Exhibit 10.3
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and
entered into as of July 19, 2002 among Orthovita, Inc., a Pennsylvania
corporation (the "Company"), and each of the purchasers executing this Agreement
and listed on Schedule 1 attached hereto (collectively, the "Purchasers").
This Agreement is being entered into pursuant to the Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof, by and among
the Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
Commonwealth of Pennsylvania generally are authorized or required by law or
other government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$0.01 per share.
"Effectiveness Period" shall have the meaning set forth in
Section 2.
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"Event" shall have the meaning set forth in Section 8(e).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the 75/th/ day following the First Closing
Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including without
limitation the Purchasers, the Placement Agent and their assignees.
"Indemnified Party" shall have the meaning set forth in
Section 5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"NASDAQ" shall mean the National Association of Securities
Dealers Automatic Quotation System.
"OrbiMed" shall mean any of the following Purchasers: OrbiMed
Advisors LLC, OrbiMed Associates LLC, PW Juniper Crossover Fund LLC, Caduceus
Private Investment L.P., or any of their respective successors and assigns.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Placement Agent" shall mean SmallCaps Online Group, LLC.
"Placement Agent Warrant Shares" means the shares of Common
Stock issuable upon the exercise of the warrants granted to the Placement Agent
in connection with the offering consummated under the Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
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"Registrable Securities" means (i) the Conversion Shares, the
Warrant Shares and the Placement Agent Warrant Shares, and any shares issued
upon any stock split, stock dividend, recapitalization or similar event with
respect to such Conversion Shares, Warrant Shares or Placement Agent Warrant
Shares and (ii) any other dividend or other distribution with respect to,
conversion or exchange of, or in replacement of, Registrable Securities;
provided, however, that such securities shall cease to be Registrable Securities
when such securities have been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction.
Notwithstanding anything herein contained to the contrary, such registered
shares of Common Stock shall be allocated among the Holders pro rata based on
the total number of Registrable Securities issued or issuable as of each date
that a Registration Statement, as amended, relating to the resale of the
Registrable Securities is declared effective by the Commission.
"Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means one special counsel to the Holders.
2. Registration. On or prior to the Filing Date, the Company
shall prepare and file with the Commission a "shelf" Registration Statement
covering all Registrable Securities for a secondary or resale offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (or on another form appropriate for such registration in
accordance herewith). The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange Act
within five (5) Business Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not be subject to further
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review and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "Effectiveness Period"). Upon the initial filing thereof,
the Registration Statement shall cover at least 112% of the shares of Common
Stock for issuance upon the conversion of the Preferred Stock and the exercise
of the Initial Warrants and the Placement Agent Warrants. The Company may
include Common Stock other than the Registrable Securities in the Registration
Statement, provided that such additional securities shall not exceed 250,000
shares of Common Stock.
3. Registration Procedures.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or on another form
appropriate for such registration in accordance herewith) (which shall include a
Plan of Distribution substantially in the form of Exhibit A attached hereto),
and cause the Registration Statement to become effective and remain effective as
provided herein; provided, however, that not less than three (3) Business Days
prior to the filing of the Registration Statement or any related Prospectus or
any amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to the
Holders and the Special Counsel, copies of all such documents proposed to be
filed, which documents (other than those incorporated by reference) will be
subject to the review of such Holders and such Special Counsel, and (ii) at the
request of any Holder cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or the Special Counsel shall reasonably object in writing within
three (3) Business Days after their receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible, and in no event later
than 13 business days, to any comments received from the Commission with respect
to the Registration Statement or any amendment thereto and as promptly as
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the
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Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold
and the Special Counsel as promptly as possible (A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed (but in no event in the case of this subparagraph (A),
less than three (3) Business Days prior to date of such filing); (B) when the
Commission notifies the Company whether there will be a "review" of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective: (i) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iii) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) if the financial statements included in the Registration
Statement become ineligible for inclusion therein or of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain 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,
in the light of the circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, use best efforts to obtain the withdrawal of, (i) any order suspending
the effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 3(e) that would, in the written opinion of
counsel for the Company (addressed to the Holder's Special Counsel), violate
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applicable law.
