SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant
to Rule 13d-1(A) and
Amendments Thereto Filed Pursuant to Rule 13d-2(A)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Under the Securities Exchange Act of 1934
(Amendment No. )*
CRDENTIA CORP.
--------------
(Name of Issuer)
Common Stock, $.0001 par value
------------------------------
(Title of Class of Securities)
225235100
---------
(CUSIP Number)
J. Alexander Moore, Esq.
Howard Rice Nemerovski Canady Falk & Rabkin,
A Professional Corporation
Three Embarcadero Center, Suite 700
San Francisco, CA 94111
(415) 434-1600
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 16, 2004
-------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(e), 13d-1(f) or 13d-1(g), check the following box [x].
Note: Schedules filed in paper format shall include a signed
original and five copies of this schedule, including all
exhibits. See Rule 13d-7 for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
CUSIP 225235100 SCHEDULE 13D PAGE 2 OF 27
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
CUSIP 225235100 SCHEDULE 13D PAGE 3 OF 27
1 Name of Reporting Person MEDCAP MANAGEMENT & RESEARCH LLC
IRS Identification No. of
Above Person 94-3411543
2 Check the Appropriate Box if a Member of a (a) [ ]
Group
(b) [ ]
3 SEC USE ONLY
4 Source of Funds OO
5 Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization Delaware
NUMBER OF 7 Sole Voting Power 17,266,014
SHARES
BENEFICIALLY 8 Shared Voting Power 0
OWNED BY EACH
REPORTING 9 Sole Dispositive Power 17,266,014
PERSON WITH
10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 17,266,014
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 [ ]
Excludes Certain Shares
13 Percent of Class Represented by Amount in 49.2%
Row 11
14 Type of Reporting Person IA
CUSIP 225235100 SCHEDULE 13D PAGE 4 OF 27
1 Names of Reporting Persons MEDCAP PARTNERS, L.P.
IRS Identification Nos. of 94-3412423
Above Persons
2 Check the Appropriate Box if a Member of a (a) [ ]
Group
(b) [ ]
3 SEC USE ONLY
4 Source of Funds WC
5 Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization Delaware
NUMBER OF 7 Sole Voting Power 17,266,014
SHARES
BENEFICIALLY 8 Shared Voting Power 0
OWNED BY EACH
REPORTING 9 Sole Dispositive Power 17,266,014
PERSON WITH
10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 17,266,014
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 [ ]
Excludes Certain Shares
13 Percent of Class Represented by Amount in 49.2%
Row 11
14 Type of Reporting Person PN
CUSIP 225235100 SCHEDULE 13D PAGE 5 OF 27
Names of Reporting Persons C. FRED TONEY
1 IRS Identification Nos. of
Above Persons
2 Check the Appropriate Box if a Member of a (a) [ ]
Group
(b) [ ]
3 SEC USE ONLY
4 Source of Funds OO
5 Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization United States
NUMBER OF 7 Sole Voting Power 17,266,014
SHARES
BENEFICIALLY 8 Shared Voting Power 0
OWNED BY EACH
REPORTING 9 Sole Dispositive Power 17,266,014
PERSON WITH
10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 17,266,014
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 [ ]
Excludes Certain Shares
13 Percent of Class Represented by Amount in 49.2%
Row 11
14 Type of Reporting Person IN, HC
CUSIP 225235100 SCHEDULE 13D PAGE 6 OF 27
Item 1. Security and Issuer
This Schedule 13D ("Schedule") relates to shares of
common stock, with par value $.0001 (the "Common Stock"), of
Crdentia Corp. (the "Issuer"). The principal executive office of
the Issuer is 14114 Dallas Parkway, Suite 600, Dallas, TX 75254.
Item 2. Identity and Background
This Schedule is filed on behalf of MedCap Partners L.P.
("MedCap"), MedCap Management & Research LLC ("MMR") and C. Fred
Toney ("Toney"), each of whose principal business office address
is 500 Third Street, Suite 535, San Francisco, CA 94107.
MedCap is an investment limited partnership, whose
general partner is MMR. MMR is an investment adviser registered
under the laws of the State of California. Toney is MMR's sole
managing member.
