EXHIBIT 5
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT (this "Agreement"), dated as of February __,
2000, by and among BIOSOURCE INTERNATIONAL, INC., a corporation organized under
the laws of the State of Delaware (the "Company"), and GENSTAR CAPITAL PARTNERS
II, L.P., Delaware limited partnership, and STARGEN II LLC, a Delaware limited
liability company (each, an "Investor" and collectively, the "Investors").
R E C I T A L S
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A. The Company and the Investors have entered into a Securities Purchase
Agreement dated as of January 10, 2000 (the "Purchase Agreement;" capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement). In connection with the Purchase
Agreement, the Company has agreed, upon the terms and subject to the conditions
contained therein, to issue and sell to the Investors an aggregate of 371,300
shares of the Company's Series B Convertible Preferred Stock, par value $0.001
per share (the "Series B Shares") and warrants to purchase an aggregate of
1,287,000 shares of the Company's Common Stock, par value $.001 per share (the
"Warrants").
B. In connection with the transactions contemplated by the Purchase
Agreement, the Company has agreed to provide to the Investors certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the
following meanings:
(a) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(b) "Registrable Securities" means the shares of Common Stock of the
Company issued or issuable to the Investors upon conversion of the Series B
Shares or upon exercise of the Warrants and any shares of capital stock issued
or issuable, from time to time (with any adjustments), as a distribution on or
in exchange for or otherwise with respect to the foregoing.
(c) "Registration Statement" means one or more registration statements
of the Company under the Securities Act registering all or a portion of the
Registrable Securities.
2. REGISTRATION.
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(a) Requested Registration.
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(i) Request for Registration. If the Company shall receive from
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any Investor or Investors holding not less than 50% of the Registrable
Securities then outstanding, at any time, a written request that the Company
effect any registration with respect to all or a part of the Registrable
Securities, the Company will, as soon as reasonably practicable, use its
reasonable best efforts to effect such registration (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities as
are specified in such request; provided that the Company shall not be obligated
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to effect, or take any action to effect, any such registration pursuant to this
Section 2(a):
A. after the Company has effected three (3) such
registrations pursuant to this Section 2(a) requested by the Investors, and, in
each case, such registrations have been declared or ordered effective and have
remained effective for ninety (90) days; provided, however, that the limitation
set forth in this Section 2(a)(i)A is not applicable if, at the time of the
request for registration, the Company qualifies to register the resale of the
Registrable Securities in accordance with the request on a Form S-3;
B. if at the time of any request to register Registrable
Securities, the Company is engaged or intends to engage in an acquisition,
financing or other material transaction which, in the good faith determination
of the Board of Directors of the Company, would be adversely affected by the
requested registration to the material detriment of the Company, or the Board of
Directors of the Company determines in good faith that the registration would
require the disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential, and that the Company is not
otherwise required by applicable securities laws or regulations to disclose, in
which event, the Company may, at its option, direct that such request be delayed
for a period not in excess of 120 days from the date of the determination by the
Board of Directors, as the case may be; provided, however, that the Company may
not exercise this deferral right more than once in any 12-
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month period.
Subject to Section 2(a)(ii), a Registration Statement filed pursuant
to this Section 2(a)(i) may include other securities, other than Registrable
Securities, of the Company which are held by the other stockholders ("Other
Stockholders") of the Company. The Company shall prepare and file with the SEC,
as soon as practicable, the applicable Registration Statement required by
Section 2(a) and shall use reasonable best efforts to cause such Registration
Statement to become effective as soon as practicable after such filing. The
Company shall keep such Registration Statement effective pursuant to Rule 415
until the earliest of (i) one hundred and eighty (180) days from the date the
applicable Registration Statement is declared effective by the SEC, (ii) the
date at which all Registrable Securities included in such Registration Statement
have been sold by the Investors or (iii) the date on which all of the
Registrable Securities may (in the reasonable opinion of counsel to the Company)
be immediately sold to the public without registration or restriction pursuant
to Rule 144(k) under the Securities Act (the "Registration Period").
