SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant
to Rule 13d-1(A) and
Amendments Thereto Filed Pursuant to Rule 13d-2(A)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Under the Securities Exchange Act of 1934
(Amendment No. 5 )*
CRDENTIA CORP.
--------------
(Name of Issuer)
Common Stock, $.0001 par value
------------------------------
(Title of Class of Securities)
225235209
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(CUSIP Number)
Ann E. Carey, Business Legal Assistant
Howard Rice Nemerovski Canady Falk & Rabkin,
A Professional Corporation
Three Embarcadero Center, Suite 700
San Francisco, CA 94111
(415) 434-1600
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 29, 2005
--------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [].
Note: Schedules filed in paper format shall include a signed original and
five copies of this schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
CUSIP No. 225235209 SCHEDULE 13G Page 2 of 68
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 225235209 SCHEDULE 13G Page 3 of 68
1 Name of Reporting Person MEDCAP MANAGEMENT & RESEARCH LLC
IRS Identification No. of Above Person
94-3411543
2 Check the Appropriate Box if a Member of a Group (a) []
(b) []
3 SEC USE ONLY
4 Source of Funds OO
5 Check Box if Disclosure of Legal Proceedings is []
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization Delaware
7 Sole Voting Power 35,225,405
NUMBER OF
SHARES 8 Shared Voting Power 0
BENEFICIALLY
OWNED BY EACH 9 Sole Dispositive Power 35,225,405
REPORTING
PERSON WITH 10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 35,225,405
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 []
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row 11 66.9%
14 Type of Reporting Person IA
CUSIP No. 225235209 SCHEDULE 13G Page 4 of 68
1 Name of Reporting Person MEDCAP PARTNERS L.P.
IRS Identification Nos. of Above Person 94-3412423
2 Check the Appropriate Box if a Member of a Group (a) []
(b) []
3 SEC USE ONLY
4 Source of Funds WC
5 Check Box if Disclosure of Legal Proceedings is []
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization Delaware
7 Sole Voting Power 35,225,405
NUMBER OF
SHARES 8 Shared Voting Power 0
BENEFICIALLY
OWNED BY EACH 9 Sole Dispositive Power 35,225,405
REPORTING
PERSON WITH 10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 35,225,405
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 []
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row 11 66.9%
14 Type of Reporting Person PN
CUSIP No. 225235209 SCHEDULE 13G Page 5 of 68
1 Name of Reporting Person C. FRED TONEY
IRS Identification No. of Above Person
2 Check the Appropriate Box if a Member of a Group (a) []
(b) []
3 SEC USE ONLY
4 Source of Funds OO
5 Check Box if Disclosure of Legal Proceedings is []
Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization United States
7 Sole Voting Power 35,225,405
NUMBER OF
SHARES 8 Shared Voting Power 0
BENEFICIALLY
OWNED BY EACH 9 Sole Dispositive Power 35,225,405
REPORTING
PERSON WITH 10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by 35,225,405
Reporting Person
12 Check Box if the Aggregate Amount in Row 11 []
Excludes Certain Shares
13 Percent of Class Represented by Amount in Row 11 66.9%
14 Type of Reporting Person IN, HC
CUSIP No. 225235209 SCHEDULE 13G Page 6 of 68
Item 1. Security and Issuer
This Schedule 13D ("Schedule") relates to shares of
common stock, with par value $.0001 (the "Common Stock"), of
Crdentia Corp. (the "Issuer"). The principal executive office of
the Issuer is 14114 Dallas Parkway, Suite 600, Dallas, TX 75254.
Item 2. Identity and Background
This Schedule is filed on behalf of MedCap Partners L.P.
("MedCap"), MedCap Management & Research LLC ("MMR") and C. Fred
Toney ("Toney"), each of whose principal business office address
is 500 Third Street, Suite 535, San Francisco, CA 94107.
MedCap is an investment limited partnership, whose
general partner is MMR. MMR is an investment adviser registered
under the laws of the State of California. Toney is MMR's sole
managing member.
None of MedCap, MMR nor Toney has, during the past five
years, been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors).
