Exhibit 9.1
SHAREHOLDER AGREEMENT
This Shareholder Agreement (this "Agreement") is entered into as of the
18th day of September, 2003, by and among Protalex, Inc., a New Mexico
corporation (the "Company"), certain of the holders of the Common Stock of the
Company or options to acquire the Common Stock identified on Exhibit A hereto
(the "Existing Shareholders") and the Investors listed on Schedule I (the
"Investors") with reference to the following facts:
A. The Company has agreed to issue and the Investors have agreed to purchase
shares of the Company's Common Stock and Warrants to purchase shares of the
Company's Common Stock pursuant to that certain Securities Purchase Agreement of
even date herewith (the "Purchase Agreement") at a Closing (the "Closing"); and,
as a condition to such Closing, the parties wish to assure that (i) a
representative of the Investors is elected as a member of the Board of Directors
of the Company and (ii) the transfer of shares of the Company's Common Stock by
the Existing Investors following the Closing is limited.
NOW, THEREFORE, in consideration of their respective promises contained
in this Agreement, the undersigned agree as follows:
1. Definitions. For the purposes of this Agreement, capitalized terms that are
used but not defined herein shall have the respective meanings ascribed thereto
in the Purchase Agreement.
a. "Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
b. "Expiration Date" shall mean that date on which vSpring SBIC, L.P.
("vSpring"), together with its Affiliates, no longer owns shares of Common Stock
and Warrant Shares, on an as exercised basis, (as appropriately adjusted for
stock splits, combinations, recapitalizations and similar transactions) that
represent less than 25% of the shares of Common Stock and Warrant Shares, on an
as exercised basis, purchased by vSpring together with its Affiliates at the
Closing (as appropriately adjusted for stock splits, combinations,
recapitalizations and similar transactions).
c. "Liquidity Date" shall have the same meaning as that term is defined in that
certain Investor Rights Agreement dated of even date herewith among the Company
and the Investors (defined therein).
d. "Person" shall mean any individual, any corporation, limited liability
company, general or limited partnership, business trust, unincorporated
association or other business organization or entity, or any governmental
authority.
e. "Shares" shall mean: (i) all securities of the Company (including all shares
of the Company's Common Stock and all options, warrants and other rights to
acquire shares of the Company's Common Stock) owned by such Existing Shareholder
or such Investor as of the date of this Agreement, and (ii) all additional
securities of the Company (including all additional shares of the Company Common
Stock and all additional options, warrants and other rights to acquire shares of
the Company Common Stock) of which such Existing Shareholder or such Investor
acquires beneficial ownership during the period commencing with the execution
and delivery of this Agreement until two years from the Closing Date.
f. "Restriction Termination Date" shall mean the date that is the earlier to
occur of (i) the two year anniversary of the Closing Date or (ii) the Liquidity
Date.
g. A Person shall be deemed to have effected a "Transfer" of a security if such
Person directly or indirectly (i) offers for sale, sells, assigns, pledges,
encumbers, grants an option with respect to, transfers or otherwise disposes of
such security or any interest therein, or (ii) enters into an agreement,
commitment or other arrangement providing for the sale of, assignment of, pledge
of, encumbrance of, granting of an option with respect to, transfer of or
disposition of such security or any interest therein.
2. Restriction on Transfer; Stop Transfer. Except as expressly contemplated by
this Agreement, at all times during the period commencing with the execution and
delivery of this Agreement and continuing until the Restriction Termination
Date, each of the Existing Shareholders listed on Exhibit B (the "Restricted
Shareholders") shall not, without the prior written consent of vSpring, directly
or indirectly, (i) cause or permit the Transfer of any of the Shares to be
effected, or discuss, negotiate or make any offer regarding any Transfer of any
of the Shares, or (ii) request that the Company register the Transfer of any
certificate or uncertificated interest representing any of the Shares; provided
however, that, during the period beginning on the one year anniversary of the
Closing Date continuing until the Restriction Termination Date, each such
Restricted Shareholder may Transfer in the aggregate up to 10% of the Shares
beneficially owned by such Restricted Shareholder (determined on a fully-diluted
basis) as of the Closing Date without the prior written consent of vSpring. Each
Restricted Shareholder hereby agrees that, in order to ensure compliance with
the restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent in respect of the Shares.