None of MedCap, MMR or Toney has, during the past five
years, been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors).
None of MedCap, MMR or Toney has, during the past five
years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of
which any of them became or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
MedCap is a Delaware limited partnership, MMR is a
Delaware limited liability company and Toney is a United States
citizen.
Item 3. Source and Amount of Funds or Other Consideration
The source of funds to make the purchases described in
Item 5 was working capital of MedCap. The total amount of the
funds to make the purchases described in Item 5 was
$2,012,010.50.
Item 4. Purpose of Transaction.
The acquisitions of Common Stock and the Issuer's Series
B Preferred Stock described in Item 5 were made for investment
purposes.
Toney is a member of the Issuer's Board of Directors.
The reporting persons do not currently have any plans or
proposals that relate to or would result in any of the following:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
CUSIP 225235100 SCHEDULE 13D PAGE 7 OF 27
(b) An extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving the Issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of the issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of
the Act; or
(j) Any action similar to those enumerated above.
Depending upon market conditions and other factors, the
reporting persons may acquire additional securities of the
Issuer, or alternatively, may dispose of some or all of the
securities of the Issuer beneficially owned by them.
Item 5. Interest in Securities of the Issuer
(a) MedCap beneficially owns 1,106,014 shares of Common Stock,
2,000,000 shares of the Issuer's Series A Preferred Stock,
which are currently convertible into 10,000,000 shares of
Common Stock, and 6,250,000 of Series B Preferred Stock,
which are currently convertible into 6,250,000 shares of
Common Stock. MMR as general partner and investment manager
of MedCap and Toney as the sole managing member of MMR may
be deemed to beneficially own the shares owned by MedCap in
that they may be deemed to have the power to direct the
voting or disposition of the shares. Neither the filing of
this Schedule 13D nor any of its contents shall be deemed to
constitute an admission that either MMR or Toney is, for any
other purpose, the beneficial owner of any such securities
to which this Schedule relates, and MMR and Toney disclaim
beneficial ownership as to the Common Stock except to the
CUSIP 225235100 SCHEDULE 13D PAGE 8 OF 27
extent of their respective pecuniary interests therein.
Based on the number of shares outstanding reported in the
Issuer's most recent quarterly report on Form 10-QSB, the
percentage of Common Stock beneficially owned by MedCap, MMR
and Toney for the purposes of this Schedule 13D is 49.2%.
(b) Reference is made hereby to Items 7 to 10 of pages 3, 4 and
5 of this Schedule, which Items are incorporated herein by
reference.
(c) On May 18, 2004, MedCap purchased from the Issuer in a
private placement, 1,016,014 shares of Common Stock at a
price of $0.75 per share, with the aggregate amount of
MedCap's investment in the private placement being
$762,010.50. On June 16, 2004, MedCap purchased from the
Issuer in a private placement, 6,250,000 shares of Preferred
Stock at a price of $0.20 per share, with the aggregate
amount of MedCap's investment in the private placement being
$1,250,000.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
MedCap is a party to an Amended and Restated Registration
Rights Agreement entitling it to registration rights with respect
to Common Stock issuable upon conversion of its shares of Series
A Preferred Stock and Series B Preferred Stock.
Item 7. Material to be Filed as Exhibits
No. Exhibit
1. Agreement Regarding Joint Filing of Statement on Schedule
13D or 13G.
2. Amended and Restated Registration Rights Agreement between
the Issuer and MedCap dated June 16, 2004.
CUSIP 225235100 SCHEDULE 13D PAGE 9 OF 27
Signatures
After reasonable inquiry and to the best of each of the
undersigned's respective knowledge and belief, each of the
undersigned certifies that the information set forth in this
statement is true, complete and correct.
DATED June 24, 2004
MEDCAP PARTNERS L.P.