None of MedCap, MMR nor Toney has, during the past five
years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of
which any of them became or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
MedCap is a Delaware limited partnership, MMR is a
Delaware limited liability company and Toney is a United States
citizen.
Item 3. Source and Amount of Funds or Other Consideration
The source of funds to make the purchases described in
Item 5(c) was (i) working capital of MedCap in the amount of
$5,034,998.90 and (ii) the cancellation of four notes payable by
the Issuer to MedCap with a total principal amount of $1,450,000
and accrued interest of $15,041.10 (the "Notes"). The total
amount of the cash and the Notes to make the purchases described
in Item 5(c) was $6,500,040. The Notes related to loans made by
MedCap to the Issuer on November 29, 2004, January 4, 2005,
February 2, 2005 and March 1, 2005, respectively, which loans
were funded from MedCap's working capital.
CUSIP No. 225235209 SCHEDULE 13G Page 7 of 68
Item 4. Purpose of Transaction
The acquisitions of Series C Preferred Stock and Common
Stock described in Item 5(c) were made for investment purposes.
Toney is a member of the Issuer's Board of Directors.
Except as described herein, the reporting persons do not
currently have any plans or proposals that relate to or would
result in any of the following:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving the Issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the
board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of the issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of
the Act; or
(j) Any action similar to those enumerated above.
Depending upon market conditions and other factors, the
reporting persons may acquire additional securities of the
Issuer, or alternatively, may dispose of some or all of the
securities of the Issuer beneficially owned by them. In
addition, MedCap may receive stock dividends on the shares of
Series C Preferred Stock that it holds.
CUSIP No. 225235209 SCHEDULE 13G Page 8 of 68
Item 5. Interest in Securities of the Issuer
(a) MedCap beneficially owns 7,270,505 shares of Issuer's Common
Stock and 151,251 shares of Issuer's Series C Preferred
Stock which are currently convertible into 15,125,100 shares
of Common Stock. MedCap also owns warrants giving it the
right to acquire (i) 6,000 shares of Series B-1 Preferred
Stock for $60 per share (6,000 shares of Series B-1
Preferred Stock, in turn, would currently be convertible
into 600,000 shares of Common Stock) and (ii) 122,298 shares
of Series C Preferred Stock for $60 per share (122,298
shares of Series C Preferred Stock, in turn, would currently
be convertible into 12,229,800 shares of Common Stock).
MMR as general partner and investment manager of MedCap and
Toney as the sole managing member of MMR may be deemed to
beneficially own the shares owned by MedCap in that they may
be deemed to have the power to direct the voting or
disposition of the shares. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to
constitute an admission that either MMR or Toney is, for any
other purpose, the beneficial owner of any such securities
to which this Schedule relates, and MMR and Toney disclaim
beneficial ownership as to the Common Stock except to the
extent of their respective pecuniary interests therein.
Based on the number of shares outstanding reported in the
Issuer's most recent annual report on Form 10-KSB and shares
reported in filings with the SEC as being issued to various
parties, the percentage of Common Stock beneficially owned
by MedCap, MMR and Toney for the purposes of this Schedule
13D is 66.9%.
(b) Reference is made hereby to Items 7 to 10 of pages 3, 4 and
5 of this Schedule, which Items are incorporated herein by
reference.
CUSIP No. 225235209 SCHEDULE 13G Page 9 of 68
(c) On March 29, 2005, MedCap exercised warrants that it held to
acquire from the Issuer 108,334 shares of Series C Preferred
Stock (currently convertible into 10,833,400 shares of
Common Stock) for a total consideration of $6,500,040 (the
Series C Preferred Stock acquired upon the exercise of the
warrants are referred to as the "Warrant Shares"). The
consideration for the Warrant Shares consisted of
$5,034,998.90 in cash and $1,465,041.10, representing the
value of the principal ($1,450,000) and accrued interest
($15,041.10) on the cancelled Notes. Under the terms of the
warrants, the exercise price was $60 for each share of
Series C Preferred Stock. In connection with the exercise
of the warrants, MedCap received 77,751 shares of Common
Stock (the "Additional Common Stock") for no additional
consideration. In order to exercise the warrants, MedCap
surrendered to the Issuer warrants exercisable for 131,320
shares of Series C Preferred Stock and, in addition to the
Warrant Shares and the Additional Common Stock, received a
new warrant exercisable for 22,986 shares of Series C
Preferred Stock.