(ii) Underwriting. If the Investors intend to distribute the
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Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2(i)(a). If securities held by Other Stockholders are requested by such
Other Stockholders to be included in any registration pursuant to this Section
2, the Company shall condition such inclusion on their acceptance of the further
applicable provisions of this Section 2. The Investors and the Company shall
(together with all Other Stockholders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Company and reasonably acceptable to such Investor;
provided, however, that an Investor shall not be required to make any
representations, warranties or indemnities except as they relate to such
Investor's ownership of securities and authority to enter into the underwriting
agreement and to such Investor's intended method of distribution, and the
liability of such Investor shall be limited to an amount equal to the net
proceeds from the offering received by such Investor. Notwithstanding any other
provision of this Section 2(a), if the representative advises the Investors in
writing that marketing factors (including, without limitation, pricing
considerations) require a limitation on the number of shares to be underwritten,
the securities of the Company held by Other Stockholders shall be excluded from
such registration to the extent so required by such limitation. If, after the
exclusion of such shares, further reductions are still required, the securities
proposed to be sold by the Company shall be excluded from such registration to
the extent so required by such limitation. If, after the exclusion of such
shares, further reductions are still required, the Registrable Securities
proposed to be sold by the Investors shall be excluded from such registration to
the extent so required by such limitation, provided, however, that the number of
Registrable Securities to be included in the offering by the Investors shall not
be reduced unless all other securities are excluded entirely from the offering.
No Registrable Securities or any other securities excluded from the
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underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Investors. The securities so withdrawn
shall also be withdrawn from registration.
(iii) Shares; Warrants. The Investors may elect to sell the
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Series B Shares or Warrants to the underwriters and have the underwriters
convert the Series B Shares into the Conversion Shares and sell such Conversion
Shares or exercise the Warrants for the Warrant Shares and sell such Warrant
Shares.
(b) Company Registration.
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(i) If the Company shall determine to register any of its
equity securities either for its own account or any Other Stockholders (a
"Company Registration"), other than a registration relating solely to employee
benefit plans, or a registration relating solely to a SEC Rule 145 transaction,
or a registration on any registration form which does not permit secondary sales
or does not include substantially the same information as would be required to
be included in a registration statement covering the sale of Registrable
Securities, the Company will:
(A) deliver to the Investors written notice thereof at
least thirty (30) days prior to the filing of the registration statement
relating to such Company Registration; and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made by Investor within ten (10) days after receipt of the written
notice from the Company described in clause (A) above, except as set forth in
Section 2(b)(ii) below. The Company may terminate, in its sole and absolute
discretion, any registration described in this Section 2(b) at any time prior to
the effectiveness of the applicable registration statement. Upon such
termination, the Company's obligations under this Section 2(b) with respect to
such terminated registration shall terminate.
(ii) Underwriting. If the Company Registration of which the
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Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Investors as a part of the written
notice given pursuant to Section 2(b)(i)(A). In such event, the right of the
Investors to registration pursuant to this Section 2(b) shall be conditioned
upon the Investors' participation in such underwriting and the inclusion of the
Investors' Registrable Securities in the underwriting to the extent provided
herein. The Investors shall (together with the Company and the Other
Stockholders distributing their securities through such underwriting) enter into
an underwriting agreement in customary form
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with the representative of the underwriter or underwriters selected for
underwriting by the Company; provided, however, that an Investor shall not be
required to make any representations, warranties or indemnities except as they
relate to such Investor's ownership of securities and authority to enter into
the underwriting agreement and to such Investor's intended method of
distribution, and the liability of such Investor shall be limited to an amount
equal to the net proceeds from the offering received by such Investor.
Notwithstanding any other provision of this Section 2(b), if the representative
determines that marketing factors require a limitation on the number of shares
to be underwritten, the representative may limit or eliminate the number of
Registrable Securities to be included in the registration and underwriting to
the extent so required by such limitation; provided, however, that the number of
Registrable Securities to be included in the offering by the Investors shall not
be reduced unless all securities to be included in the offering by Other
Stockholders are also reduced, in which instance the number of Registrable
Securities to be included in the offering by the Investors and the number of
securities to be included in the offering by Other Stockholders shall be
allocated among the Investors and the Other Stockholders in proportion (or as
nearly as practicable) to the amount of securities sought to be included in the
offering by each Investor and each Other Stockholder, as the case may be.
(iii) Number and Transferability. Each Investor shall be
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entitled to have its Registrable Securities included in an unlimited number of
registrations pursuant to this Section 2(b).