By its general partner
MedCap Management &
Research LLC
/s/ C. Fred Toney
-----------------
By: C. Fred Toney
Its: Managing Member
MEDCAP MANAGEMENT &
RESEARCH LLC
/s/ C. Fred Toney
-----------------
By: C. Fred Toney
Its: Managing Member
C. FRED TONEY
/s/ C. Fred Toney
-----------------
CUSIP 225235100 SCHEDULE 13D PAGE 10 OF 27
Exhibit Index
Exhibit 1 Agreement Regarding Joint Filing of
Statement on Schedule 13D or 13G
Exhibit 2 Amended and Restated Registration Rights
Agreement
PAGE 11 OF 27
Exhibit 1
AGREEMENT REGARDING JOINT FILING OF STATEMENT ON SCHEDULE
13D OR 13G
The undersigned agree to file jointly with the Securities
and Exchange Commission (the "SEC") any and all statements on
Schedule 13D or Schedule 13G (and any amendments or supplements
thereto) required under section 13(d) of the Securities Exchange
Act of 1934, as amended, in connection with purchases by the
undersigned of the common stock of Crdentia Corp. For that
purpose, the undersigned hereby constitute and appoint C. Fred
Toney as their true and lawful agent and attorney-in-fact, with
full power and authority for and on behalf of the undersigned to
prepare or cause to be prepared, sign, file with the SEC and
furnish to any other person all certificates, instruments,
agreements and documents necessary to comply with section 13(d)
and section 16(a) of the Securities Exchange Act of 1934, as
amended, in connection with said purchases, and to do and perform
every act necessary and proper to be done incident to the
exercise of the foregoing power, as fully as the undersigned
might or could do if personally present.
DATED: June 24, 2004
MEDCAP PARTNERS, L.P.
By its general partner
MedCap Management &
Research LLC
/s/ C. Fred Toney
-----------------
By: C. Fred Toney
Its: Managing Member
MEDCAP MANAGEMENT &
RESEARCH LLC
/s/ C. Fred Toney
-----------------
By: C. Fred Toney
Its: Managing Member
C. FRED TONEY
/s/ C. Fred Toney
-----------------
PAGE 12 OF 27
Exhibit 2
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement
(this "Agreement") is made as of June 16, 2004 by and among
Crdentia Corp., a Delaware corporation (the "Company") and MedCap
Partners L.P. ("MedCap").
Recitals:
A. The Company and MedCap are parties to that certain
Registration Rights Agreement dated December 16, 2003 (the
"Original Agreement").
B. The Company and MedCap are parties to that certain
Subscription Agreement (the "Subscription Agreement"), dated June
16, 2004, regarding the proposed sale and issuance of shares of
the Company's Series B Preferred Stock (the "Series B Preferred")
to MedCap (the "Preferred Stock Financing");
C. The Original Agreement may be amended by a written
agreement executed by the Company and the holders of sixty-six
and two-thirds percent (66 2/3%) of the securities registrable
under the Original Agreement.
D. MedCap holds more than sixty-six and two-thirds
percent (66 2/3%) of the securities registrable under the
Original Agreement
E. In connection with the Preferred Stock Financing, the
Company and MedCap desire to agree to the terms and conditions
set forth herein, and to amend, restate and supercede the
Original Agreement.
Agreement
Now, Therefore, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth
in this Agreement and the Subscription Agreement, the parties
hereto agree as follows:
2. Registration Rights. The Company covenants and agrees as
follows:
2.1 Definitions. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
PAGE 13 of 27
(c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.11 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
(f) The term "Registrable Securities" means (i) the Common Stock
of the Company (the "Common Stock") issued to the Investors
listed on Schedule A attached hereto pursuant to conversion of
the Series B Preferred and/or the Series A Preferred Stock of the
Company, as the case may be, and (ii) any Common Stock issued as
(or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in
replacement of the shares referenced in (i) above, excluding in
all cases, however, any Registrable Securities sold by a person
in a transaction in which his rights under this Section 1 are not
assigned pursuant to the terms of this Agreement.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of
