) above. In the
event of Termination For Cause of a Shareholder more than two years from the
effective date of this Agreement, the Corporation and the Remaining Shareholders
shall have the exclusive option for six (6) months from the date of such
termination to purchase any or all of the terminated Shareholder's Shares in the
same manner and on the same terms as are set forth in Section 5(b) above.
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(d) Terms of Payment. In all cases other than the Corporation's
exclusive option to purchase all or half (as the case may be) of a Shareholder's
shares as a result of the Termination For Cause of a Shareholder within two
years of the effective date hereof, the selling Shareholder (or his estate)
shall be entitled to receive the Fair Market Value Per Share of his Shares. In
the event of Termination For Cause of a Shareholder within two (2) years of the
effective date of this Agreement, the selling Shareholder shall have the right
to receive from the Corporation for those Shares subject to the Corporation's
exclusive option set forth in Section 5(c) above, not more than the par value of
such shares as adjusted from time to time, all to be paid in cash at one time
upon the purchase of such shares by the Corporation. Except as otherwise
provided in subsection (a) hereof, the terms of payment for Shares purchased
pursuant to subsection (a) and (b) of this Section 5 shall be as follows:
(i) Each purchaser shall make a down payment of ten percent
(10%) of the total purchase price of the Shares purchased by him (not to exceed
One Hundred Thousand ($100,000) Dollars) at the time such Shares are surrendered
(the "Closing"), and shall simultaneously deliver to the selling Shareholder or
his representative, as the case may be, a negotiable note (the "Note") signed by
the purchaser and payable to the order of the selling Shareholder, in an amount
equal to the balance of the purchase price of such Shares. Notwithstanding the
foregoing,
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to the extent that payment is made out of the proceeds of any applicable key man
insurance policy maintained by the Corporation, the down payment by the
Corporation shall be not less than the net proceeds of such policy, up to the
full amount of the purchase price, and the Closing shall be postponed, if
necessary, until such proceeds are received. Any purchaser may, in his or its
sole discretion, increase the amount of his down payment to any amount, or pay
the entire purchase price at the Closing.
(ii) The Note shall be due and payable in not more than
five (5) equal annual principal installments, beginning one (1) year after the
date of the Note. Interest shall accrue on the unpaid balance of the Note at an
annual rate equal to the applicable federal rate under Section 1274 of the
Internal Revenue Code of 1986, as amended (or any successor provision), and
shall be payable quarterly beginning on the first day of the fourth month
following the date of the Note. If the purchaser fails to pay any amount due
under the Note within thirty (30) days after written notice of such default is
given to such purchaser, the selling Shareholder shall have the right, at his
sole option, to declare the entire unpaid balance, together with accrued
interest, immediately due and payable. In the event of default, the selling
Shareholder shall also be entitled to collect all reasonable fees and expenses,
including, but not limited to, reasonable attorneys' fees incurred in enforcing
his rights under the Note. Each such Note shall also provide that the
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purchaser may pre-pay the whole or any part of the remaining principal balance
at any time without notice or penalty.
(iii) In conjunction with the delivery of the Note, the
purchaser shall execute and deliver to the selling Shareholder a security
agreement, in a form mutually acceptable to the purchaser and selling
Shareholder, granting to the selling Shareholder a security interest in the
purchased Shares as security for the Note and providing for the purchased Shares
to be held by an agent designated by the selling Shareholder until the Note is
paid in full. The security agreement shall prohibit any further sale or
assignment of the Shares by the purchaser except a sale or assignment that would
result in payment in full of the Note. The purchaser shall have the right to
exercise all incidents of ownership, including the right to vote the Shares,
unless the purchaser is in default under the Note or the security agreement.
Remedies upon any default under the Note shall be as provided by the Uniform
Commercial Code as enacted in the State of Delaware.
(e) Delivery of Shares.
(i) The Closing shall take place within sixty (60) days
after determination of the Fair Market Value Per Share (or, in the case of the
Corporation's option to purchase at par value pursuant to Section (5)(c), on
such date as shall be determined by the Board of Directors of the Corporation,
but not more
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than six (6) months following the effective date of Termination For Cause), at a
time and place mutually agreeable to the selling Shareholder and the
purchaser(s). If there is more than one purchaser of the Shares, the
consummation of the purchases shall take place at a single closing, to the
extent reasonably practicable. The Closing shall be extended to the extent
reasonably necessary if the event of Separation (for example, death) requires
the appointment of a representative for the Shareholder and such representative
is unable to effectuate such sale within such sixty-day period.