(iv) Shares; Warrants. The Investors may elect to sell
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the Series B Shares or Warrants to the underwriters and have the underwriters
convert the Series B Shares into the Conversion Shares and sell such Conversion
Shares or exercise the Warrants for the Warrant Shares and sell such Warrant
Shares.
(c) Form S-3 Registration. In case the Company shall receive
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from any Investor or Investors holding not less than fifty percent (50%) of the
Registrable Securities then outstanding a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Investor or Investors, the Company will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Investors; and
(ii) 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
Investor's or Investors' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Investor or Investors joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; provided,
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however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 2(c): (i) if
Form S-3 is not available for such offering by the Investors; (ii) if the
Company shall furnish to the Investors a certificate signed by the President of
Company stating that in the good faith judgment of the Board of Directors of the
Company that the registration would require the disclosure of material
information that the Company has a bona fide business purpose for preserving as
confidential, and that the Company is not otherwise required by applicable
securities laws or regulations to disclose, 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 120 days after receipt of the request of the Investor or
Investors under this Section 2(c); provided, however, that the Company shall not
utilize this right more than once in any twelve month period; (iii) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form S-3 for the Investors
pursuant to this Section 2(c); (iv) 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; or (v) during the period ending one hundred eighty (180) days after
the effective date of a registration statement subject to Section 2(b).
(iii) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Investors. Registrations effected pursuant to this Section 2(c) shall not be
counted as demands for registration or registrations effected pursuant to
Sections 2(a).
3. OBLIGATIONS OF THE COMPANY.
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In connection with each registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein and all documents
incorporated by reference therein) filed pursuant to this Agreement (i) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. The financial statements of the Company included in the
Registration Statement or incorporated by reference therein shall comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC applicable with respect thereto.
Such financial statements shall be prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not
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include footnotes or may be condensed or summary statements) and shall fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to immaterial year-end
adjustments).
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the Investor as set
forth in the Registration Statement. Notwithstanding the foregoing, the
Company's obligations hereunder to file a Registration Statement and to keep a
Registration Statement in effect under the Securities Act shall be suspended if
the Company is engaged or intends to engage in an acquisition, financing or
other material transaction which, in the good faith determination of the Board
of Directors of the Company, would be adversely affected by the requested
registration to the material detriment of the Company, or the Board of Directors
of the Company determines in good faith that the registration would require the
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential, and that the Company is not otherwise
required by applicable securities laws or regulations to disclose, in which
event, the Company may, at its option, direct that such request be delayed for a
period not in excess of 120 days from the date of the determination by the Board
of Directors, as the case may be; provided, however, that the Company may not
exercise this deferral right more than once in any 12-month period..
(c) The Company shall furnish to the Investor (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, such reasonable number of copies of the Registration Statement and
any amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto as the Investors may reasonably request. In the
case of the Registration Statement referred to in Section 2(a), the Company
shall furnish to the Investors a copy of each letter written by or on behalf of
the Company to the SEC or the staff of the SEC (including, without limitation,
any request to accelerate the effectiveness of any Registration Statement or
amendment thereto), and each item of correspondence from the SEC or the staff of
the SEC, in each case relating to such Registration Statement (other than any
portion, if any, thereof which contains information for which the Company has
sought confidential treatment), (ii) on the date of effectiveness of the
Registration Statement or any amendment thereto, a notice stating that the
Registration Statement or amendment has been declared effective, and (iii) such
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
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(d) The Company shall use all commercially reasonable efforts to (i)
register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as such Investor reasonably requests (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its
certificate of incorporation or bylaws, which in each case the Board of
Directors of the Company determines in good faith to be contrary to the best
interests of the Company and its stockholders.
(e) As promptly as practicable after becoming aware of such event, the
Company shall notify the Investors by telephone or facsimile of the happening of
any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and use reasonable best efforts promptly to prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission and deliver such number of copies of such supplement or amendment to
the Investors as the Investors may reasonably request.
(f) The Company shall use reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable date (including in each
case by amending or supplementing such Registration Statement) and to notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to such Investor as the Investor may reasonably request).
(g) The Company shall permit a single firm of counsel designated by
the Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC.