The acquisition of the Warrant Shares and the Additional
Common Stock occurred in connection with a financing by the
Issuer (the "Financing"). As part of the Financing, the
Issuer entered into a letter agreement with MedCap (the
"Letter Agreement") pursuant to which the Issuer agreed to
register for resale (i) all of the shares of Common Stock
and the Common Stock that can be acquired upon the
conversion of the Series C Preferred Stock that are held by
MedCap and (ii) shares of Common Stock underlying all of the
warrants that MedCap holds to acquire the Issuer's preferred
stock; provided that, the Issuer is not required to register
for resale Common Stock underlying the warrants unless such
shares can be registered at the time that the shares of
Common Stock listed in item (i) are registered for resale.
Under a previous registration rights agreement executed by
the Issuer, which in part is amended by the Letter
Agreement, MedCap and certain other investors have a right
to require the Issuer to register additional shares of
Common Stock that may become outstanding following the
exercise of certain warrants to acquire preferred stock and
the conversion of such preferred stock into Common Stock;
provided that, such shares of Common Stock have not already
been registered for resale by the Issuer.
As part of the Financing, on March 29, 2005, 3,750,000
shares of the Issuer's Series B Preferred Stock that were
held by MedCap were converted into 1,250,000 shares of
Common Stock.
CUSIP No. 225235209 SCHEDULE 13G Page 10 of 68
Series C Preferred Stock is currently convertible at the
option of its holder into 100 shares of Common Stock per
share of Series C Preferred Stock. MedCap currently has
outstanding warrants permitting it to acquire 122,298 shares
of Series C Preferred Stock for $60 per share and the
warrants for Series C Preferred Stock that MedCap holds
would currently be indirectly convertible into 12,229,800
shares of Common Stock.
On March 22, 2005, a dividend of 277,085 shares of Common
Stock was paid to MedCap on the shares of Series C Preferred
Stock and Series B Preferred Stock that it then held. Under
the terms of the warrants for the Series C Preferred Stock,
the Issuer was required to make a distribution on the
108,334 shares of Series C Preferred Stock that were
acquired by MedCap upon the exercise of the warrants at the
same rate as the dividends previously paid on the
outstanding shares of Series C Preferred Stock. As a
result, upon the exercise of the warrants on March 29, 2005,
MedCap received 705,732 shares of Common Stock (for no
additional consideration) in addition to the 108,334 shares
of Series C Preferred Stock.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
MedCap is a party to an Amended and Restated Registration
Rights Agreement entitling it to registration rights with respect
to Common Stock issuable upon conversion of its shares of Series
A Preferred Stock, Series B-1 Preferred Stock and Series C
Preferred Stock, including any Series B-1 Preferred or Series C
Preferred issued upon exercise of the Warrants.
MedCap and the Issuer are also parties to the Letter
Agreement which amends in part the Amended and Restated
Registration Rights Agreement. Under the Letter Agreement, the
Issuer agrees to register for resale (i) all of the shares of
Common Stock and the Common Stock that can be acquired upon the
conversion of the Series C Preferred Stock that are held by
MedCap and (ii) shares of Common Stock underlying all of the
warrants that MedCap holds to acquire the Issuer's preferred
stock; provided that, the Issuer is not required to register for
resale Common Stock underlying the warrants unless such shares
can be registered at the time that the shares of Common Stock
listed in item (i) are registered for resale.
CUSIP No. 225235209 SCHEDULE 13G Page 11 of 68
Item 7. Material to be Filed as Exhibits
No. Exhibit
1. Agreement Regarding Joint Filing of Statement on Schedule
13D or 13G
2. Amended and Restated Registration Rights Agreement between
the Issuer and MedCap dated August 30, 2004, as amended by
the Letter Agreement listed as Exhibit 3 below (included as
Exhibit 2 to MedCap's, MMR's and Toney's Schedule 13D/A No.