Common Stock outstanding which are, and the number of shares of
Common Stock issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
2.2 Requested Registration.
(a) Request for Registration. If, at any time after July 1,
2004, the Company shall receive from the Holders of thirty-three
and one-third percent (33 1/3%) or more of the Registrable
Securities then outstanding (the "Initiating Holders") a written
request that the Company file a registration statement in
accordance with the Act covering the registration on a continuous
basis pursuant to Rule 415 under the Act, or any successor rule
or regulation ("Rule 415") of all or part of the Registrable
Securities then held by such Holders, the Company shall:
(i) within ten (10) days of the receipt thereof, give written
notice of the proposed registration, qualification or compliance
to all other Holders; and
PAGE 14 of 27
(ii) within forty-five (45) days of the receipt thereof, file
a registration statement with the SEC and use its reasonable and
diligent efforts to effect as soon as practicable, the
registration under the Act of all such Holders' Registrable
Securities as are specified in such request, together with such
portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written
notice given within fifteen (15) days after receipt of written
notice from the Company; provided, however, that the Company
shall not be obligated to take any action to effect any such
registration pursuant to this Section 1.2, (A) after the Company
has effected one (1) registration under this Section 1.2 or (B)
if less than thirty-three and one-third percent (33 1/3%) of the
then outstanding Registrable Securities will be registered.
(b) Registration Statements. Any registration statement filed
pursuant to this Section 1.2 shall be on Form S-3, or if Form S-3
is not available, Form S-1 or other appropriate form permitting
registration of the Registrable Securities for resale by the
Holders.
(c) Underwriting. If the Holders at any time intend to
distribute all or a part of the Registrable Securities covered by
the registration statement filed pursuant to this Section 1.2 by
means of an underwriting, they shall so advise the Company and
the Company shall promptly notify the other Holders of such
underwriting. The Company (together with all Holders proposing
to distribute their securities pursuant to the underwriting)
shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten,
then the Holders requesting the underwriting shall so advise all
Holders of Registrable Securities, and the number of shares
included in the underwriting shall be allocated among the Holders
of Registrable Securities requesting registration in proportion,
as nearly as practicable, to the total number of Registrable
Securities held by such Holders at the time of the request for an
underwriting. If any Holder disapproves of the terms of the
underwriting, such Holder may elect to withdraw from such
underwritten offering by written notice to the Company, the
underwriter and the other Holders whose shares are being included
in the underwriting. The Company agrees to file any amendments
or supplements to the registration statement necessary in order
to permit any underwritten offering.
(d) Rights in Addition to Other Rights. The rights under this
Section 1.2 are in addition to, and not affected by, the Holders'
exercise of any registration rights contained in Section 1.3.
2.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register any of its stock or other
securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a
Company employee benefit plan or corporate reorganization or
other transaction covered by Rule 145 promulgated under the Act,
or a registration on any form which does not permit secondary
sales or include substantially the same information as would be
required to be included in a registration statement covering the
sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given
PAGE 15 of 27
within twenty (20) days after mailing of such notice by the
Company in accordance with Section 2.6 hereof, the Company shall,
subject to the provisions of Section 1.7 hereof, cause to be
registered under the Act all of the Registrable Securities that
each such Holder has requested to be registered.
2.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable and
diligent efforts to cause such registration statement to become
effective, and keep such registration statement effective (i) in
the case of a registration statement filed pursuant to Section
1.2, during the Effectiveness Period (as hereinafter defined) or
(ii) in the case of a registration statement filed pursuant to
Section 1.3, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, for up to three
hundred sixty-five (365) days or, if earlier, the date on which
the distribution contemplated in the registration statement has
been completed. As used herein, the term "Effectiveness Period"
shall mean until the earlier of (i) the termination of the rights
set forth in this Agreement in accordance with Section 1.14 or
(ii) all of the Registrable Securities covered by the
registration having been sold or a subsequent registration
statement covering any unsold Registrable Securities having been
declared effective.
(b) Provide, at least three (3) business days prior to filing,
any registration statement and included prospectus (including
each preliminary prospectus and any amendments or supplements
thereto) prepared in conformity with the requirements of the Act
in connection with Sections 1.2 and 1.3 (the "Registration
Materials") to the Holders and their respective counsel for
review and comment, if any.
(c) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in
connection with such registration statement as may be necessary
to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration
statement.
(d) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents and
Registration Materials as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by
them that are included in such registration.
PAGE 16 of 27
(e) Use its reasonable and diligent efforts to register and
qualify the securities covered by such registration statement
under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders;
provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in
any such states or jurisdictions.