(h) The Company shall make available for inspection by (i) any
underwriter participating in any disposition pursuant to a Registration
Statement and (ii) one firm of attorneys
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retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence.
(i) The Company shall use reasonable best efforts to promptly either
(i) secure the designation and quotation, of all the Registrable Securities
covered by a Registration Statement on the Nasdaq National Market or the Nasdaq
Small Cap Market, or (ii) cause all the Registrable Securities covered by the
Registration Statement to be listed on the NYSE or the AMEX or another national
securities exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange.
(j) The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
(k) The Company shall hold in confidence and not make any disclosure
of information provided to the Company concerning the Investors unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) the Investors
consent to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning the
Investors is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Investors prior
to making such disclosure, and allow the Investors, at their expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
(l) The Company shall cooperate with the Investors and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or the Investors may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the transfer agent
for the Registrable
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Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) (1) an opinion of counsel for the
Company, dated the effective date of the Registration Statement, and (2)
"comfort" letters signed by the Company's independent public accountants who
have examined and reported on the Company's financial statements included in the
Registration Statement, to the extent permitted by the standards of the AICPA or
other relevant authorities, covering substantially the same matters with respect
to the registration statement (and the prospectus included therein) and (in the
case of the accountants' "comfort" letters, with respect to events subsequent to
the date of the financial statements), in each case as are customarily covered
in opinions of issuers' counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities.
(m) The Company shall comply with applicable federal securities laws
and regulations related to a Registration Statement and offering and sale of
securities.
(n) The Company shall use its commercially reasonable efforts to
qualify for registration on Form S-3 or any comparable or successor form or
forms and remain so qualified following the Closing Date.
(o) The Company shall take all such other actions as any Investor or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
4. OBLIGATIONS OF THE INVESTOR.
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In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete any registration pursuant to this Agreement with respect to
the Registrable Securities that each Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five (5) business days prior to the
first anticipated filing date of the Registration Statement, the Company shall
notify the Investors of any information the Company requires from them.
(b) Each Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder.
(c) If the Investors determine to engage the services of an
underwriter, the
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Investors agree to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriter(s) of such
offering and the Company and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of the Registrable
Securities, provided, however, that an Investor shall not be required to make
any representations, warranties or indemnities except as they relate to such
Investor's ownership of securities and authority to enter into the underwriting
agreement and to such Investor's intended method of distribution, and the
liability of such Investor shall be limited to an amount equal to the net
proceeds from the offering received by such Investor.
(d) The Investors will not participate in any underwritten
distribution hereunder unless they (i) agree to sell such the Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, provided, however, that an Investor
shall not be required to make any representations, warranties or indemnities
except as they relate to such Investor's ownership of securities and authority
to enter into the underwriting agreement and to such Investor's intended method
of distribution, and the liability of such Investor shall be limited to an
amount equal to the net proceeds from the offering received by such Investor,
(ii) complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements, provided, however, that an Investor shall not
be required to make any representations, warranties or indemnities except as
they relate to the Investor's ownership of securities and authority to enter
into the underwriting agreement and to such Investor's intended method of
distribution, and the liability of such Investor shall be limited to an amount
equal to the net proceeds from the offering received by such Investor, and (iii)
agree to pay all brokers fees, underwriting discounts and commissions and other
selling expenses applicable to the Registrable Securities.
5. EXPENSES OF REGISTRATION.
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All expenses incurred by the Company in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3 above, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees and the fees and disbursements of counsel for the Company, and
the reasonable fees and disbursements of one counsel for the selling Investors
selected by them, shall be borne by the Company. All brokers' fees,
underwriting discounts and commissions and similar selling expenses applicable
to the Registrable Securities shall be borne by the Investors.