1 filed with the Commission on September 3, 2004 and
incorporated herein by reference)
3. Letter Agreement dated March 29, 2005, between the Issuer
and MedCap (the "Letter Agreement")
4. Warrant to Purchase Shares of Series B-1 Preferred Stock of
the Issuer issued to MedCap dated August 31, 2004 (included
as Exhibit 5 to MedCap's, MMR's and Toney's Schedule 13D/A
No. 1 filed with the Commission on September 3, 2004 and
incorporated herein by reference)
5. Warrant to Purchase Shares of Series C Preferred Stock of
the Issuer issued to MedCap dated September 25, 2004
(included as Exhibit 6 to MedCap's, MMR's and Toney's
Schedule 13D/A No. 2 filed with the Commission on September
24, 2004 and incorporated herein by reference)
6. Warrant to Purchase Shares of Series C Preferred Stock of
the Issuer issued to MedCap dated October 18, 2004
7. Warrant to Purchase Shares of Series C Preferred Stock of
the Issuer issued to MedCap dated October 25, 2004
8. Warrant to Purchase Shares of Series C Preferred Stock of
the Issuer issued to MedCap dated November 3, 2004
9. Warrant to Purchase Shares of Series C Preferred Stock of
the Issuer issued to MedCap dated March 29, 2005
CUSIP No. 225235209 SCHEDULE 13G Page 12 of 68
Signatures
After reasonable inquiry and to the best of each of the
undersigned's respective knowledge and belief, each of the
undersigned certifies that the information set forth in this
statement is true, complete and correct.
DATED: April 7, 2005
MEDCAP PARTNERS L.P.
By its general partner
MedCap Management &
Research LLC
/s/ C. Fred Toney
------------------------
By: C. Fred Toney
Its: Managing Member
MEDCAP MANAGEMENT &
RESEARCH LLC
/s/ C. Fred Toney
------------------------
By: C. Fred Toney
Its: Managing Member
C. FRED TONEY
/s/ C. Fred Toney
------------------------
CUSIP No. 225235209 SCHEDULE 13G Page 13 of 68
Exhibit Index
Exhibit 1 Agreement Regarding Joint Filing of Statement on Schedule 13D
or 13G.
Exhibit 3 Letter Agreement dated March 29, 2005, between the Issuer and
MedCap.
Exhibit 6 Warrant to Purchase Shares of Series C Preferred Stock of the
Issuer issued to MedCap dated October 18, 2004
Exhibit 7 Warrant to Purchase Shares of Series C referred Stock of the
Issuer issued to MedCap dated October 25, 2004
Exhibit 8 Warrant to Purchase Shares of Series C Preferred Stock of the
Issuer issued to MedCap dated November 3, 2004
Exhibit 9 Warrant to Purchase Shares of Series C Preferred Stock of the
Issuer issued to MedCap dated March 29, 2005
CUSIP No. 225235209 SCHEDULE 13G Page 14 of 68
Exhibit 1
AGREEMENT REGARDING JOINT FILING OF STATEMENT ON SCHEDULE
13D OR 13G
The undersigned agree to file jointly with the Securities
and Exchange Commission (the "SEC") any and all statements on
Schedule 13D or Schedule 13G (and any amendments or supplements
thereto) required under section 13(d) of the Securities Exchange
Act of 1934, as amended, in connection with purchases by the
undersigned of the common stock of Crdentia Corp. For that
purpose, the undersigned hereby constitute and appoint C. Fred
Toney as their true and lawful agent and attorney-in-fact, with
full power and authority for and on behalf of the undersigned to
prepare or cause to be prepared, sign, file with the SEC and
furnish to any other person all certificates, instruments,
agreements and documents necessary to comply with section 13(d)
and section 16(a) of the Securities Exchange Act of 1934, as
amended, in connection with said purchases, and to do and perform
every act necessary and proper to be done incident to the
exercise of the foregoing power, as fully as the undersigned
might or could do if personally present.
DATED: April 7, 2005
MEDCAP PARTNERS L.P.