(f) Furnish to each Holder and the Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g) Promptly deliver to each Holder and the Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holders
and the Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by applicable law and the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any Holder may request at least
two (2) Business Days prior to any sale of Registrable Securities. In connection
therewith, the Company shall promptly after the effectiveness of the
Registration Statement cause an opinion of counsel to be delivered to and
maintained with its transfer agent, together with any other authorizations,
certificates and directions required by the transfer agent, which authorize and
direct the transfer agent to issue such Registrable Securities without legend
upon sale by the Holder of such shares of Registrable Securities under the
Registration Statement.
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
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thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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,
in the light of the circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on NASDAQ and any other
United States securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which similar securities issued by the Company are
then listed as and when required pursuant to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 3-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) Request each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law or the Commission to be disclosed in the
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such information
within a reasonable time prior to the filing of each Registration Statement,
supplemented Prospectus and/or amended Registration Statement.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(i), 3(c)(ii), 3(c)(iii),
3(c)(iv) or 3(c)(v), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
(n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is
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a significant business opportunity (including, but not limited to, the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board reasonably determines not
to be in the Company's best interest to disclose and which the Company would be
required to disclose under the Registration Statement, then the Company may
postpone or suspend filing or effectiveness of a registration statement for a
period not to exceed 30 consecutive days, provided that the Company may not
postpone or suspend its obligation under this Section 3(n) for more than 45 days
in the aggregate during any 12 month period (each, a "Blackout Period");
provided, however, that no such postponement or suspension shall be permitted
for consecutive 45 day periods, arising out of the same set of facts,
circumstances or transactions.
4. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with NASDAQ and each other securities exchange, quotation system, market or
over-the-counter bulletin board on which Registrable Securities are required
hereunder to be listed, (B) with respect to filings required to be made with the
Commission, (C) with respect to filings required to be made under NASDAQ and any
other securities exchange, quotation system, market or over-the-counter bulletin
board and (C) in compliance with state securities or Blue Sky laws (including,
without limitation, fees and disbursements of counsel for the Holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance, and (v) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters) and legal
counsel. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder.
5. Indemnification
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(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained or incorporated by
reference in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
amendment or supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, which information was reasonably relied on by the
Company for use therein or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto; or (ii) in the case of an
occurrence of an event of the type described in Section 3(c)(ii), 3(c)(iii),
3(c)(iv) or 3(c)(v), the use by a Holder of an outdated or defective Prospectus
after the delivery to the Holder of written notice from the Company that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 3(m). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of an Indemnified Party (as defined in
Section 5(c) to this Agreement) and shall survive the transfer of the
Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that (i) such untrue statement or omission is contained in
or omitted from any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably
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relied upon by the Company for use in the Registration Statement, such
Prospectus, or in any amendment or supplement thereto, or to the extent that
such information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus, or such form of prospectus or in any amendment or supplement thereto
or (ii) in the case of an occurrence of an event of the type described in
Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v), the use by a Holder of an
outdated or defective Prospectus after the delivery to the Holder of written
notice from the Company that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 3(m);
provided, however, that the indemnity agreement contained in this Section 5(b)
shall not apply to amounts paid in settlement of any Losses if such settlement
is effected without the prior written consent of the Holder, which consent shall
not be unreasonably withheld. Notwithstanding anything to the contrary contained
herein, the Holder shall be liable under this Section 5(b) for only that amount
as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the reasonable
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on
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claims that are the subject matter of such Proceeding and does not impose any
monetary or other obligation or restriction on the Indemnified Party.
All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on a
monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
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, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party 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 of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying, Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the contrary contained
herein, the Holder shall be required to contribute under this Section 5(d) for
only that amount as does not exceed the net proceeds to such Holder as a result
of the sale of Registrable Securities pursuant to such Registration Statement.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account 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.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties. The indemnity and contribution agreements herein are
in addition to and not in diminution or limitation of any
11
indemnification provisions under the Purchase Agreement.