(ii) At the Closing, the selling Shareholder shall deliver
the Shares to be sold to the purchaser or the agent, as required pursuant to
subsection (d)(iii) of this Section 5, free and clear of all liens and
encumbrances. The Shares shall be duly endorsed for transfer to the purchaser
and shall be accompanied by all other documents necessary for their effective
immediate transfer to the purchaser.
(iii) Simultaneously with delivery, the purchaser shall pay
the purchase price of the Shares in accordance with subsection (d) of this
Section 5.
6. Right of First Refusal.
(a) Grant of Right. No Shareholder shall sell, assign or
otherwise transfer all or any portion of his Shares to a
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person who is not a Shareholder without giving the other Shareholders and the
Corporation a right of first refusal to purchase such Shares in the manner set
forth in this Section 6.
(b) Purchase by the Corporation and Other Shareholders.
Upon receiving an offer to purchase any such Shares, the selling Shareholder
shall require the offeror to submit a Bona Fide Offer which such Shareholder
then shall transmit to the Corporation and the other Shareholders (the "Other
Shareholders"). The Corporation and the Other Shareholders shall have sixty (60)
days thereafter in which to purchase all (but not less than all) of the Shares
referred to in the Bona Fide Offer at the same price and terms contained in the
Bona Fide Offer. If any or all of the Other Shareholders are exercising the
right of first refusal hereunder, each of them shall have the priority right to
purchase such Shares in such proportion as the total number of Shares owned by
each participating Other Shareholder shall bear to the total number of Shares
then owned by all participating Other Shareholders; and any of the Shares not so
subscribed for by each participating Other Shareholder shall be allocated in one
or more successive allocations to those Other Shareholders who wish to purchase
additional Shares and each such allocation shall be determined by a fraction,
the numerator of which is the number of shares owned by each such Other
Shareholder and the denominator of which is the number of Shares owned by all
such Other Shareholders. Bernstein shall not be considered an Other
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Shareholder for purposes hereof unless he shall have first converted his RPC
into Shares pursuant to the terms thereof; provided, however, that if not all of
the selling Shareholder's Shares would be purchased pursuant to the provisions
hereof, then at the Corporation's option in its sole discretion Bernstein may
elect to purchase any such remaining Shares. To the extent that the purchasers
fail to tender the full cash purchase price (or to match such other terms as are
contained in the Bona Fide Offer) for all of the Shares referred to in the Bona
Fide Offer against the proper endorsement and delivery of the certificates
evidencing the Shares within such sixty-day period, this right of first refusal
shall expire as to that particular Bona Fide Offer, but shall remain in full
force and effect with respect to all material modifications of that Bona Fide
Offer and all future offers.
(c) Purchase by Third Party. Any Offered Shares which are
not purchased by the Shareholders or the Corporation as provided herein may be
sold to the person, firm, association or corporation named in the Bona Fide
Offer, but not at a lower price, or upon more favorable terms to the purchaser,
then the price and terms set forth in the Bona Fide Offer. Title to such Offered
Shares shall pass not later than ninety (90) days from the latest date on which
the Other Shareholders or the Corporation have declined or failed to purchase
the Shares. In the event that the selling Shareholder should desire to sell such
Shares at a lower price, or upon terms more favorable to the purchaser, than he
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theretofore offered the Shares to the Other Shareholders or the Corporation, he
shall, before he can sell to any such purchaser, again offer the Shares in
accordance with the procedure set forth in this Section 6.
7. Transfer to Family Members. Notwithstanding anything to the
contrary contained herein, each Shareholder shall have the right to transfer all
or any of his Shares at any time by will or deed to one or more of his Family
members (hereinafter called "Close Assigns"). However, whenever any such
Shareholder shall thus dispose of Shares among his Close Assigns, such Close
Assigns and the Shares owned by them shall continue to be bound by all of the
terms and conditions of this Agreement. Without limiting the foregoing, the
option to purchase granted in Section 5 and the right of first refusal granted
in Section 6 with reference to the Shares of such Shareholder shall be
applicable to the Shares of his Close Assigns as if such Shareholder still owned
such Shares.