By its general partner
MedCap Management &
Research LLC
/s/ C. Fred Toney
------------------------
By: C. Fred Toney
Its: Managing Member
MEDCAP MANAGEMENT &
RESEARCH LLC
/s/ C. Fred Toney
------------------------
By: C. Fred Toney
Its: Managing Member
C. FRED TONEY
/s/ C. Fred Toney
------------------------
CUSIP No. 225235209 SCHEDULE 13G Page 15 of 68
Exhibit 3
LETTER AGREEMENT DATED MARCH 29, 2005
Crdentia Corp.
14114 Dallas Pkwy, Suite 600
Dallas, Texas 75254
March 29, 2005
MedCap Partners L.P.
500 Third Street, Suite 535
San Francisco, CA 94107
Attn: C. Fred Toney
Dear Mr. Toney:
This letter agreement (this "Letter Agreement") reflects
certain understandings by and between Crdentia Corp. (the
"Company") and MedCap Partners L.P. ("MedCap") in connection with
MedCap's exercise of warrants to purchase 108,334 shares of the
Company's Series C Preferred Stock (the "Financing").
1. Attorney Fees. The Company hereby acknowledges and agrees
that it will pay reasonable attorney's fees and expenses incurred
by MedCap in connection with the Financing, including any such
reasonable fees in connection with MedCap's filing of a Schedule
13D related to the Financing.
2. Registration Rights.
(a). The Company hereby acknowledges and agrees that it
will, within thirty (30) days of the closing of the Financing
(the "Closing") file a registration statement with the Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended, covering the resale of all MedCap Shares (as
defined below), and use its reasonable efforts to have such
registration statement declared effective by the SEC within
ninety (90) days of the Closing. For purposes of this Letter
Agreement, "MedCap Shares" means (i) all shares of outstanding
Common Stock of the Company held by MedCap immediately following
the Closing (including the shares of Common Stock issued to
MedCap pursuant to Section 3 of this Letter Agreement and the
shares of Common Stock issued to MedCap in connection with the
conversion of the Company's outstanding Series B Preferred
Stock), and (ii) the Common Stock of the Company issued or
issuable to MedCap pursuant to conversion of the Series C
Preferred Stock of the Company held by MedCap immediately
following the Closing and (iii) the Registrable Warrant Shares
CUSIP No. 225235209 SCHEDULE 13G Page 16 of 68
(as defined below). For purposes of this Letter Agreement,
"Registrable Warrant Shares" shall mean shares of Common Stock of
the Company issuable to MedCap pursuant to the conversion of
Series B-1 or Series C Preferred Stock of the Company that may be
acquired by MedCap upon the exercise of any outstanding warrant
for shares of the Company's Series B-1 or Series C Preferred
Stock held by MedCap immediately following the Closing; provided
that, such shares of Common Stock are eligible to be registered
for resale pursuant to the SEC registration statement form (e.g.,
Form S-2 or Form S-3) on which the Company decides to register
the MedCap Shares listed in items (i) and (ii) of the previous
sentence at the time that the MedCap Shares listed in items (i)
and (ii) are registered for resale.
(b). The Company and MedCap agree that their respective
obligations with respect to the registration to be effected
pursuant to Section 2(a) of this Letter Agreement shall be
identical, to the extent applicable, to those set forth in
Sections 1.4, 1.5, 1.9, 1.12 and 1.13 (including any applicable
defined terms that may be elsewhere defined) of that certain
Amended and Restated Registration Rights Agreement dated August
31, 2004 by and between the Company, MedCap and the other
investors listed on Schedule A thereto (the "Registration Rights
Agreement"). Such sections of the Registration Rights Agreement
are hereby incorporated herein by reference, to the extent
applicable; provided that, the term "Holder" or "Holders" as used
in such incorporated provisions shall mean MedCap. All expenses
(other than underwriting discounts and commissions, stock
transfer taxes and fees of counsel to MedCap in excess of
$15,000) incurred in connection with the registration set forth
in this Section 2, including (without limitation) all federal or
state registration, filing and qualification fees, printers' and
accounting fees and fees and disbursements of counsel for the
Company, shall be borne by the Company. The Company shall pay up
to an aggregate of $15,000 of MedCap's legal fees in connection
with the registration. If MedCap at any time intends to
distribute all or a part of the MedCap Shares covered by the
registration statement filed pursuant to this Section 2 by means
of an underwriting, it shall so advise the Company and the
Company and MedCap shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by
the Company and MedCap. The Company agrees to file any
amendments or supplements to the registration statement in order
to permit any underwritten offering.
