NOTICE OF INDEMNIFICATION: THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS IN
SECTION 8, NOTICE OF WHICH IS HEREBY GIVEN.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 12, 1997, by
Integrated Orthopaedics, Inc., a Texas corporation (the "Company"), for the
benefit of FW Integrated Orthopaedics Investors, L.P., a Texas limited
partnership, and FW Integrated Orthopaedics Investors II, L.P., a Texas limited
Partnership (each a "Purchaser" and collectively, the "Purchasers"), and their
Permitted Transferees.
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers (and for limited purposes,
Chartwell Capital Investors, L.P.) have entered into a Securities Purchase
Agreement, dated as of December 12, 1997 (the "Securities Purchase Agreement"),
pursuant to which the Purchasers have agreed to purchase, and the Company has
agreed to sell, 250,000 shares of Series B Convertible, Non-Redeemable Preferred
Stock, par value $.01 per share, of the Company (the "Series B Preferred") and
contingent warrants ("Warrants" and together with the Series B Preferred, the
"Securities") to acquire shares of common stock, par value $.001 per share, of
the Company ("Common Stock"), all in accordance with the terms and subject to
the conditions set forth in the Securities Purchase Agreement; and
WHEREAS, in order to induce the Purchasers to accept the unregistered
securities of the Company, the Company has agreed to provide registration rights
with respect to the Common Stock issuable upon conversion of the Series B
Preferred and upon exercise of the Warrants and with respect to any other Common
Stock hereafter acquired by the Purchasers.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, the following terms
shall have the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement, including
all amendments, modifications and supplements, and any exhibits or schedules to
any of the foregoing, and shall refer to this Agreement as the same may be in
effect at the time such reference becomes operative.
"Business Day" shall mean any day other than a Saturday, a Sunday, or
other day on which banking institutions in the City of Houston, Texas shall be
permitted or required by law or executive order to be closed.
"Closing Date" shall mean the date on which the Securities shall be
issued by the Company to the Purchasers in accordance with the Securities
Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Form S-3" shall mean such form under the Securities Act as is in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the Commission that permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the Commission.
"Holders" shall mean the Purchasers and each Permitted Transferee.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Permitted Transferee" shall mean a transferee or assignee of
Securities or Registrable Securities, which were transferred or assigned
pursuant to Section 10 hereof.
"Registrable Securities" shall mean (i) shares of Common Stock owned
by a Holder, whether acquired on the date hereof or hereafter acquired, and any
other securities issued or issuable with respect to such Registrable Securities
by way of dividend or stock split or in connection with any combination of
shares of Common Stock, recapitalization, exchange, merger, consolidation or
reorganization and (ii) the Warrants and the Series B Preferred (for purposes of
a Demand Registration (as defined in Section 2)); provided, that any Registrable
Security shall cease to be a Registrable Security when (a) a registration
statement covering such Registrable Security has been declared effective by the
Commission and it has been disposed of pursuant to such effective registration
statement, (b) it is sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met or (c)(i) it has been otherwise transferred, (ii) the
Company has delivered a new certificate or other evidence of ownership for it
not bearing a legend restricting further transfer and (iii) it may be resold
without subsequent registration under the Securities Act.
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"Requesting Holders" shall mean any Holders requesting registration of
its or their Registrable Securities in accordance with the terms of this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
2. Demand Registration.
(a) Request for Registration. (i) Subject to Section 5 hereof, at any
time following the Closing Date, the Holders holding a majority of the then
outstanding Registrable Securities (on an "as converted" and "as exercised"
basis) may make a written request of the Company (a "Demand Request") for
registration under the Securities Act (a "Demand Registration") of all or part
of its or their Registrable Securities.
The Demand Request shall specify the number of shares of Registrable
Securities proposed to be sold by the Requesting Holders making such Demand
Request. Subject to Section 4(b), the Company shall file the Demand
Registration as soon as practicable and in any event within 60 days after
receiving the Demand Request (the "Required Filing Date") and shall use its best
efforts to cause the same to be declared effective by the Commission as promptly
as practicable after such filing; provided, that the Company need effect only
three Demand Registrations pursuant to this Section 2.