8. Transferees of Shares. Any transferee of Shares (other than a
Close Assign of a Shareholder as defined in Section 7) who is not a Shareholder
must execute a written consent to be bound by this Agreement to the same extent
as a Shareholder. Any such transferee shall be considered a Shareholder for all
purposes under this Agreement; except that no such transferee shall be
considered a Shareholder whose Shares are subject to the purchase
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option contained in Section 5 unless such transferee is, or becomes, engaged by
the Corporation in a managerial or advisory capacity.
9. Agreement by Corporation. The Corporation agrees for itself and its
successors and assigns that (i) insofar as is proper or required, it consents to
this Agreement; (ii) it will not transfer or reissue any Shares in violation of
this Agreement, or without requiring proof of compliance with this Agreement;
and (iii) all other actions required of the Corporation pursuant to the terms of
this Agreement shall be promptly and faithfully performed.
10. Departing Shareholders. Upon the sale or other disposition by a
Shareholder of the beneficial ownership of all of his Shares, the selling
Shareholder shall no longer be deemed to be either a party hereto or a
"Shareholder" hereunder, and shall have no further rights or obligations under
this Agreement, except that he shall remain liable to the other parties hereto
for all violations of this Agreement committed by him in connection with the
disposition of his Shares.
11. Failure to Surrender Shares. If a Shareholder or any person having
custody or control of his Shares fails or refuses to tender such Shares as is
required by the terms of this Agreement, all right to vote such Shares or to
receive dividends or other distributions with respect thereto shall cease as of
the
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time such Shares should have been surrendered. The only rights of the owner
thereof shall be to collect and receive the purchase price per Share as above
provided, and no interest shall accrue thereon as a result of any delay in the
surrender of such Shares.
12. Conversion of Non-Voting Shares to Voting Shares. In the event that
Titomirov or the Corporation has entered into an agreement or has undertaken a
course of action that results or would result in Titomirov owning or potentially
owning less than fifty-one percent (51%) of the outstanding voting shares of any
class of the Corporation, then, without further action or payment by any
Shareholder, the Corporation shall immediately offer in writing to exchange any
and all non-voting Shares held by any Shareholder or Close Assign for voting
Shares of the Corporation. The Corporation and the Shareholders agree to take
any action necessary or appropriate to give effect to this provision, including,
but not limited to, the taking of any corporate actions, the execution of
consents, the holding of meetings of directors or shareholders and the
preparation, execution and filing or delivery of any certificates, as and when
required, and, in any event, prior to Titomirov's owning less than fifty-one
(51%) of the Corporation's outstanding voting Shares of any class.
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13. Proprietary Information.
(a) Definitions. The parties acknowledge that each will be furnished or
may otherwise receive or have access to information which relates to the
Corporation's past, present or future products, software, research, development,
improvements, processes, techniques, design or other technical data, customers,
suppliers, contractors, or regarding administrative, management, financial, or
marketing activities, or of a third party which provided proprietary information
to one or more of the parties hereto on a confidential basis. All such
information, including any materials or documents containing such information,
are proprietary and confidential to the disclosing party (the "Proprietary
Information").
(b) Nondisclosure. Both during and after the term of this Agreement,
each party agrees to preserve and protect the confidentiality of Proprietary
Information and all physical forms thereof, whether disclosed before this
agreement is signed or afterward. In addition, the receiving party shall not
disclose or distribute any Proprietary Information to any third party, and shall
not use any Proprietary Information for his or its own benefit or for the
benefit of any third party. The foregoing obligations shall not apply with
respect to any Proprietary Information the disclosing party can establish to
have become publicly known without breach of this Agreement.
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(c) Return of Proprietary Information. Each party shall return to the
Corporation all documents and other tangibles, including diskettes and other
storage media (and all copies and reproductions of any of the foregoing) which
contain any Proprietary Information immediately upon request by the Corporation.
14. Competition. During the term thereof, or for a period of three
years following an Event of Separation of a Shareholder, or at any time within
two years following the date that a Shareholder no longer owns any Shares, such
party will not, and such party shall use his best efforts to cause his
employees, agents and affiliates not to (i) own any interest in, provide any
financing for or perform any services for, any business or entity which engages,
directly or indirectly, in competition in any respect with the Corporation or
(ii) engage in competition with the Corporation. Each party further agrees that
during such period he will not solicit any current or former customer of the
Corporation, or solicit or employ any current employee of the Corporation, or
any contractor of the Corporation providing software development, modification
or enhancement services to or for the Corporation.