CUSIP No. 225235209 SCHEDULE 13G Page 17 of 68
(c). Pursuant to Section 2.8 of the Registration Rights
Agreement, the Company and MedCap hereby amend and restate
Section 1.1(g) of the Registration Rights Agreement in its
entirety as set forth on Exhibit A hereto. The granting to
MedCap of the registration rights set forth in this Letter
Agreement, shall not reduce the number of times that any of the
parties to the Registration Rights Agreement shall have the right
to require the Company to register any securities pursuant to the
Registration Rights Agreement or otherwise affect any other
rights that are granted pursuant to the Registration Rights
Agreement.
3. Common Stock Issuance. In consideration for MedCap
extending, through the Closing, the maturity of certain
indebtedness owed by the Company, the Company agrees to issue to
MedCap, 77,751 shares of Common Stock. Following the Closing,
the Company shall promptly instruct its transfer agent to issue
to MedCap a stock certificate representing such shares of Common
Stock. The Company hereby represents and warrants that the
payment for such shares of Common Stock shall be adequate
consideration and such shares, when issued, will be fully paid
and non-assessable.
4. Audit Committee Financial Expert. The Company agrees that it
shall, in connection with the Closing, designate an audit
committee financial expert (as such term is defined in the rules
of the SEC).
5. Miscellaneous
(a). This Letter Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to
agreements among Delaware residents entered into and to be
performed entirely within Delaware.
(b). This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(c). This Letter Agreement constitutes the full and entire
understanding and agreement between the parties with regard to
the subjects hereof.
(d). Except as expressly amended, restated or consented to
in this Letter Agreement, the Registration Rights Agreement shall
continue in full force and effect.
(e). The consideration for the exercise of the warrants to
purchase 108,334 shares of the Company's Series C Preferred Stock
shall consist of cash in the amount of $5,034,998.90 (to be paid
by wire transfer) and the termination of notes issued by the
Company to MedCap with a principal outstanding amount of
$1,450,000 and accrued interest of $15,041.10.
CUSIP No. 225235209 SCHEDULE 13G Page 18 of 68
(f). Notwithstanding any conversion of Series B-1
Preferred Stock into shares of Common Stock by the holders of the
Series B-1 Preferred Stock in connection with the Financing, the
warrant which MedCap holds that is convertible into 6,000 shares
of Series B-1 Preferred Stock shall remain outstanding and after
the Closing will continue to be exercisable for shares of Series
B-1 Preferred Stock.
(g) The Company represents and warrants that, in connection
with the Closing, all of the outstanding shares of Series B and B-
1 Preferred Stock of the Company will be converted into shares of
the Company's Common Stock in accordance with the terms of the
notice of meeting provided to the holders of Series B and Series
B-1 Preferred Stock.
[SIGNATURE PAGE FOLLOWS]
Very truly yours,
CRDENTIA CORP.
/s/ James D. Durham
-------------------------------
By: James D. Durham,
Its: Chief Executive Officer
ACKNOWLEDGED AND AGREED
MEDCAP PARTNERS L.P.
By: MedCap Management & Research LLC
Its: General Partner
/s/ C. Fred Toney
-----------------------
By: C. Fred Toney
Its: Managing Member
CUSIP No. 225235209 SCHEDULE 13G Page 19 of 68
Exhibit 6
WARRANT TO PURCHASE SHARES OF SERIES C
PREFERRED STOCK OF THE ISSUER ISSUED TO MEDCAP
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
Void after
October 18, 2009
WARRANT TO PURCHASE SHARES
OF SERIES C PREFERRED STOCK
of
CRDENTIA CORP.