(b) Effective Registration. A registration shall not count as a
Demand Registration until it has been declared effective by the Commission
(unless the Requesting Holders withdraw all their Registrable Securities, in
which case such demand shall count as a Demand Registration unless (i) the
Requesting Holders pay all registration expenses (excluding the cost of Company
personnel) in connection with such withdrawn registration, (ii) the Holders have
learned of a material adverse change in the condition, business or prospects of
the Company not known to the Holders at the time of their Demand Request or
(iii) the amount of Registrable Securities proposed to be included in such
Demand Registration by the Requesting Holders is reduced by more than 50%
pursuant to Section 2(d)); provided that if, after the registration has become
effective, an offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court, such registration shall
be deemed not to have been declared effective.
(c) Selection of Underwriters. The offering of Registrable Securities
pursuant to a Demand Registration shall be in the form of a "firm commitment"
underwritten offering (or a "best efforts" underwritten offering upon the
written consent of the Requesting Holders). The Requesting Holders holding a
majority of the shares of Registrable Securities to be registered in a Demand
Registration shall select the managing underwriter or underwriters
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to be used in connection with the offering; provided that such selections shall
be subject to the reasonable consent of the Company.
(d) Priority on Demand Registrations. No securities to be sold for
the account of any person (including the Company) other than a Requesting Holder
shall be included in a Demand Registration unless the managing underwriter or
underwriters shall advise the Requesting Holders in writing that the inclusion
of such securities will not materially and adversely affect the price or success
of the offering (a "Material Adverse Effect"). Furthermore, in the event the
managing underwriter or underwriters shall advise the Requesting Holders that
even after exclusion of all securities of other persons (including the Company)
pursuant to the immediately preceding sentence, the amount of Registrable
Securities proposed to be included in such Demand Registration by Requesting
Holders is sufficiently large to cause a Material Adverse Effect, the
Registrable Securities of Requesting Holders to be included in such Demand
Registration shall be allocated pro rata among the Requesting Holders on the
basis of the number of shares of Common Stock requested to be included in such
registration by each such Requesting Holder.
(e) Rights of Non-Requesting Holders. Upon receipt of any Demand
Request, the Company shall promptly (but in any event within ten Business Days)
give written notice of such proposed Demand Registration to all other Holders
who shall have the right, exercisable by written notice to the Company within 20
Business Days of their receipt of the Company's notice, to elect to include in
such Demand Registration such portion of their Registrable Securities as they
may request on the same terms as the Requesting Holders who delivered the
initial Demand Request. All Holders requesting to have their Registrable
Securities included in a Demand Registration in accordance with the preceding
sentence shall be considered "Requesting Holders" for purposes of this
Agreement.
3. Piggy-Back Registration.
(a) Notice by Company. Subject to the provisions of this Agreement,
if the Company at any time proposes to file on its behalf and/or on behalf of
any of its equity holders a registration statement under the Securities Act on
any form (other than a registration statement (i) pursuant to Sections 2 or 4 or
(ii) on Form S-8 or any successor form for securities to be offered to employees
of the Company pursuant to any employee benefit plan), the Company will give
written notice to all Holders, at least 30 days before the initial filing with
the Commission of such registration statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
the Company. Subject to this Agreement, the notice shall offer to include in
such filing the aggregate amount of Registrable Securities as such Holders may
request.