6. INDEMNIFICATION.
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In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify, hold
harmless
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and defend (i) each Investor, and (ii) the directors, officers, partners,
members, employees and agents of each Investor and each person who controls such
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any
(each, an "Indemnified Person"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any of
them may become subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement, including any preliminary prospectus or final prospectus
contained therein and any amendments or supplements thereto or the omission or
alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, 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 thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the restrictions
set forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse each Investor and each other Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any preliminary prospectus, shall not inure to the benefit of any
Indemnified Person if the untrue statement or omission of material fact
contained in such preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor
is participating, to the extent permitted by law, each selling Investor agrees
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the
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Company, each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claim to
which any of them may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such Claim arises out of or is 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 to the Company by the Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) the Investor will
reimburse any legal or other expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Investor, and provided further, that the obligations of an
Investor hereunder shall be limited to an amount equal to the net proceeds to
such Investor from the Registrable Securities sold under such Registration
Statement, prospectus, offering circular or other document contemplated herein.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
any transfer of the Registrable Securities by the Investor pursuant to Section
9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact by the Investor contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented, and the Indemnified Party failed to utilize
such corrected prospectus.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
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Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by the
Investor, if the Investor is entitled to indemnification hereunder, or by the
Company, if the Company is entitled to indemnification hereunder, as applicable.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
actually prejudiced in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
------------------------------
With a view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(a) file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such
requirements and the filing and availability of such reports and other
documents as is required for the applicable provisions of Rule 144; and
(b) furnish to any Investor so long as such Investor owns Registrable
Securities, promptly upon written request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act and that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the
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Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
---------------------------------
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable, by any Investor to any transferee of all or any portion of the
Registrable Securities if: (i) such Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Purchase Agreement, and
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained therein.
10. BOARD REPRESENTATION.
--------------------
So long as the Investors beneficially own (as defined in Rule 13d-3 under
the Exchange Act) (A) not less than 750,000 shares of Common Stock, the
Investors shall be entitled to designate two (2) persons reasonably acceptable
to the Company to serve on the Board of Directors of the Company, and (B) not
less than 495,000 shares of Common Stock, the Investors shall be entitled to
designate one (1) person reasonably acceptable to the Company to serve on the
Board of Directors of the Company (the "Designated Directors"), and the Company
shall use its best efforts (including the inclusion of such persons in the
Company's proxy statement as director nominees) to cause the Designated
Directors to be elected as directors of the Company. The Company shall
immediately expand the size of its Board of Directors to seven (7) members and
appoint the Designated Directors to fill the vacancies created thereby. For so
long as the Investors are entitled to designate directors pursuant to this
Section 10, the Company shall procure and maintain directors' and officers'
indemnification insurance covering the Designated Directors in such amounts and
with such deductibles and covering such risks as are customary for similarly
situated businesses. The Company shall indemnify each Designated Director to
the same extent that it indemnifies its other directors pursuant to its
organizational documents and applicable law. The Company shall reimburse each
Designated Director for all reasonable costs and expenses incurred in connection
with such Directors' attendance at meetings of the Board of Directors or any
committee upon which they, or any of them, may serve.
11. RIGHT OF FIRST NEGOTIATION FOR ADDITIONAL SECURITIES.
----------------------------------------------------
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So long as the Investors hold not less than 50% of the aggregate Series B
Shares and Warrants they purchased pursuant to the Purchase Agreement (or an
equivalent amount of Common Stock issued upon conversion or exercise thereof),
each time the Company proposes to offer any shares of, or securities convertible
into or exercisable for any shares of, any class of its capital stock
("Additional Securities"), the Company will make an offering of such Additional
Securities to the Investors in accordance with the following provisions:
(a) The Company shall deliver a written notice (a "First Negotiation
Notice") to the Investors, which notice shall set forth all material terms and
conditions, including, without limitation, the number of shares and the purchase
price, on which the Company desires to sell the Additional Securities.
(b) The Investors shall, for a period of thirty (30) days following
the receipt of the First Negotiation Notice by the Investors (the "First
Negotiation Period"), have the exclusive right to negotiate with the Company
with respect to the purchase and sale of the Additional Securities. All
negotiations between the Company and any Investor shall be conducted in good
faith.
(c) If, during the First Negotiation Period, the Company and one or
more of the Investors agree to enter into an agreement for the purchase and sale
of the Additional Securities, then the Company may not offer the Additional
Securities to any other Person and the purchase and sale of the Additional
Securities shall occur on the terms and conditions on which the Company and the
Investors agree. If more than one Investor agrees to purchase the Additional
Securities on the terms set forth in the First Negotiation Notice, each Investor
so electing shall be entitled to purchase its pro rata share of the Additional
Securities.