15. Remedies for Breach of Agreement. Each Shareholder agrees as
follows:
(a) that any breach or attempted breach by him of the provisions
of this Agreement could result in irreparable injury
24
<PAGE>
to any or all of the other parties hereto for which there would be no adequate
remedy at law;
(b) that if he should breach or attempt to breach any such provisions of
this Agreement, one or more of the other parties hereto who are or may be
injured by such breach or attempted breach may seek through process of law to
enjoin him from further breaches or attempted breaches hereof, or to compel his
compliance with such provisions by specific performance, in addition to any
other remedies available in equity or at law; and
(c) that if a court of competent jurisdicition determines that he has
breached, or attempted to breach, any such provisions of this Agreement, he
shall pay all costs and expenses, including, without limitation, court costs and
the reasonable attorneys' fees, incurred by the other parties in enforcing his
obligations under this Agreement.
16. Notices. Any and all notices, consents or other communications
provided for herein shall be given in writing and personally delivered or sent
by telex, telecopy, telegram or other overnight mail with appropriate evidence
of transmission or receipt, or by registered by certified mail addressed as
follows: (i) if to the Corporation, to its current office address at the time
such notice, consent or other communication is to be given, and (ii) if to a
Shareholder, to his most recent address appearing on the records of the
Corporation. Each such notice, consent or
25
<PAGE>
other communication shall be deemed given on the date it is personally delivered
of, if mailed, on the date of mailing.
17. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the remainder of this Agreement or any
valid clause of an invalid provision.
18. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the matters contained
herein and may not be modified except by a written agreement signed by the
Corporation and all of the other parties to this Agreement who are then
shareholders of the Corporation. This Agreement supersedes all prior agreements
or understandings, oral or written, among the parties relating to the subject
matter hereof.
19. Corporate Authorization. The proper officers of the Corporation
have been authorized to enter into this Agreement on behalf of the Corporation
by a resolution adopted by its board of directors.
20. Governing Law; Consent to Jurisdiction. This Agreement shall be
construed under and governed in all respects, including issues of validity,
interpretation, performance and enforcement, by the laws of the District
Columbia. Each of the parties
26
<PAGE>
hereby irrevocably consents to, and waives any objections to the exercise of,
personal jurisdiction by the courts in the District of Columbia with respect to
any action or proceeding arising out of this Agreement.
21. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors and assigns and upon each
Shareholder and his heirs, legatees, personal representatives and assigns, but
neither this Agreement nor any right or obligation hereunder shall be assignable
by any party without the express written consent of all of the other parties
hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.
ATTEST:
WITNESSES: Shareholders:
/s/ C. Bowdoin Train /s/ Alexander Titomirov
------------------------------- --------------------------------
Alexander Titomirov
/s/ Alexander Titomirov /s/ Valera Sagitov
------------------------------- --------------------------------
Valera Sagitov
/s/ Alexander Titomirov /s/ James E. Bernstein
------------------------------- --------------------------------
James E. Bernstein
27
<PAGE>
/s/ Alexander Titomirov /s/ C. Bowdoin Train
------------------------------- --------------------------------
C. Bowdoin Train
/s/ Alexander Titomirov /s/ Louis Hecht
------------------------------- --------------------------------
Louis Hecht
/s/ Alexander Titomirov /s/ Brennan Klose
------------------------------- --------------------------------
Brennan Klose
The Corporation:
INFORMAX, INC.
/s/ Peter Van Story /s/ Alexander Titomirov
-------------------------------- --------------------------------
Peter Van Story Alexander Titomirov
Secretary President
28
<PAGE>
FIRST AMENDMENT
TO THE SHAREHOLDERS' AGREEMENT
THIS FIRST AMENDMENT TO THE SHAREHOLDERS' AGREEMENT (the "AMENDMENT")
is made as of 17 August 1999, by and among Alexander Titomirov ("TITOMIROV"),
James E. Bernstein ("BERNSTEIN"), C. Bowdoin Train, and Brennan Klose
(collectively, the "CURRENT SHAREHOLDERS") and InforMax, Inc., a Delaware
corporation (the "CORPORATION").