(f) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall
also enter into and perform its obligations under such agreement.
(g) 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 Act of the
happening of any event the result of which causes the prospectus
included in such registration statement, as then in effect, to
include an 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 in light of the
circumstances then existing; and thereafter, the Company will use
reasonable efforts to amend or supplement such prospectus in
order to cause such prospectus not to include 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 in light of circumstances then existing;
provided, however, that upon such notification by the Company,
the Holders will not offer or sell Registrable Securities until
the Company has notified the Holders that it has prepared a
supplement or amendment to such prospectus and delivered copies
of such supplement or amendment to the Holders (it being
understood and agreed by the Company that the foregoing proviso
shall in no way diminish or otherwise impair the Company's
obligations to prepare a prospectus amendment or supplement as
above provided in this Section 1.4(g)).
(h) Use its reasonable and diligent efforts, if a registration
statement under Section 1.2 ceases to be effective for any reason
at any time during the Effectiveness Period (other than because
of the sale of all of the Registrable Securities registered
thereunder or pursuant to the Company's exercise of the
Suspension Right (as hereinafter defined)), to (i) obtain the
prompt withdrawal of any order suspending the effectiveness
thereof, and (ii) amend the registration statement in a manner
reasonably expected to obtain the withdrawal of the order
suspending the effectiveness of the shelf registration or file an
additional registration statement covering all of the unsold
Registrable Securities (a "Subsequent Registration Statement").
If a Subsequent Registration Statement is filed, the Company will
use its reasonable and diligent efforts to cause the Subsequent
Registration Statement to be declared effective as soon as
PAGE 17 of 27
practicable and to keep such Subsequent Registration Statement
continuously effective until the end of the Effectiveness Period.
The requirements of this Section 1.4(h) that the Company file
additional registration statements shall not be affected by the
provisions set forth in Section 1.2 that the Company is only
required to file one registration statement under Section 1.2.
(i) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(j) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the
effective date of such registration.
(k) Use its reasonable and diligent efforts to furnish, at the
request of any Holder requesting registration of Registrable
Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale
in connection with a registration statement pursuant to this
Section 1, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion,
dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the
Holders requesting registration of the Registrable Securities,
and (ii) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration
of Registrable Securities.
(l) Notify each seller of Registrable Securities under such
registration statement of (i) the effectiveness of such
registration statement, (ii) the filing of any post-effective
amendments to such registration statement, or (iii) the filing of
a supplement to such registration statement.
2.5 Furnish Information.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable
Securities.
PAGE 18 OF 27
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 hereof if, as a
result of the application of subsection 1.5(a), the number of
shares of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares
required to originally trigger the Company's obligation to
initiate such registration as specified in Section 1.2 hereof.
2.6 Expenses of Registration. All expenses (other than
underwriting discounts and commissions, stock transfer taxes and
fees of counsel to the stockholders in excess of $15,000)
incurred in connection with any registrations, filings or
qualifications of Registrable Securities pursuant to Sections 1.2
or 1.3 including (without limitation) all federal or state
registration, filing and qualification fees, printers' and
accounting fees and fees and disbursements of counsel for the
Company shall be borne by the Company. The Company shall pay up
to an aggregate of $15,000 of the selling stockholders' legal
fees in connection with one (1) registration. Notwithstanding
the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section
1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable
Securities to be registered, unless the withdrawal is based upon
a material adverse development concerning the Company and the
Holders have withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse
change.
2.7 Underwriting Requirements. In connection with any offering
pursuant to Section 1.3 involving an underwriting of shares of
the Company's capital stock by the Company, the Company shall not
be required to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and
then only in such quantity as the underwriters determine in their
sole discretion will not jeopardize the success of the offering
by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included
in such offering exceeds the amount of securities sold other than
by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then
the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will
not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling
stockholders according to the total amount of securities entitled
to be included therein owned by each selling stockholder, or in
such other proportions as shall mutually be agreed to by such
selling stockholders). For purposes of the preceding
parenthetical concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which
PAGE 19 OF 27
is a limited liability company, partnership or corporation, the
members, partners, retired partners and stockholders of such
holder, or the estates and family members of any such members,
partners and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single
"selling stockholder," and any pro-rata reduction with respect to
such "selling stockholder" shall be based upon the aggregate
amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder,"
as defined in this sentence.