6. Rule 144.
As long as any Holder owns Preferred Stock, Conversion Shares,
Warrants or Warrant Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
owns Preferred Stock, Conversion Shares, Warrants or Warrant Shares, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Conversion Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including compliance with the provisions
of the Purchase Agreement relating to the transfer of the Conversion Shares and
Warrant Shares. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
7. Agreement to Vote Securities.
(a) Until such time as all of the Preferred Stock has been
converted or redeemed and all of the Warrants have been exercised or have
expired unexercised, at every meeting of shareholders of the Company called with
respect to any of the following, and at every adjournment thereof, and on every
action or approval by written consent of shareholders of the Company with
respect to any of the following, each of the Purchasers shall cause the
Preferred Stock, the Conversion Shares, the Warrant Shares and the shares of
Common Stock issued as payment of dividends on the Preferred Stock and all
securities of the Company owned by it prior to and after the date hereof
(collectively, the "Voting Securities") to be voted and shall otherwise consent:
(i) in favor of approval of the issuance of securities by the Company upon the
conversion of the Preferred Stock, payment of dividends on the Preferred Stock
and exercise of the Warrants, without regard to the Issuance Cap Amount (as such
term is defined in the Statement of Designation); and (ii) against
approval of any proposal made in opposition to, or in competition with,
conversion of the Preferred Stock, payment of dividends on the Preferred Stock
and exercise of the Warrants, without regard to the Issuance Cap Amount.
Concurrently with the execution of this Agreement, each of the Purchasers agrees
to deliver to the Company a proxy in the form attached hereto as Exhibit C (the
"Proxy") with respect to the Voting Securities voting on the matters described
in this subparagraph, which shall be irrevocable to the fullest extent permitted
by applicable law.
12
8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Except as otherwise disclosed
in the Purchase Agreement, neither the Company nor any of its subsidiaries is a
party to an agreement currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.
(c) Market Standoff. Each Holder hereby agrees that it shall
not, to the extent requested by the Company or an underwriter of securities of
the Company, directly or indirectly sell, contract to sell, make any short sale,
pledge or otherwise transfer or dispose of, or enter into any hedging
transaction that is likely to result in a transfer (collectively, a "transfer")
of, any shares of the Company's Common Stock, options to acquire shares of the
Company's Common Stock or securities exchangeable for or convertible into shares
of the Company's Common Stock which he, she or it may then own, for a period
commencing on or about the date that the Company enters into an underwriting
agreement in connection with a public offering of the Company's securities and
ending on the date which is ninety (90) days after the date of the final
prospectus in connection with any such offering; provided, however, that the
Holder may transfer shares of Common Stock as a bona fide gift for estate
planning purposes provided that the transferee agrees in writing to be bound by
the terms of this paragraph. Each Holder agrees that the provisions of this
paragraph shall binding upon its heirs, legal representatives, successors and
assigns. In addition, each Holder agrees to execute an agreement, in the lead
underwriter's standard form, reflecting the foregoing at the time of the
underwritten offering. The Company may impose stop-transfer instructions with
respect to the Registrable Shares or other securities subject to the foregoing
restriction until the end of the standoff period.
(d) Piggy-Back Registrations. If at any time when there is not
an effective Registration Statement covering all of the Conversion Shares and
Warrant Shares, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for
13
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within seven (7) Business Days
after receipt of such notice, any such holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
the Holders), the Company will cause the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the Holder, to the extent required to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 8(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 8(d) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).
(e) Failure to File Registration Statement and Other
Events. The Company and the Holders agree that the Holders will suffer damages
if the Registration Statement is not filed on or prior to the Filing Date and
maintained in the manner contemplated herein during the Effectiveness Period.
