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EXHIBIT 4.4
AGREEMENT BY AND AMONG ORTHOPAEDIC
BIOSYSTEMS LTD., INC. AND CERTAIN INVESTORS
IN ORTHOPAEDIC BIOSYSTEMS LTD., INC.
REGARDING REGISTRATION RIGHTS
THIS AGREEMENT, by and among Orthopaedic Biosystems Ltd., Inc. (the
"Company") and certain investors in the Company is entered into as of this 5th
day of May, 1997.
W I T N E S S E T H: THAT,
WHEREAS, the investors set forth in Schedule A attached hereto (the
"Investors") are the purchasers of the shares of the Class A Preferred Stock of
the Company ("Preferred Stock") reflected on said Schedule A; and
WHEREAS, the Company has agreed to grant registration rights to the
Investors as provided herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the Investors and the Company agree as follows:
A. Definitions
As used herein:
1. The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, and the declaration or ordering of
the effectiveness of such registration statement.
2. The term "Registrable Securities" means the shares of the Preferred
Stock of the Company, but only after conversion into the common shares of the
Company into which such Preferred Stock has been converted, purchased by the
Investors and listed on Schedule A.
3. The term "Initiating Holders" means any holder or holders of not less
than 50% of the Registrable Securities.
4. The term "Holders" means any holder or holders of Registrable Shares.
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B. Requested Registration
1. Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification, or compliance with respect to all or a part of the Registrable
Securities the Company will: (a) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and (b) as soon
as practicable, use its diligent best efforts to effect all such registrations,
qualifications and compliances (including, without limitations, the execution of
an undertaking to file post-effective amendments, appropriate qualifications
under the applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act and any
other governmental requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given within
thirty days after receipt of such written notice from the Company; provided that
the Company shall not be obligated to take any action to effect such
registration, qualification or compliance pursuant to this paragraph (b):(i) at
any time prior to the Company's first registered offering to the general public
of its securities for its own account, or May 1, 2001, whichever shall first
occur; (ii) within 180 days following the effective date of the Company's first
registered offering to the general public of its securities for its own account;
(iii) after the Company has effected one such registration pursuant to this
subparagraph (b)(1) and such registration has been declared or ordered
effective; (iv) if the amount of securities being offered for sale is less than
50% of the Registrable Securities, and the expected price to the public is less
than $2,000,000; (v) when the Investors or their assignees have sold 60 percent
or more of the Registrable Securities in transactions on a national securities
exchange or in the over-the-counter market; or (vi) after the first to occur of
May 1, 2003, or more than two years following the effective date of the
Company's first registered offering to the general public of its securities for
its own account.
Subject to the foregoing clauses (i) through (iv), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within ninety days, after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Company shall furnish to such Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed at the date filing would be required
and it is therefore essential to defer the filing of such registration
statement, the Company shall have an additional period of not more than ninety
days within which to file such registration statement.
2. Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the
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Company as a part of their request made pursuant to paragraph B and the
Company shall include such information in the written notice referred to in
subparagraph B(1)(a). In such event, if so requested in writing by the Company,
the Initiating Holders shall negotiate with an underwriter selected by the
Company with regard to the underwriting of such requested registration;
provided, however, that if a majority in interest of the Initiating Holders have
not agreed with such underwriter as to the terms and conditions of such
underwriting within twenty days following commencement of such negotiations, a
majority in interest of the Initiating Holders may select an underwriter of
their choice. The right of any Holder to registration pursuant to paragraph B
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder to the extent provided herein. The Company shall
(together with all Holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
paragraph B, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, the Initiating Holders shall so advise all holders of Registrable
Securities, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities entitled to inclusion in such registration
held by such Holders at the time of filing the registration statement. If any
Holder of Registrable Securities disapproves of the terms of the underwriting,
he may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. Any Registrable Securities which may be
withdrawn under the preceding sentence from such underwriting shall, unless the
Holder requests otherwise, be included in such registration but shall not be
transferred in a public distribution prior to ninety days after the effective
date of the registration statement relating thereto.
C. Company Registration
1. If at any time or from time to time, the Company shall determine to
register any of its securities, either for its own account or the account of a
security holder or holders, in a registration statement pursuant to an
underwritten public offering, the Company will: (a) promptly give to each
Holder written notice thereof (which shall include a list of the jurisdictions
in which the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and (b) include in such
registration (and any related qualification under blue sky laws or other
compliance) and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within thirty days
after receipt of such written notice from the Company, by any Holder or
Holders, except as set forth in subparagraph C(2) below.