(b) Procedure. Each Holder desiring to have such Registrable
Securities registered under this Section 3 shall so advise the Company, in
writing, within 20 Business
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Days after the date of receipt of such offer from the Company, setting forth the
amount of Registrable Securities for which registration is requested by such
Holder. The Company shall thereupon include in such filing the amount of such
Registrable Securities for which registration is so requested, subject to the
next two sentences, and shall use best efforts to effect registration under the
Securities Act of such Registrable Securities. If the managing underwriter of a
proposed public offering shall advise the Company in writing that, in its
opinion, including all the Registrable Securities requested to be included in
such registration would cause a Material Adverse Effect, then in such event the
securities to be included in such offering shall be allocated first to the
Company or the holder initiating such request for registration, as appropriate,
and then, to the extent that any additional securities can, in the opinion of
such managing underwriter or underwriters, be sold without any such Material
Adverse Effect, pro rata among the Holders of Registrable Securities and other
holders requesting their securities of the Company to be registered pursuant to
similar piggy-back registration rights on the basis of the number of shares of
Registrable Securities requested to be included in such registration of each
Holder and the number of shares of other securities requested to be included in
such registration of each other holder having similar piggy-back registration
rights. If the managing underwriter of a proposed public offering shall advise
the Company in writing that, in its opinion, the distribution of any of the
Registrable Securities requested to be included in the registration concurrently
with the securities being registered by the Company or such other equity holder
would materially and adversely affect the distribution of such securities by the
Company or such other equity holder, then the Holders shall have no right to
have any of their securities included in such registration. The Company may
discontinue registration of any of its securities which are not Registrable
Securities (and, in connection with any piggy-back registration described in
this Section 3, its securities which are Registrable Securities) at any time
prior to the effective date of the registration statement relating thereto.
(c) Unlimited Rights. Each Holder shall be entitled to the
registration rights set forth in this Section 3 for so long as such Holder owns
Registrable Securities, regardless of the number of times such Holder is offered
or has exercised such rights.
4. Shelf Registration.
(a) Request for Registration. At any time following the Closing Date,
the Holders holding a majority of the then outstanding Registrable Securities
(on an "as converted" and "as exercised" basis) may make a written request of
the Company (a "Shelf Request") for registration on Form S-3 (a "Shelf
Registration") of all or part of its or their Registrable Securities; provided,
that the Company is eligible to use Form S-3.
The Shelf Request shall specify the number of shares of Registrable
Securities proposed to be sold by the Requesting Holders making such Shelf
Request. The Company shall file the Shelf Registration as soon as practicable
and in any event within 60 days after
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receiving the Shelf Request and shall use its best efforts to cause the same to
be declared effective by the Commission as promptly as practicable after such
filing. Each Holder shall be entitled to the registration rights set forth in
this Section 4 for so long as such Holder owns Registrable Securities,
regardless of the number of times such Holder is offered or has exercised such
rights.
(b) Selection of Underwriters. If the Requesting Holders holding a
majority of the shares of Registrable Securities to be registered in such Shelf
Registration shall elect to distribute such securities pursuant to an
underwritten offering, such Holders shall select the managing underwriter or
underwrites to be used in connection with the Shelf Registration; provided that
such selections shall be subject to the reasonable consent of the Company. The
Company shall not be obligated to effect an underwritten Shelf Registration
unless the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities, if any, at an aggregate price to the
public greater than $5,000,000.
(c) Priority on Shelf Registrations. No securities to be sold for the
account of any person (including the Company) other than a Requesting Holder
shall be included in a Shelf Registration unless the managing underwriter or
underwriters shall advise the Requesting Holders in writing that the inclusion
of such securities will not have a Material Adverse Effect. Furthermore, in the
event the managing underwriter or underwriters shall advise the Requesting
Holders that even after exclusion of all securities of other persons pursuant to
the immediately preceding sentence, the amount of Registrable Securities
proposed to be included in such Shelf Registration by Requesting Holders is
sufficiently large to cause a Material Adverse Effect, the Registrable
Securities of Requesting Holders to be included in such Shelf Registration shall
be allocated pro rata among the Requesting Holders on the basis of the number of
shares of Common Stock requested to be included in such registration by each
such Requesting Holder. For purposes of this Section 4(c), in the event that a
Shelf Registration is not underwritten, such determinations relating to the
inclusion of securities in such Shelf Registration shall be made in good faith
by the Requesting Holders holding a majority of the shares of Registrable
Securities to be registered in such Shelf Registration.
(d) Rights of Non-Requesting Holders. Upon receipt of any Shelf
Request, the Company shall promptly (but in any event within ten Business Days)
give written notice of such proposed Shelf Registration to all other Holders who
shall have the right, exercisable by written notice to the Company within 20
Business Days of their receipt of the Company's notice, to elect to include in
such Shelf Registration such portion of their Registrable Securities as they may
request on the same terms as the Requesting Holders who delivered the initial
Shelf Request.
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5. Holdback Provisions and Other Limitations.