2.8 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of
this Section 1.
2.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the maximum extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers,
and directors of each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Act, the 1934
Act or any state securities law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, or any rule or regulation
promulgated under the Act or the 1934 Act or any state securities
law in connection with the offering covered by such Registration
Statement; and the Company will pay to each such Holder, partner,
officer, director, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.9(a) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld or delayed), nor shall the Company be
liable to any Holder, underwriter or controlling person for any
such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon a Violation which occurs in
PAGE 20 OF 27
reliance upon and in conformity with written information
furnished expressly for use in connection with such registration
by any such Holder, partner, officer, director, underwriter or
controlling person.
(b) To the maximum extent permitted by law, each selling Holder
will, if Registrable Securities held by such Holder are included
in the applicable registration statement, indemnify and hold
harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages
or liabilities (joint or several) to which any of the foregoing
persons may become subject under the Act or the 1934 Act or any
state securities law in connection with the offering covered by
such registration statement insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration;
and each such Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.9(b), in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably
withheld or delayed); provided further, that in no event shall
any indemnity under this subsection 1.9(b) exceed the net
proceeds from the offering received by such Holder, except in the
case of willful misconduct or fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action
(including any governmental action) as to which indemnity may be
sought hereunder, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party
under this Section 1.9, deliver to the indemnifying party a
written notice of the commencement thereof. The indemnifying
party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one
separate counsel, with the reasonable fees and expenses to be
paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
PAGE 21 OF 27
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party
under this Section 1.9, but the omission to so deliver written
notice to the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
indemnified party otherwise than under this Section 1.9. No
indemnifying party, in the defense of any such claim or
litigation, shall, except upon the consent of each indemnified
party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party
of a full and unconditional release from all liability in respect
to such claim or litigation.
(d) The foregoing indemnity agreements of the Company and Holders
are subject to the condition that, insofar as they related to any
Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or
the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any person if a copy of the Final
Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the
Act. If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage or
liability referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions
that resulted in such loss, claim, damage or liability, as well
as any other relevant equitable considerations; provided,
however, that in no event shall (i) any contribution by a Holder
under this subsection 1.9(d) exceed the net proceeds from the
offering received by such Holder, except in the case of willful
fraud by such Holder, and (ii) any person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation. The
relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party
PAGE 22 OF 27
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section
1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and
otherwise.
2.10 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations)
by a Holder to a transferee or assignee of such securities,
including a subsidiary, affiliate, partner, limited partner,
retired partner or stockholder of a Holder, provided in each case
that (i) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (ii) such
transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement; and (iii)
such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
2.11 Reports Under the 1934 Act. The Company agrees to use
commercially reasonable efforts: (a) to make and keep public
information available, as those terms are understood and defined
in the General Instructions to Form S-3, or any successor or
substitute form, and in Rule 144, (b) to file with the SEC in a
timely manner all reports and other documents required to be
filed by an issuer of securities registered under the Securities
Act or the Exchange Act, (c) as long as any Holder owns any
Registrable Securities, to furnish in writing upon such Holder's
request a written statement by the Company that it has complied
with the reporting requirements of Rule 144 and of the Act and
the 1934 Act, and to furnish to such Holder a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company with the SEC as may
be reasonably requested.