The Company and the Holders further agree that it would not be feasible to
ascertain the
14
extent of such damages with precision. Accordingly, if (i) the Registration
Statement is not filed on or prior to the Filing Date, or (ii) the Company fails
to file with the Commission a request for acceleration in accordance with Rule
12d1-2 promulgated under the Exchange Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
by the Commission that a Registration Statement will not be "reviewed," or not
subject to further review, or (iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with the Commission, except as otherwise permitted
by this Agreement, including pursuant to Section 3(n), or (iv) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from NASDAQ
or any other securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed for any reason for more than three (3) Business Days in the aggregate,
other than pursuant to Section 3(n), or (v) the conversion rights of the Holders
are suspended for any reason without the consent of the particular Holder other
than as set forth in the Statement of Designation, or (vi) the Company has
breached Section 3(n) of this Agreement (any such failure or breach being
referred to as an "Event"), the Company shall pay in cash as liquidated damages
for such failure and not as a penalty to each Holder an amount equal to two
percent (2%) of such Holder's pro rata share of the purchase price paid by all
Holders for Preferred Stock purchased and then outstanding pursuant to the
Purchase Agreement for the initial thirty (30) day period until the applicable
Event has been cured or until the Preferred Stock has been redeemed (whichever
is earlier), which shall be pro rated for such periods less than thirty (30)
days and two percent (2%) of such Holder's pro rata share of the purchase price
paid by all Holders for Preferred Stock purchased and then outstanding pursuant
to the Purchase Agreement for each subsequent thirty (30) day period until the
applicable Event has been cured which shall be pro rated for such periods less
than thirty days (the "Periodic Amount"). Payments to be made pursuant to this
Section 8(e) shall be due and payable immediately upon demand in immediately
available cash funds. The parties agree that the Periodic Amount represents a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of damages that may be incurred by the Holders if the
Registration Statement is not filed on or prior to the Filing Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if any other Event as described herein has occurred.
(f) Specific Enforcement, Consent to Jurisdiction.
(i) The Company and the Holders acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Purchase Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement or
the Purchase Agreement and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(ii) Each of the Company and the Holders (i) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts located in New York City, New York for the
15
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Holders consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 8(f) shall affect
or limit any right to serve process in any other manner permitted by law.
(g) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and each of the Holders. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of at least a
majority of the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(h) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., New York
City time, on a Business Day, (ii) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Business Day
or later than 5:00 p.m., New York City time, on any date and earlier than 11:59
p.m., New York City time, on such date, (iii) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service such
as Federal Express or (iv) actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be with
respect to each Holder at its address set forth under its name on Schedule 1
attached hereto, or with respect to the Company, addressed to:
Orthovita, Inc.
00 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Chief Financial Officer
Facsimile No.: 000-000-0000
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Xxxxxx, Xxxxx
& Bockius LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Att'n:
Xxxxxxxxx X. Xxxxxx, Esq., Facsimile No. (000) 000-0000. Copies of notices to
any Holder shall be sent to the addresses listed on Schedule 1 attached hereto.
Copies of
16
notices to OrbiMed shall be sent to Xxxxxxxx Xxxxx & Deutsch LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxx, Esq., Facsimile No.
(000) 000-0000_ and copies of notices to any Holder other than OrbiMed shall be
sent to Xxxx Xxxxxxx, P.C., 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq., Facsimile No.: (000) 000-0000.
(i) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Holder may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Preferred Stock, the Warrants or the Registrable Securities
if: (i) the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment the further disposition of such
securities by the transferee or assignees is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section 8(j),
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions of this Agreement and delivers the Proxy to the Company, and
(v) such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement. The rights to assignment shall apply to
the Holders (and to subsequent) successors and assigns.
(k) Counterparts; Facsimile. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(l) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof.
(m) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
17
(n) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(o) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
(p) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(q) Notice of Effectiveness. Within two (2) Business Days
after the Registration Statement which includes the Registrable Securities is
ordered effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable Securities
are included in such Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit B.