(a) Restrictions on Public Sale. Each Holder participating in a
registration pursuant to Section 2 agrees not to effect any public sale or
distribution of the class of securities being registered or of any securities
convertible into or exchangeable or exercisable for such securities, during the
14 days prior to, and during the 90 days after, the effective date of a
registration statement filed pursuant hereto except as part of such
registration, if and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering; provided, that all
executive officers and directors of the Company then holding Common Stock (or
securities convertible into or exchangeable or exercisable for Common Stock)
enter into similar agreements.
(b) Deferral of Filing. The Company may defer the filing (but not the
preparation) of a registration statement required by Sections 2 or 4 until a
date not later than 60 days after the Required Filing Date if (i) at the time
the Company receives the Demand Request, the Company or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such registration statement (but would
not be required if such registration statement were not filed), and the Board of
Directors of the Company determines in good faith that such disclosure would be
materially detrimental to the Company and its stockholders, or (ii) the Company
had received, prior to receiving the Demand Request, a separate written demand
request from a different person or group of persons having contractual rights
(whether exercisable alone or in connection with other rights) to require the
Company to file a registration statement (a "preferred request") and is
proceeding with reasonable diligence to comply with the preferred request, or
(iii) prior to receiving the Demand Request, the Board of Directors had formally
determined to effect a registered underwritten public offering of the Company's
equity securities for the Company's account and the Company had taken
substantial steps (including, but not limited to, selecting and entering into a
letter of intent with the managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering. A deferral of the
filing of a registration statement pursuant to this Section 5(b) shall be
lifted, and the requested registration statement shall be filed forthwith, if,
in the case of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the preferred
request is withdrawn or effected, or in the case of a deferral pursuant to
clause (iii) of the preceding sentence, the proposed registration for the
Company's account is abandoned. In order to defer the filing of a registration
statement pursuant to this Section 5(b), the Company shall promptly, upon
determining to seek such deferral, deliver to each Requesting Holder a
certificate signed by an executive officer of the Company stating that the
Company is deferring such filing pursuant to this Section 5(b) and the basis
therefor in reasonable detail; provided, that the Company may not utilize this
right more than [twice] in any 12-month period. Within 20 Business Days after
receiving such certificate, the Holders of a majority of the Registrable
Securities held by the Requesting Holders and for which
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registration was previously requested may withdraw such request by giving notice
to the Company; if withdrawn, the Demand Request or the Shelf Request shall be
deemed not to have been made for all purposes of this Agreement.
6. Registration Procedures.
(a) Action of the Company. If the Company is required by the
provisions of Sections 2, 3 or 4 hereof to use best efforts to effect the
registration of any of its securities under the Securities Act, the Company
shall, as expeditiously as possible:
(1) prepare and file with the Commission a registration
statement with respect to such securities and use best efforts to cause
such registration statement to become and remain effective for a period of
time required for the disposition of such securities by the Holders
thereof, but not to exceed 12 months; provided, that such 12-month period
shall be extended for a period of time equal to the period the Holder(s)
refrain(s) from selling any securities included in such registration at the
request of the Company or an underwriter of such securities;
(2) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all securities covered by
such registration statement until the earlier of such time as all of such
securities have been disposed of in a public offering or the expiration of
12 months;
(3) furnish to such selling Holders such number of copies of a
summary prospectus or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such other
documents, as such selling Holders may reasonably request;
(4) use best efforts to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions within the United States and Puerto Rico as
each Holder of such securities shall request, and do such other reasonable
acts and things as may be required of it to enable such Holder to
consummate the disposition in such jurisdiction of the securities covered
by such registration statement;
(5) furnish, at the request of any Holder requesting
registration of such Registrable Securities pursuant to Sections 2, 3 or 4
hereof, on the date that such Registrable Securities are delivered to the
underwriters for sale pursuant to such registration or, if such Registrable
Securities are not being sold through underwriters,
8
on the date that the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion, dated as of such
date, of the independent counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the
Holders making such request, in a customary form and covering matters of
the type customarily covered in such legal opinions; and (ii) a comfort
letter dated as of such date, from the independent certified public
accountants of the Company addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters, then
to the Holders making such request and, if such accountants refuse to
deliver such letter to such Holders, then to the Company, in a customary
form and covering matters of the type customarily covered by such comfort
letters. Such opinion of counsel shall additionally cover such other legal
matters regarding the registration in respect of which such opinion is
being given as the Holders holding a majority of the Registrable Securities
being so registered may reasonably request. Such letter from the
independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not
more than five Business Days prior to the date of such letter) regarding
the registration in respect of which such letter is being given as the
Holders holding a majority of the Registrable Securities being so
registered may reasonably request;
(6) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
Registrable Securities;
(7) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(8) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but not later than
16 months after the effective date of the registration statement, an
earnings statement covering the period of at least 12 months beginning with
the first full month after the effective date of such registration
statement, which earnings statement shall satisfy the requirements of
Section 11(a) of the Securities Act; and
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(9) cause all Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or automated quotation
system on which similar securities issued by the Company are then listed.