WHEREAS, the Current Shareholders are parties to that certain
Shareholders' Agreement by and among Valera Sagitov ("SAGITOV") and Louis Hecht
(together with Sagitov, the "FORMER SHAREHOLDERS"), the Current Shareholders,
and the Corporation dated as of September 1, 1990, as amended hereby (the
"SHAREHOLDERS' AGREEMENT");
WHEREAS, the Former Shareholders each ceased to be a party to the
Shareholders' Agreement upon the disposition of all of their respective shares
of the Corporation's common stock;
WHEREAS, the Corporation and FBR Technology Venture Partners II, LP
("FBR") entered into that certain Series A Preferred Stock Purchase Agreement
("SERIES A PREFERRED STOCK PURCHASE AGREEMENT") dated as of June 22, 1999,
pursuant to which among other things FBR: (a) made an equity investment into the
Corporation, and (b) entered into that certain Investor Rights Agreement dated
as of June 22, 1999, by and between FBR and the Corporation (together with any
amendments thereto, the "INVESTOR RIGHTS AGREEMENT");
WHEREAS, pursuant to the terms of the Series A Preferred Stock Purchase
Agreement: (a) Vadim Babenko, Bernstein and Titomirov (collectively, the
"FOUNDERS"), FBR and the Corporation entered into that certain Right of First
Refusal and Co-Sale Agreement, dated as of June 22, 1999 (together with any
amendments thereto, the "FIRST REFUSAL AND CO-SALE AGREEMENT"); and (b) the
Founders, FBR and the Corporation entered into that certain Voting Agreement
dated as of June 22, 1999 (together with any amendments thereto, the "VOTING
AGREEMENT");
WHEREAS, the Current Shareholders are desirous of amending the terms
and conditions of the Shareholders' Agreement as set forth herein; and
WHEREAS, capitalized terms used and not defined herein shall have the
meaning ascribed to such terms in the Shareholders' Agreement.
NOW, THEREFORE, in consideration of the above and for the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Matters Relating to Section 12.
<PAGE>
(a) The parties hereto acknowledge and agree that in the fifth
line of Section 12 of the Shareholders' Agreement the phrase "outstanding voting
shares" shall be corrected to read as follows, "outstanding voting Shares".
(b) The parties hereto acknowledge and agree that in Section
12 of the Shareholders' Agreement the provisions regarding the circumstances
pursuant to which nonvoting common stock is automatically converted into voting
common stock shall only apply when Titomirov no longer has voting control of the
Corporation.
2. Amendment to Section 3. Section 3 of the Shareholders' Agreement
shall be amended to add as the last sentence of Section 3, the following:
Notwithstanding anything to the contrary herein, including
this Section 3, each Shareholder shall take all action necessary in
order to carry out the intents and purposes of the Voting Agreement.
3. Amendment to Section 5. Section 5 of the Shareholders' Agreement
shall be amended to add a new subsection (f) which shall read in its entirety as
follows:
(f) Notwithstanding anything to the contrary herein,
including this Section 5, each Shareholder and the Corporation
acknowledges and agrees that any rights of first refusal granted to
such Shareholders or the Corporation, as the case may be, pursuant to
this Section 5, shall be subject to the rights of first refusal and
co-sale granted to FBR pursuant to the terms of the Right of First
Refusal and Co-Sale Agreement as set forth and limited by the terms of
such Right of First Refusal and Co-Sale Agreement.
4. Amendment to Section 7. Section 7 of the Shareholders' Agreement
shall be amended to add as the last sentence to Section 7, the following:
Notwithstanding anything to the contrary herein, including
this Section 7, each Founder acknowledges and agrees that any rights
conferred upon such Founder pursuant to this Section 7, shall be
exercised by such Founder in a manner consistent with the limitations
on such rights provided for in the First Refusal and Co-Sale Agreement.
5. Amendment to Section 14. Section 14 of the Shareholders' Agreement
is hereby amended in its entirety to read as follows:
14. Noncompetition.
(a) Covenants. During the term of this Agreement and
for a period of twenty four (24) months after termination of this
Agreement (the "Noncompetition Period"), no Shareholder shall, directly
or indirectly, as an officer, director, employee, consultant, owner,
shareholder, adviser, joint venturer, or otherwise, compete with the
Company Business. This covenant
2
<PAGE>
shall not preclude a Shareholder from owning less than two percent (2%)
of the securities of any competitor of the Corporation if such
securities are publicly traded on a nationally recognized stock
exchange or over-the-counter market. For purposes of this Section 14,
the term "Company Business" shall mean the business of developing and
licensing pharma-informatic software tools of the type developed by the
Corporation.