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2. Underwriting. The right of any Holder to registration pursuant to
paragraph C shall be conditioned upon such Holder's participation in the
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this paragraph C, if the underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, and (a) if such registration is the first registered offering of
the sale of the Company's securities to the general public, the underwriter may
limit the number of Registrable Securities to be included in the registration
and underwriting, or any exclude Registrable Securities entirely from such
registration and underwriting, or (b) if such registration is other than the
first registered offering of the sale of the Company's securities to the
general public, the underwriter may limit the number of Registrable Securities
to be included in the registration and underwriting; provided, however, that
with respect to a registration within the category described in clause (b) of
this sentence, the underwriter may not limit the amount of Registrable
Securities included in such registration and underwriting to less than an
amount equal to 20 percent of the amount of all of the Company's securities
included within such registration and underwriting. The Company shall so advise
all Holders of Registrable Securities which would otherwise be registered and
underwritten pursuant hereto, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities entitled to inclusion in such
registration held by such Holders at the time of filing the registration
statement. If any Holder disapproves of the terms of any such underwriting, he
may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall, unless the Holder requests otherwise, be included in such
registration but shall not be transferred in a public distribution prior to
ninety days after the effective date of the registration statement relating
thereto.
D. Expenses of Registration
All expenses incurred in connection with any registration, qualification
or compliance pursuant to this Agreement, including without limitation, all
registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company;
provided, however:
(1) The Company shall not be required to pay for expenses of any
registration begun pursuant to paragraph B, the request for which has been
subsequently withdrawn by the Initiating Holders, in which case, such
expenses shall be borne by the Holders requesting such withdrawal;
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(2) The Company shall not be required to pay fees of legal counsel of
Holder, or underwriters' fees, discounts, or commissions relating to
Registrable Securities.
E. Registration Procedures
In the case of each registration, qualification, or compliance effected by
the Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense, the Company will:
(1) Keep such registration, qualification or compliance pursuant to
subparagraphs B or C effective for a period of 180 days or until the
Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs; and
(2) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
F. Indemnification
1. To the extent permitted by law, the Company will indemnify each
Holder of Registrable Securities, each of the Holder's officers and directors,
and each person controlling such Holder, with respect to such registration,
qualification, or compliance effected pursuant to this paragraph, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, damages, and liabilities (or actions in respect thereto) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification, or compliance, or based on
any 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 any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration,
qualification, or compliance, and will reimburse each such Holder, each of the
Holder's officers and directors, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon information furnished to the Company by
such Holder or underwriter.
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2. Each Holder will, if Registrable Securities held by or issuable to such
Holder are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the Company, each of
its directors and officers who sign such registration statement, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company within the meaning of the
Securities Act, and each other such Holder, each of such Holder's officers and
directors and each person controlling such Holder, against all claims, losses,
damages, and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement of a material fact
contained in any such registration statement, prospectus, offering circular, or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, persons, or underwriters for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder specifically for use therein.
3. Each party entitled to indemnification under this paragraph F (the
Indemnified Party) shall give notice to the party required to provide
indemnification (the Indemnifying Party) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this paragraph. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
G. Information by Holder
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such written information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration, qualification, or compliance referred to in this
paragraph.
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H. Rule 144 Reporting
With a view to making available to the Investors the benefits of certain
rules and regulations of the SEC which may permit the sale of the Purchased
Shares to the public without registration, the Company agrees when required by
law to:
(1) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety days
after the effective date of the first registration filed by the Company for
an offering of its securities to the general public;
(2) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Securities Exchange Act;
(3) To furnish to the Investors forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after ninety days after the
effective date of the first registration statement filed by the Company for
an offering of its securities to the general public), and of the Securities
Act and the Securities Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed by the Company as may reasonably be requested in availing an Investor
of any rule or regulation of the SEC allowing the sale of any such
securities without registration.
I. Transfer of Registration Rights
The rights to cause the Company to register securities granted to an
Investor by the Company under subparagraphs B and C may be assigned by such
Investor to a transferee or assignee of any of said Investor's Registrable
Securities, provided, that the Company is given written notice by an Investment
at the time of or within a reasonable time after said transfer, stating the name
and address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned.
J. Assignability
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
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K. Law
This Agreement shall be governed by and construed in accordance with the
laws of Arizona.
L. Amendment
Any modification, amendment, or waiver of this Agreement or any provision
hereof shall be in writing and executed by the Company and Holders of not less
than 66-2/3 percent of the outstanding Registrable Securities; provided,
however, that no such modification, amendment or waiver shall reduce the
aforesaid percentage of outstanding Registrable Securities without the consent
of the record or beneficial holders of no less than 90 percent of said
Registrable Securities.
M. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned holders of securities and the Company
have executed this Agreement on the day and year first above written.
ORTHOPAEDIC BIOSYSTEMS LTD., INC.
By: D. Xxxxxx Xxxxxx
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