(b) Information to be Provided by Holders. It shall be a condition
precedent to the obligation of the Company to take any action pursuant to this
Agreement in respect of the Registrable Securities that are to be registered at
the request of any Holder of the Registrable Securities that such Holder shall
furnish to the Company such information regarding the securities held by such
Holder and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required in connection with the action taken
by the Company.
7. Expenses. All expenses incurred in complying with this Agreement,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD and the American Stock Exchange),
printing expenses, fees and disbursements of counsel for the Company, fees and
disbursements of one counsel for all selling Holders of Registrable Securities,
expenses of any special audits incident to or required by any such registration
and expenses of complying with the securities or blue sky laws of any
jurisdictions pursuant to Section 6(d), shall be paid by the Company except that
the Company shall not be liable for any discounts or commissions to any
underwriter in respect of the securities sold by such Holder.
8. Indemnification and Contribution.
(a) Indemnification by Company. In the event of any registration of
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company shall indemnify and hold harmless the Holder of such Registrable
Securities, its officers, directors, partners, legal counsel, each other person
(including each underwriter) who participated in the offering of such
Registrable Securities and each other person, if any, who controls such Holder
or such participating person within the meaning of the Securities Act, against
any expenses, losses, claims, damages or liabilities, joint or several, to which
such Holder, officer, director, partner, legal counsel, or any such
participating person or controlling person may become subject under the
Securities Act or any other statute or at common law, insofar as such expenses,
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, (ii) any alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading or
(iii) any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, and
shall reimburse such Holder, officer, director,
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partner, legal counsel or such participating person or controlling person for
any legal or any other expenses reasonably incurred by such Holder, officer,
director, partner, legal counsel or such participating person or controlling
person in connection with investigating and defending or settling any such
expense, loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such registration statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
information furnished in writing to the Company by such Holder. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Holder or such participating person or controlling person, and
shall survive the transfer of such securities by such Holder.
(b) Indemnification by Holders. Each Holder, by acceptance of the
Registrable Securities, agrees to indemnify and hold harmless the Company, its
directors and officers and each other person, if any, who controls the Company
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director or
officer or any such person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information provided in writing to the Company by such Holder and contained in
(or omitted from, as the case may be), on the effective date of, any
registration statement under which securities were registered under the
Securities Act at the request of such Holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto;
provided, however, in no event shall any Holder be liable for an amount in
excess of the net proceeds received from all Registrable Securities offered and
sold by such Holder pursuant to such registration statement.
(c) Contribution. If the indemnification provided for in this Section
8 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action;
provided, however, in no event shall any Holder
11
be required to contribute any amount in excess of the net proceeds received from
all Registrable Securities offered and sold by such Holder pursuant to such
registration statement.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(d) Notice and Defense of Claims. Whenever a claim shall arise for
indemnification under this Section 8, the indemnified party shall promptly
notify the indemnifying party of such claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification resulting from or in connection with a claim or legal proceeding
by a third party, the indemnifying party may, at its sole expense, assume the
defense thereof. If an indemnifying party assumes the defense of any such claim
or legal proceeding, the indemnifying party shall be entitled to select counsel
reasonably acceptable to the indemnified party and take all steps necessary in
the defense thereof; provided, however, that no settlement shall be made without
the prior written consent of the indemnified party, which shall not be
unreasonably withheld (it being understood that the indemnified party may not
withhold consent to any settlement involving only a monetary payment where the
indemnifying party is ready, willing and able to pay such amount); and, provided
further, that the indemnified party may, at its own expense, participate in any
such proceeding with the counsel of its choice. If the indemnifying party does
not assume the defense of any such claim or litigation in accordance with the
terms hereof, the indemnified party may defend against such claim or litigation
in such manner as it may deem appropriate, including, but not limited to,
settling such claim or litigation (after giving notice of the same to the
indemnifying party) on such terms as the indemnified party may deem appropriate,
and the indemnifying party will promptly indemnify the indemnified party in
accordance with the provisions of this Section 8.