3. Proxies and Non-Interference; Stop Transfer. Except as expressly contemplated
by this Agreement, at all times during the period commencing with the execution
and delivery of this Agreement and continuing until the Expiration Date, each of
the Existing Shareholders and each of the Investors shall not, without the prior
written consent of vSpring, directly or indirectly, (i) grant any proxies or
powers of attorney with respect to any of the Shares, deposit any of the Shares
into a voting trust or enter into a voting agreement or other similar commitment
or arrangement with respect to any of the Shares in contravention of the
obligations of such Existing Shareholder or such Investor, respectively, under
this Agreement, or (ii) take any action that would make any representation or
warranty of such Existing Shareholder or such Investor, respectively, contained
herein untrue or incorrect, or have the effect of preventing or disabling such
Existing Shareholder or such Investor, respectively, from performing any of such
Existing Shareholder's or such Investor's obligations under this Agreement. Each
Existing Shareholder and each Investor hereby agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent in respect of the
Shares.
4. Voting Agreement. Until the Expiration Date, at each annual meeting of the
shareholders of the Company, or at any meeting of the shareholders of the
Company at which members of the Board of Directors are to be elected, however
called, and at every adjournment or postponement thereof, and at any other time
at which shareholders of the Company will have the right to or will vote for or
render consent in writing regarding the election of directors of the Company,
then and in each event, each Existing Shareholder and each Investor hereby
covenants and agrees to appear at such meeting, in person or by proxy, or
otherwise cause all of the Shares to be counted as present thereat for purposes
of establishing a quorum thereat, and each Existing Shareholder and each
Investor shall vote, or cause to be voted (and on every action or approval by
written consent of shareholders with respect to the following, act, or cause to
be acted, by written consent) with respect to all of the Shares that such
Existing Shareholder or such Investor is entitled to vote or as to which such
Existing Shareholder or such Investor has the right to direct the voting, as of
the relevant record date, in favor of the following actions:
a. to fix and maintain the number of directors at seven (7);
b. with respect to one (1) member of the Board of Directors, to cause and
maintain the election of (1) candidate designated by vSpring, who shall
initially be Dr. Xxxxxx Xxxxx (the "Investor Designee").
5. Irrevocable Proxy. Concurrently with the execution of this Agreement, each
Existing Shareholder and each Investor shall deliver to vSpring an irrevocable
proxy in the form attached hereto as Exhibit C, which shall be irrevocable to
the fullest extent permitted by applicable law, with respect to the Shares.
6. Representations and Warranties. Each Existing Shareholder and each Investor
hereby represents and warrants to vSpring and the Company as follows:
a. Ownership of Shares. Such Existing Shareholder or such Investor, as
applicable, is the beneficial owner (as such term is defined under Rule 13(d)(3)
promulgated under the Securities Exchange Act of 1934, as amended, except that
such terms shall include Shares that may be acquired more than sixty (60) days
from the date hereof) of all of the Shares; provided that with respect to the
Shares held by such Investor issued by the Company upon the Closing, this
representation and warranty assumes the valid issuance of the shares by the
Company pursuant the Purchase Agreement. Such Existing Shareholder or such
Investor, as applicable, has sole voting power and the sole power of disposition
with respect to all of the Shares, with no limitations, qualifications or
restrictions on such rights, subject to applicable federal securities laws and
the terms of this Agreement. Such Existing Shareholder or such Investor, as
applicable, is the sole record holder (as reflected in the records maintained by
the Company's transfer agent for the Company's Common Stock) of all of the
Shares.
b. Power; Binding Agreement. Such Existing Shareholder or such Investor, as
applicable, has the legal capacity, power and authority to enter into and
perform all of such Existing Shareholder's or such Investor's obligations under
this Agreement. The execution, delivery and performance of this Agreement by
such Existing Shareholder or such Investor will not violate any agreement or
court order to which such Existing Shareholder or such Investor, as applicable,
is a party or is subject, including, without limitation, any voting agreement or
voting trust. This Agreement has been duly and validly executed and delivered by
such Existing Shareholder or such Investor and constitutes a valid and binding
agreement of such Existing Shareholder or such Investor, enforceable against
such Existing Shareholder or such Investor in accordance with its terms.
c. No Consents. To his, her or its knowledge, the execution and delivery of this
Agreement by such Existing Shareholder or such Investor does not, and the
performance by such Existing Shareholder or such Investor of his, her or its
obligations hereunder will not, require such Existing Shareholder or such
Investor to obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any Governmental Authority.