[Signature Page Follows]
18
IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
COMPANY:
ORBIMED ASSOCIATES LLC ORTHOVITA, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------ ------------------
Name: Xxxxxxxx Xxxxxxxxxxx Xxxxxx Xxxxxxx, Chief Executive Officer
Title: Director
PW JUNIPER CROSSOVER FUND LLC
By: /s/ Xxxxxxxx Xxxxxxxxxxx
------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Director
CADUCEUS PRIVATE INVESTMENTS,
L.P.
By: /s/ Xxxxxxxx Xxxxxxxxxxx
------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Director
SDS MERCHANT FUND, L.P.
by its Managing Member,
SDS Capital Partners, L.L.C.
19
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: General Counsel
DMG LEGACY FUND LLC
by its Managing Member,
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
DMG LEGACY INSTITUTIONAL FUND LLC
by its Managing Member,
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
DMG LEGACY INTERNATIONAL FUND LTD.
by its Investment Advisor
DMG Advisors LLC
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
PROMED PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Member and Portfolio
Manager
20
PROMED OFFSHORE FUND, LTD.
By: /s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Member and Portfolio
Manager
XMARK FUND, L.P.
By: /s/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
Title: CIO
XMARK FUND, LTD.
By: /s/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
Title: CIO
SCO CAPITAL PARTNERS LLC
By: /s/ illegible
-------------
Name:
Title:
By: /s/ Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx
21
SCHEDULE 1
PURCHASERS
OrbiMed Associates LLC
PW Juniper Crossover Fund LLC
Caduceus Private Investment L.P.
SDS Merchant Fund, L.P.
DMG Legacy Fund LLC
DMG Legacy Institutional Fund LLC
DMG Legacy International Fund Ltd.
ProMed Partners, L.P.
ProMed Offshore Fund, Ltd.
Xmark Fund, L.P.
Xmark Fund, Ltd.
SCO Capital Partners LLC
Xxxx Xxxxxxxx
22
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other
successors-in-interest directly to purchasers or to or through underwriters,
broker-dealers or through agents. Sales may be made from time to time on the
Nasdaq National Market, any other exchange upon which our shares may trade in
the future, in the over-the-counter market or otherwise, at market prices
prevailing at the time of sale, at prices related to market prices, or at
negotiated or fixed prices. The shares may be sold by one or more of, or a
combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction [(including crosses
in which the same broker acts as agent for both sides of the
transaction)];
- purchases by a broker-dealer as principal and resale by such
broker-dealer, including resales for its account, pursuant to this
prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in making short sales or in transactions to cover short sales; and
- put or call option transactions relating to the shares.
The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling security holders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
selling security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holders. The selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of shares offered by this prospectus to those
broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).
The selling security holders and any broker-dealers that act in
connection with the sale of shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, and any commissions
received by broker-dealers or any profit on the resale of the shares sold by
them while acting as principals may be deemed to be underwriting discounts or
commissions under the Securities Act. The selling security holders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares against liabilities, including liabilities arising
under the Securities Act. Orthovita has agreed to indemnify each of the selling
security holders and each selling security holder has agreed, severally and not
jointly, to indemnify Orthovita against some liabilities in connection with the
offering of the shares, including liabilities arising under the Securities Act.
The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.
Selling security holders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required pursuant to Rule 424(b)
under the Securities Act, disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transactions.
In addition, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.
Expenses Associated with Registration. We are paying all expenses and
fees in connection with the registration of the shares. The selling security
holders will bear all brokerage or underwriting discounts or commissions paid to
broker-dealers in connection with the sale of the shares.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and Address of Transfer Agent]
Re: Orthovita, Inc.