9. Public Information. The Company covenants and agrees that for so long
as the Common Stock shall be registered under Section 12(b) or 12(g) of the
Exchange Act or the Company shall be subject to the reporting requirements of
Section 15(d) of the Exchange Act, at any time when any Holder so entitled
desires to make sales of any Registrable Securities in reliance on Rule 144
under the Securities Act either (i) there will be available adequate current
public information with respect to the Company as required by Rule 144, or (ii)
if such information is not available the Company will use its best efforts to
make such information available without delay. Without limiting the foregoing,
the Company covenants and agrees that for so long as the Common Stock shall be
registered under Section 12(b) or 12(g) of the Exchange Act or the Company shall
be subject to the reporting requirements of Section 15(d) of the Exchange Act,
it will timely file with the Commission all reports required to be filed
12
under Sections 13 and 15(d) of the Exchange Act and will promptly furnish to any
Holder so requesting a written statement that the Company has complied with all
such reporting requirements.
10. Transfer or Assignment of Registration Rights. If any person shall
acquire Securities or Registrable Securities from any Holder, in any manner,
whether by operation of law or otherwise, such person shall be entitled to
receive the rights granted to a Holder under this Agreement, including the
rights to cause the Company to register the Registrable Securities; provided
that, (i) the Company is given written notice at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of the transferee or assignee and identifying the securities with respect to
which such rights are being transferred or assigned and (ii) the transferee or
assignee of such rights assumes the obligations of a Holder under this
Agreement.
11. Miscellaneous.
(a) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departure from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of at least a
majority of the Registrable Securities (on an "as converted" and "as exercised"
basis) then outstanding.
(b) Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement will be in writing and (i) delivered
personally, (ii) sent by telefacsimile, (iii) delivered by a nationally
recognized overnight courier service, or (iv) sent by registered or certified
mail, postage prepaid, as follows:
(1) If to any Holder, at its last known address appearing on
the books of the Company maintained for such purpose.
With a copy to
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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(2) If to the Company, at
Integrated Orthopaedics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Every notice, demand, request, consent, approval, declaration, delivery or other
communication required or permitted under this Agreement that is addressed as
provided in this Section 11(b) will (x) if delivered personally or by overnight
courier service, be deemed given upon delivery; (y) if delivered by
telefacsimile or similar facsimile transmission, be deemed given when
electronically confirmed; and (z) if sent by registered or certified mail, be
deemed given when received. Any party from time to time may change its address
for the purpose of notices to that party by giving a similar notice specifying a
new address, but no such notice will be deemed to have been given until it is
actually received by the party sought to be charged with the contents thereof.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and their respective successors and
assigns including any person to whom the Securities or any Registrable
Securities are transferred in accordance with their terms and the terms of any
agreement relating thereto.
(d) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(e) Governing Law. This Agreement shall be governed by the laws of
the State of Texas, without regard to the provisions thereof relating to
conflict of laws.
(f) Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such
14
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(g) Entire Agreement. This Agreement represents the complete
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof.
(h) No Inconsistent Agreement. The Company shall not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders of Registrable
Securities pursuant to this Agreement.
[Remainder of page left blank intentionally]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INTEGRATED ORTHOPAEDICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Accepted and Acknowledged by:
FW INTEGRATED ORTHOPAEDICS INVESTORS, L.P.
By: GROUP 31, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FW INTEGRATED ORTHOPAEDICS INVESTORS II, L.P.
By: FW GROUP GENPAR, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
16