2.12 Deferral. Notwithstanding anything in this Agreement to
the contrary, if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer of the Company
stating that the Board of Directors of the Company has made the
good faith determination (a) that continued use by the Holders of
a registration statement for purposes of effecting offers or
PAGE 23 OF 27
sales of Registrable Securities pursuant thereto would require,
under the Act, premature disclosure in the registration statement
(or the prospectus relating thereto) of material, nonpublic
information concerning the Company, its business or prospects or
any proposed material transaction involving the Company, (b) that
such premature disclosure would be materially adverse to the
Company, its business or prospects or any such proposed material
transaction or would make the successful consummation by the
Company of any such material transaction significantly less
likely and (c) that it is therefore essential to suspend the use
by the Holders of any such registration statement (and the
prospectus relating thereto) for purposes of effecting offers or
sales of Registrable Securities pursuant thereto, then the right
of the Holders to use any such registration statement (and the
prospectus relating thereto) for purposes of effecting offers or
sales of Registrable Securities pursuant thereto shall be
suspended until further notice by the Company (the "Suspension
Period"). During the Suspension Period, none of the Holders
shall offer or sell any Registrable Securities pursuant to or in
reliance upon any such registration statement (or the prospectus
relating thereto). In the event the Company exercises the
suspension rights set forth herein (the "Suspension Right"), such
suspension will continue for such period of time reasonably
necessary for disclosure to occur at a time that is not
materially detrimental to the Company or until such time as the
registration statement does not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were
made, each as determined in good faith by the Company. The
Company agrees to notify the Holders promptly upon termination of
the Suspension Right. Notwithstanding the foregoing, under no
circumstances shall the Company be entitled to exercise the
Suspension Right for a period of more than thirty (30) days
during any twelve (12) month period.
2.13 Limitation of Liability. The Company shall not be liable
to the Holder for a failure to effect, or a delay in effecting, a
registration hereunder or a default in any other obligations
under this Agreement arising out of or relating to any failure to
receive necessary consents from its independent auditors or any
internal review, investigation or similar activity by the
Company's Audit Committee.
2.14 Termination of Registration Rights. The rights granted
under this Section 1 shall terminate upon the fourth anniversary
of the date of this Agreement. In addition, a Holder's
registration rights shall terminate if all Registrable Securities
held by and issuable to such Holder may be sold under Rule 144
during any ninety (90) day period.
PAGE 24 OF 27
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this
Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to
agreements among Delaware residents entered into and to be
performed entirely within Delaware.
3.3 Submission to Jurisdiction; Waivers. Each of the parties
hereto irrevocably agrees that any legal action or proceeding
with respect to this Agreement or for the recognition and
enforcement of any judgment in respect hereof brought by the
other party hereto or its successors or assigns will be brought
and determined in the Chancery or other courts of the State of
Delaware, and each of the parties hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive
jurisdiction of the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it
is not personally subject to the jurisdiction of the above-named
courts for any reason other than the failure to lawfully serve
process, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (c) to the fullest
extent permitted by applicable law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum,
(ii) the venue of such suit, action, or proceeding is improper
and (iii) this Agreement, or the subject matter hereof, may not
be enforced in or by such courts and (d) any right to trial by
jury.
3.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
3.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
PAGE 25 OF 27
3.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed facsimile if sent during
normal business hours of the recipient or, if not sent during
normal business hours, then on the next business day, (c) three
days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after
deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt. All communications shall be sent to the address as set
forth on the signature page hereof or at such other address as
such party may designate by 10 days advance written notice to the
other parties hereto.
3.7 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
3.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Holders of sixty-six and two-thirds percent
(66 2/3%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder of any Registrable Securities
then outstanding, each future Holder of all such Registrable
Securities, and the Company.
3.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
3.10 Aggregation of Stock. All shares of Registrable
Securities held or acquired by affiliated entities or persons
shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.
3.11 Entire Agreement; Amendment; Waiver. This Agreement
(including Schedule A hereto) constitutes the full and entire
understanding and agreement between the parties with regard to
the subjects hereof and thereof.
[Remainder of page intentionally left blank]
PAGE 26 OF 27
In Witness Whereof, the parties have executed this
Agreement as of the date first above written.
Crdentia Corp.,
a Delaware corporation
By: /s/ James D. Durham
------------------------
Name: James D. Durham
Title: Chief Executive Officer
Address: 14114 Dallas Parkway, Suite 600
Dallas, Texas 75254
PAGE 27 OF 27
In Witness Whereof, the parties have executed this
Agreement as of the date first above written.
MedCap:
MedCap Partners L.P.
By: MedCap Management & Research LLC
Its: General Partner
By: /s/ C. Fred Toney
---------------------
Name: C. Fred Toney
Title: Managing Member
Address: 500 Third Street, Suite 535
San Francisco, California 94107