Dear [______]:
We are counsel to Orthovita, Inc., a Pennsylvania corporation (the
"Company"), and have represented the Company in connection with that certain
Preferred Stock and Warrant Purchase Agreement (the "Purchase Agreement") dated
as of July 19, 2002 by and among the Company and the buyers named therein
(collectively, the "Holders") pursuant to which the Company issued to the
Holders its Series A 6% Cumulative Convertible Voting Preferred Stock, Stated
Value $10,000 per share, par value $0.01 per share, (the "Preferred Stock")
convertible into shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), and warrants to purchase shares of the Common Stock (the
"Warrants"). Pursuant to the Purchase Agreement, the Company has also entered
into an Investor Rights Agreement with the Holders (the "Investor Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the shares of Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants, under the Securities Act of 1933, as amended
(the "1933 Act"). In connection with the Company's obligations under the
Investor Rights Agreement, on ____________ ___, 2002, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling securityholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
By:__________________________________
cc: [LIST NAMES OF HOLDERS]
EXHIBIT C
IRREVOCABLE PROXY
All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Preferred Stock and Warrant Purchase Agreement (the
"Purchase Agreement") of even date herewith among Orthovita, Inc., a
Pennsylvania corporation ("Company"), the undersigned purchaser (the
"Securityholder") of Company's Series A 6% Adjustable Cumulative Convertible
Voting Preferred Stock and Warrants to purchase shares of the Company's Common
Stock, and the other purchasers named therein.
Securityholder hereby irrevocably appoints the directors of the Board of
Directors of the Company and each of them, as the sole and exclusive attorneys
and proxies of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
the voting of the Voting Securities and the New Securities (as such term is
defined below) on the matters described below (and on no other matter), until
such date and time when (i) all of the Preferred Stock has been redeemed or
converted and (ii) all of the Warrants have been exercised or have expired
unexercised. Upon the execution hereof, all prior proxies given by the
undersigned with respect to the Voting Securities and the New Securities and any
and all other securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.
This proxy is irrevocable (to the fullest extent permitted by law and subject to
the termination of the Proxy as set forth in Section 7(a) of the Investor Rights
Agreement of even date herewith among the Company, the undersigned and the other
parties thereto (the "Investor Rights Agreement")), is granted pursuant to the
Purchase Agreement and the Investor Rights Agreement, is granted in
consideration of the Company entering into the Purchase Agreement and the
Investor Rights Agreement and is coupled with an interest. The attorneys and
proxies named above will be empowered at any time prior to such date and time
when (i) all of the Preferred Stock has been redeemed or converted and (ii) all
of the Warrants have been exercised or have expired unexercised, to exercise all
voting rights (including, without limitation, the power to execute and deliver
written consents with respect to the Voting Securities and the New Securities)
of the undersigned at every annual, special or adjourned meeting of the
Company's shareholders, and in every written consent in lieu of such a meeting,
or otherwise, to vote the Voting Securities and the New Securities in favor of
and shall otherwise consent: (i) in favor of approval of the issuance of
securities by the Company upon the conversion of the Preferred Stock, payment of
dividends on the Preferred Stock and exercise of the Warrants, without regard to
the Issuance Cap Amount (as such term is defined in the Statement of
Designation); and (ii) against approval of any proposal made in opposition to,
or in competition with, conversion of the Preferred Stock, payment of dividends
on the Preferred Stock and exercise of the Warrants, without regard to the
Issuance Cap Amount.
The attorneys and proxies named above may only exercise this proxy to vote the
Voting Securities and the New Securities subject hereto in the manner described
above at any time prior to such date and time when (i) all of the Preferred
Stock has been redeemed or converted and (ii) all of the Warrants have been
exercised or have expired unexercised as of such date, at every annual, special
or adjourned meeting of the shareholders of the Company and in every written
consent in lieu of such meeting. The undersigned Securityholder may vote the
Voting Securities and the New Securities on all other matters.
Securityholder agrees that any securities of the Company that Securityholder
purchases or with respect to which Securityholder otherwise acquires beneficial
ownership after the date hereof ("New Securities") shall be subject to the terms
and conditions of this proxy to the same extent as if they constituted Voting
Securities.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
[Name of Securityholder]
By: __________________________
Name:
Title:
Dated: , 2002