7. No Ownership Interest. Nothing contained in this Agreement shall be deemed to
vest in vSpring any direct or indirect ownership or incidence of ownership of or
with respect to any Shares. Except as provided in this Agreement, all rights,
ownership and economic benefits relating to the Shares shall remain vested in
and belong to such Existing Shareholder or such Investor, respectively.
8. Shareholder Notification of Acquisition of Additional Shares. At all times
during the period commencing with the execution and delivery of this Agreement
and continuing until the Expiration Date, each such Existing Shareholder or such
Investor shall promptly notify vSpring and the Company of the number of any
additional shares of the Company's Common Stock and the number and type of any
other voting securities of the Company acquired by such Existing Shareholder or
such Investor, if any, after the date hereof.
9. Stop Transfer Instructions. At all times commencing with the execution and
delivery of this Agreement and continuing until the later of the Expiration Date
or the Restriction Termination Date, the Company shall not register the Transfer
(by book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares unless such Transfer is made pursuant to and in
compliance with the terms and conditions of this Agreement. The Company shall
instruct its transfer agent for the Company's Common Stock (the "Transfer
Agent") not to Transfer, at any time commencing with the execution and delivery
of this Agreement and continuing until later of the Expiration Date or the
Restriction Termination Date, any certificate or uncertificated interest
representing any of the Shares unless and until the Transfer Agent has received
the Company's instruction to effect any such Transfer.
10. Specific Performance. The parties agree that the damages to the parties from
a violation of Section 4 of this Agreement will be difficult to ascertain, that
the parties will not have an adequate remedy at law for such a breach and that
specific performance or other equitable relief from a breach or anticipatory
breach of Section 1 is therefore appropriate. If any party hereto or such
party's assigns institutes any action or proceeding to specifically enforce the
provisions hereof, any Person against whom such action or proceeding is brought
hereby waives the claim of defense therein that such party or such personal
representative has an adequate remedy at law, and such Person shall not offer in
any such action or proceeding the claim or defense that such remedy at law
exists.
11. Further Assurances. At the request of any party to another party or parties
to this Agreement, such other party or parties shall execute and deliver such
instruments or documents to evidence or further effectuate the respective rights
and obligations of the parties and to evidence and effectuate any termination of
this Agreement.
12. Transferees. This Agreement shall bind and inure to the benefit of any
transferees of the Existing Shareholders and the Investors, and the Company
shall not consent to a transfer of a share of Common Stock owned by an Existing
Shareholder or an Investor unless the transferee thereof agrees to be bound by
this Agreement. Nothing in this Agreement shall be deemed to restrict the
ability of an Investor to transfer Shares in registered open market
transactions.
13. Amendment. This Agreement may be amended only upon the agreement of (i) the
Company, (ii) a majority-in-interest of the Investors voting on an as-converted
basis (which majority-in-interest shall include the agreement of vSpring), and
(iii) all of the Existing Shareholders executing this Agreement.
14. Counterparts. This Agreement may be signed in two or more counterparts, each
of which shall be deemed to be an original, fully executed agreement.
15. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. The parties
hereto irrevocably consent to the jurisdiction of the United States federal
courts and state courts located in the City of Albuquerque in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The parties hereto irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The parties hereto further
agree that service of process upon the parties hereto mailed by the first class
mail shall be deemed in every respect effective service of process upon such
party in any suit or proceeding arising hereunder. Nothing herein shall affect
either party's right to serve process in any other manner permitted by law. The
parties hereto agree that a final non appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit or such judgment or in any other lawful manner.
16. Attorneys' Fees. In any legal proceeding arising out of this Agreement,
including with respect to any instrument, document or agreement made under or in
connection with this Agreement, the prevailing party shall be entitled to
recover its costs and actual attorneys' fees. As used in this Agreement, "actual
attorneys' fees" shall mean the full and actual cost of any legal services
actually performed in connection with the matters involved, calculated on the
basis of the usual hourly fees charged by the attorneys performing such
services.
17. Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part. Further, if
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable as written, such court may interpret,
construe, rewrite or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable consistent with the intent of the
parties hereto.
IN WITNESS WHEREOF, the undersigned have caused this agreement to be
signed on the date first written above.