(b) Acknowledgments. Each Shareholder acknowledges
that the foregoing restriction on competition is fair and reasonable,
given the scope of the Company Business and the nature of such
Shareholder's relationship with the Corporation. Each Shareholder
acknowledges that such Shareholder has had, and will have, access to
information that would be valuable or useful to the Corporation's
competitors, and therefore acknowledges that the foregoing restrictions
on such Shareholders' future employment and business activities are
fair and reasonable. Each Shareholder acknowledges and is prepared for
the possibility that such Shareholder's standard of living may be
reduced during the Noncompetition Period, and assumes and accepts any
risk associated with that possibility.
6. Waiver of Rights. Each Shareholder and the Corporation acknowledges
and agrees that this Amendment constitutes a waiver of any rights such
Shareholder or the Corporation has pursuant to the Shareholders' Agreement to
the extent any such rights are inconsistent with the First Refusal and Co-Sale
Agreement, the Investor Rights Agreement or the Voting Agreement.
7. Scope of Amendment. Except as expressly modified hereby, the
Shareholders' Agreement is hereby ratified and confirmed and shall continue in
full force and effect.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment to the Shareholders' Agreement or has caused this Amendment to the
Shareholders' Agreement to be duly executed and delivered in its name on its
behalf, all as of the day and year first written above.
CURRENT SHAREHOLDERS:
/s/ Alexander Titomirov /s/ C. Bowdoin Train
------------------------------ ---------------------------------
Alexander Titomirov C. Bowdoin Train
/s/ James E. Bernstein
------------------------------ ---------------------------------
James E. Bernstein Brennan Klose
THE CORPORATION: INFORMAX, INC.
/s/ Alexander Titomirov
---------------------------------
Alexander Titomirov
President and Chief Executive Officer
4
<PAGE>
SECOND AMENDMENT
TO THE SHAREHOLDERS' AGREEMENT
THIS SECOND AMENDMENT TO THE SHAREHOLDERS' AGREEMENT (the "AMENDMENT") is
made as of March 29, 2000, by and among Alexander Titomirov ("TITOMIROV"), James
E. Bernstein ("BERNSTEIN"), C. Bowdoin Train ("TRAIN"), Brennan Klose ("KLOSE";
collectively with Titomirov, Bernstein and Train, the "CURRENT SHAREHOLDERS")
and InforMax, Inc., a Delaware corporation (the "CORPORATION") 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 "BUYERS").
WHEREAS, the Current Shareholders are parties to that certain
Shareholders' Agreement by and among Valera Sagitov ("Sagitov") and Louis Hecht
(together with Sagitov, the "FORMER SHAREHOLDERS"), the Current Shareholders,
and the Corporation dated as of September 1, 1990, as amended hereby (the
"SHAREHOLDERS' AGREEMENT");
WHEREAS, the Former Shareholders each ceased to be a party to the
Shareholders' Agreement upon the disposition of all of their respective shares
of the Corporation's common stock;
WHEREAS, the Current Shareholders, FBR Technology Venture Capital
Managers, Inc. ("FBR") and the Corporation entered into that certain Side Letter
Agreement, dated June 22, 1999, pursuant to which the Current Shareholders and
the Corporation subordinated their rights of first refusal under the
Shareholders' Agreement regarding transfers of Shares to the rights granted to
FBR pursuant to that certain Right of First Refusal and Co-Sale Agreement dated
as June 22, 1999, by and among FBR, the Corporation, the Current Shareholders
and Vadim Babenko ("BABENKO");
WHEREAS, Titomirov and Babenko and the Buyers entered into that certain
Stock Purchase Agreement ("STOCK PURCHASE Agreement") dated as of March 29,
2000, pursuant to which, among other things, (a) Titomirov and Babenko have
exercised options (the "OPTIONS") 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); (b) Babenko and
Titomirov exercised the Options on the understanding that the Corporation and
the other Current Shareholders would enter into this Amendment; (c) Buyers
entered into the Stock Purchase Agreement on the understanding that the
Corporation and the other Current Shareholders would enter into this Amendment;
WHEREAS, the Buyers and the Current Shareholders are desirous of the
Buyers joining the Shareholder's Agreement for purposes Section 6 and Section 12
of the Shareholders' Agreement only;
WHEREAS, the Current Shareholders are desirous of amending the terms
and conditions of the Shareholders' Agreement as set forth herein;
<PAGE>
WHEREAS, the parties have agreed that Buyers' right hereunder will be
subordinate to the rights of FBR under the First Refusal and Co-Sale Agreement;
and
WHEREAS, capitalized terms used but not defined herein shall have the
meaning ascribed to such terms in the Shareholders' Agreement.