(d) If the Company and one or more of the Investors do not agree to
enter into an agreement for the purchase and sale of the Additional Securities
on or before the expiration of the First Negotiation Period, then the Company
may attempt to sell the Additional Securities to any other person or entity for
a period of one hundred and twenty (120) days following the expiration of the
First Negotiation Period.
(e) Additional Securities shall not include any securities: (i)
subject to a Company Registration (as defined in Section 2(b)(i), above), (ii)
relating to a SEC Rule 145 transaction, (iii) issued in connection with the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or a dividend or other distribution payable in additional shares of Common Stock
or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly, additional shares of Common Stock, (iv)
issued or issueable to employees, consultants or directors of the Company
directly or pursuant to a stock option plan or restricted stock plan approved by
the Board of Directors of the Company, (v) issued pursuant to the conversion or
exercise of convertible or exercisable securities outstanding or deemed
outstanding on the date
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hereof, or (vi) issued or issuable in connection with the acquisition, merger,
consolidation, or other business combination by or of the Company with, by, or
of any person.
12. PRE-EMPTIVE RIGHTS TO ACQUIRE ADDITIONAL SECURITIES
---------------------------------------------------
So long as the Investors hold not less than 50% of the aggregate Series B
Shares and Warrants they purchased pursuant to the Purchase Agreement (or an
equivalent amount of Common Stock issued upon conversion or exercise thereof),
each time the Company proposes to offer any Additional Securities, the Company
will, in addition to the right of first negotiation required under Section 11,
----------
above, make an offering of such Additional Securities to the Investors in
accordance with the following provisions:
(a) At least thirty (30) days prior to consummating the offer of
Additional Securities, the Company shall deliver a notice (the "Transfer
Notice") to the Investors at the addresses set forth in the Purchase Agreement
stating: (i) its bona fide intention to offer such Additional Securities, (ii)
the amount of such Additional Securities to be offered, (iii) the price and
terms, if any, upon which it proposes to offer such Additional Securities, and
(iv) an offer to the Investors to purchase the Additional Securities on the same
terms and conditions as contained in the Transfer Notice.
(b) The Investor may accept the offer to purchase such Additional
Securities by giving written notice of acceptance to the Company within fifteen
(15) days of receipt of the Transfer Notice, and the transfer of the Additional
Securities shall thereafter be effected between the Company and the Investors
upon all of the applicable terms and conditions set forth in the Transfer
Notice, or such other or additional terms as the Company and the Investors shall
agree. In the event that the Investors do not accept the offer to purchase such
Additional Securities by giving written notice of acceptance to the Company
within fifteen (15) days of receipt of the Transfer Notice, and/or consummate
the sale of the Additional Securities within sixty (60) days of its acceptance
of the offer contained in the Transfer Notice, the Company shall be free to sell
such Additional Securities on substantially the same terms as those set forth in
the Transfer Notice.
13 AMENDMENT OF REGISTRATION RIGHTS.
--------------------------------
Provisions of this Agreement may be amended and the observance thereof may
be waived solely upon the written consent of the Company and the Investors
holding a majority of the Shares and Warrants (or an equivalent amount of Common
Stock issued upon conversion or exercise thereof).
14. MISCELLANEOUS.
-------------
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the
-17-
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be as set forth in the Purchase Agreement.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) 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. Each of the Company and the Investors
irrevocably consents to the jurisdiction of the United States federal courts and
state courts located in the State of California in any suit or proceeding based
on or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. Each of
the Company and the Investors irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Each of the Company and
the Investors further agrees that service of process upon the Company mailed by
first class mail to the address set forth in the Purchase Agreement shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. Nothing herein shall affect either the Company's or
any Investor's right to serve process in any other manner permitted by law.
(e) This Agreement and the Purchase Agreement (including all schedules
and exhibits thereto) constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the Purchase Agreement
supersede all prior agreements and understandings among the parties hereto and
thereto with respect to the subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This
-18-
Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(j) For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of California are authorized or obligated by law, regulation or
executive order to close.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
BIOSOURCE INTERNATIONAL, INC.
a Delaware corporation
By:_________________________________
Xxxxx X. Xxxxxxxxxxx
President and Chief Executive Officer
GENSTAR CAPITAL PARTNERS II, L.P.
By: Genstar Capital LLC
Its General Partner
By: ___________________________
Name:
Title:
STARGEN LLC II
By:______________________________
Its:
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