COMPANY:
PROTALEX, INC., a New Mexico
corporation
By: Xxxxxx Xxxx
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Xxxxxx Xxxx,
President and Chief Executive Officer
EXISTING SHAREHOLDERS:
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[Signature]
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[Print Name]
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[Title (if shareholder not individual)]
INVESTORS:
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[Signature]
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[Print Name]
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[Title (if shareholder not individual)]
[COUNTERPART SIGNATURE PAGE TO
SHAREHOLDER AGREEMENT]
CONSENT OF SPOUSE
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I acknowledge that I have read the foregoing Shareholder Agreement and
that I know its contents. I am aware that by its provisions shares in which I
have or may have an interest must be voted to assure that the Investor Designee
is elected as a member of the Company's Board of Directors. I further
acknowledge that the transfer of such shares is restricted by the Agreement. I
hereby agree that those shares and my interest in them, if any, are subject to
the provisions of the Agreement and that I will take no action at any time to
hinder operation of, or violate, the Agreement. I understand that the parties to
the foregoing Agreement relied on my promise herein when entering into such
Agreement.
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(Signature)
EXHIBIT A
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1. Xxxx Xxxx
2. Xxxxxx Xxxx
3. Xxxxx X. Xxxxxxxxx, Esq.
4. Xxxxxx X. Xxxxxxxxx, M.D.
5. Xxxxxx X. Xxxx
6. Xxxx Xxxxxxx
EXHIBIT B
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1. Xxxx Xxxx
2. Xxxxxx Xxxx
3. Xxxxx X. Xxxxxxxxx, Esq.
4. Xxxxxx X. Xxxxxxxxx, M.D.
5. Xxxxxx X. Xxxx
6. Xxxx Xxxxxxx
EXHIBIT C
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IRREVOCABLE PROXY
The undersigned Shareholder (the "Shareholder") of Protalex, Inc., a New Mexico
corporation ("Protalex"), hereby irrevocably (to the fullest extent permitted by
law), as of September 18, 2003, appoints each of Dr. Xxxxxx Xxxxx and Xxxx
Xxxxxxxx, of vSpring SBIC, L.P. ("vSpring"), as the sole and exclusive attorneys
and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
Shares (as defined in the Shareholder Agreement, defined below) that now are or
hereafter may be beneficially owned by the undersigned, in accordance with the
terms of this Proxy. The Shares beneficially owned by Shareholder as of the date
of this Proxy are listed on the final page of this Proxy, along with the
number(s) of the stock certificate(s) which represent such Shares. Upon
Shareholder's execution of this Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and Shareholder agrees
not to grant any subsequent proxies with respect to the Shares until after the
Expiration Date (as defined below).
Notwithstanding the limitations set forth in Article I Section 6 of the
Company's Bylaws, this Proxy is irrevocable (to the fullest extent permitted by
law), is coupled with an interest and is granted pursuant to that certain
Shareholder Agreement of even date herewith (the "Shareholder Agreement") by and
among Protalex, the Investors (defined therein), the Existing Shareholders
(defined therein), including the undersigned Shareholder of Protalex, and is
granted in consideration of the Investors and Protalex entering into that
certain Securities Purchase Agreement of even date herewith (as it may hereafter
be amended from time to time in accordance with the provisions thereof, the
"Purchase Agreement") by and among Protalex and the Buyers (defined therein). As
used in this Proxy, the term "Expiration Date" shall be as defined in the
Shareholder Agreement.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by Shareholder, at any time prior to the Expiration Date, to act
as Shareholder's attorney and proxy to vote all of the Shares, and to exercise
all voting, consent and similar rights of the undersigned with respect to all of
the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual or special meeting of stockholders of Protalex
(and at every adjournment or postponement thereof), and in every written consent
in lieu of such meeting:
a. to fix and maintain the number of directors at seven (7);
b. with respect to one (1) member of the Board of Directors, to cause and
maintain the election of (1) candidate designated by vSpring, who shall
initially be Dr. Xxxxxx Xxxxx.
The attorneys and proxies named above may not exercise this Proxy on any other
matter except as provided in clauses (a) and (b) above. Shareholder may vote the
Shares on all other matters. Any obligation of Shareholder hereunder shall be
binding upon the successors and assigns of Shareholder.
This Proxy shall terminate and be of no further force and effect, automatically
upon the Expiration Date.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Shareholder has caused this Irrevocable Proxy to be duly
executed as of the day and year first above written.
SHAREHOLDER:
Signature:
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Name:
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Address:
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Facsimile No.:
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Shares beneficially owned:
Protalex common shares
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Protalex common shares
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issuable upon exercise
of outstanding options
or warrants
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
SCHEDULE I
1. vSpring SBIC, L.P.
2. Integral Capital Partners VI, L.P.
3. SF Capital