NOW, THEREFORE, in consideration of the above and for the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Matters Relating to Section 6.
-----------------------------
(a) The parties hereto acknowledge and agree that the Buyers
are a party to the Shareholder's Agreement for all purposes of Section 6, and
shall be a "Shareholder" for purposes of Section 6, and that the first line of
Section 6(a) of the Shareholders' Agreement shall be amended to read in its
entirety as follows:
Except for the Buyers, no Shareholder shall sell, assign or
otherwise transfer all or any portion of his Shares to a person who is not a
Shareholder without giving the other Shareholders, including the Buyers, and the
Corporation a right of first refusal to purchase such Shares in the manner set
forth in this Section 6.
(b) The parties hereto acknowledge and agree that the first
line of Section 6(b) of the Shareholders' Agreement shall be corrected to read
as follows:
Upon receiving an offer to purchase any such Shares, the
selling Shareholder shall require the offeror to submit a Bona Fide Offer which
such Shareholder then shall transmit to the Corporation and the Other
Shareholders, including the Buyers (the "Other Shareholders").
(c) The parties hereto acknowledge and agree that all
remaining provisions of Section 6 of the Shareholders' Agreement are hereby
ratified and confirmed and shall continue in full force and effect.
2. Matters Relating to Section 12.
(a) The parties hereto acknowledge and agree that the Buyers
are a party to the Shareholder's Agreement for purposes of all of Section 12,
and shall be a "Shareholder" for purposes of Section 12, and that the first line
of Section 12 of the Shareholders' Agreement shall be amended to read in its
entirety as follows:
In the event Titomirov or the Corporation has entered into an
agreement or has undertaken a course of action that results or would result in
Titomirov owning or potentially owning less than fifty-one percent (51%) of the
outstanding voting Shares of the Corporation, then, without further action or
payment by any Shareholder, including the Buyers, the Corporation shall
immediately offer in writing to exchange any and all non-voting Shares held by
any Shareholder, including the Buyers, or Close Assign for voting Shares of the
Corporation.
2
<PAGE>
(b) The parties hereto acknowledge and agree that all
remaining provisions of Section 12 of the Shareholders' Agreement are hereby
ratified and confirmed and shall continue in full force and effect.
3. Scope of Amendment. Except as expressly modified hereby, the
Shareholders' Agreement is hereby ratified and confirmed and shall continue in
full force and effect.
4. Joinder to Side Letter. (a) The Buyers are hereby made a party to
the Side Letter as a "Principal Shareholder" thereunder, and the Buyers hereby
agree to be bound by all the terms and conditions of the Side Letter as a
"Principal Shareholder" thereunder.
(b) The Buyers represent and warrant individually to the
Company and the other Principal Shareholders and FBR that each Buyer: (a) has
reviewed the Side Letter (as attached hereto), and fully understands all
provisions of the Side Letter, and (b) has become a Principal Shareholder under
the Side Letter and is bound by all the terms and conditions of the Side Letter
with the same effect as though the Buyer was a subscribing party to the Side
Letter.
(c) All references in the Side Letter to "Principal
Shareholder" or "Principal Shareholders" shall be deemed to include the Buyer.
(d) Except as provided herein, all of the terms and conditions
of the Side Letter are unmodified and shall continue in full force and effect
and shall be binding upon the parties hereto and their respective assigns in
accordance with the terms thereof.
5. Counterparts. This Amendment may be executed (including by
facsimile) in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this First Amendment to the Shareholders' Agreement or has caused this First
Amendment to the Shareholders' Agreement to be duly executed and delivered in
its name on its behalf, all as of the day and year first written above.
CURRENT SHAREHOLDERS:
/s/ Alexander Titomirov /s/ C. Bowdoin Train
----------------------------- ----------------------------------
Alexander Titomirov C. Bowdoin Train
/s/ James E. Bernstein
----------------------------- ----------------------------------
James E. Bernstein Brennan Klose
THE CORPORATION:
INFORMAX, INC.
By: /s/ Joe Lehnen
------------------------------
Joe Lehnen
Chief Financial Officer
BUYERS:
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
<PAGE>
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
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
By: /s/ Raj Mehra
------------------------------