This certifies that, for value received, MedCap Partners
L.P., together with its successors and assigns (the "Holder") is
entitled to subscribe for and purchase, on the terms hereof,
shares of Series C Preferred Stock (the "Stock") of Crdentia
Corp., a Delaware corporation (the "Company"), which is
convertible into shares of Common Stock of the Company (the
"Common Stock"), subject to adjustment as provided herein.
This Warrant is subject to the following terms and
conditions:
1. Exercise of Warrant. The terms and conditions upon
which this Warrant may be exercised, and the Stock covered hereby
may be purchased, are as follows:
1.1 Term. Subject to the terms hereof, this Warrant
may be exercised at any time after the date hereof, or from time
to time, in whole or in part; provided, however, that in no event
may this Warrant be exercised (the "Exercise Date") later than
5:00 p.m. (Pacific Time) on the earlier of (a) the close of
business on October 18, 2009 or (b) the closing of a Corporate
Transaction (as defined below) (the "Exercise Period"); provided
that at least twenty (20) days prior to the occurrence of the
closing of a Corporate Transaction, the Company shall have sent
to the Holder notice of such event.
CUSIP No. 225235209 SCHEDULE 13G Page 20 of 68
For purposes hereof, the term "Corporate Transaction"
shall mean (a) the sale, conveyance or disposal of all or
substantially all of the Company's property or business; (b) the
Company's merger into or consolidation with any other corporation
(other than a merger effected exclusively for the purpose of
changing the domicile of the Company or a merger in which the
owners of the voting stock of the Company prior to the merger own
at least 50% of the voting interests in the surviving entity) or
any other transaction or series of transactions, in which more
than fifty percent (50%) of the voting power of the Company is
disposed of (other than a sale by the Company of shares of its
capital stock in an equity financing); or (c) the closing of an
underwritten public offering of the Company's Common Stock
pursuant to a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with aggregate net
proceeds to the Company in excess of twenty-five million dollars
($25,000,000).
1.2 Number of Shares. This Warrant may be exercised
for 62,695 shares of Stock, subject to adjustment as provided
herein.
1.3 Exercise Price. The per share exercise price for
the shares of Stock to be issued upon exercise of this Warrant
shall be $60.00, subject to adjustment as provided herein (such
price as adjusted from time to time as provided herein is called
the "Exercise Price").
1.4 Method of Exercise. The exercise of the purchase
rights evidenced by this Warrant shall be effected by (a) the
surrender of the Warrant, together with a duly executed copy of
the form of a subscription attached hereto as Schedule 1, to the
Company at its principal offices and (b) except as set forth in
Section 1.5, the delivery of the aggregate Exercise Price by
check or bank draft payable to the Company's order or by wire
transfer to the Company's account for the number of shares for
which the purchase rights hereunder are being exercised or any
other form of consideration approved by the Company's Board of
Directors (the "Board"). Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been
surrendered to the Company as provided herein or at such later
date as may be specified in the executed form of subscription,
and at such time the person or persons in whose name or names any
certificate or certificates for shares of Stock shall be issuable
upon such exercise as provided herein shall be deemed to have
become the holder or holders of record thereof.
CUSIP No. 225235209 SCHEDULE 13G Page 21 of 68
1.5 Net Issuance.
(a) Right to Convert. In addition to and
without limiting the rights of the Holder under the terms of
this Warrant, the Holder shall have the right to convert
this Warrant or any portion thereof (the "Conversion Right")
into shares of Stock as provided in this Section 1.5 at any
time or from time to time during the Exercise Period. Upon
exercise of the Conversion Right with respect to a
particular number of shares subject to the Warrant (the
"Converted Warrant Shares"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise
price or any cash or other consideration) that number of
shares of fully paid and nonassessable Stock computed using
the following formula:
X = Y (A - B)
A
Where X = the number of shares of Stock to be
delivered to the Holder
Y = the number of Converted Warrant Shares
A = the fair market value of the total
number of shares of Common Stock into
which one share of Stock can be
converted on the Conversion Date (as
defined below)
B = the Exercise Price (as adjusted to the
Conversion Date)
The Conversion Right may only be exercised with respect
to a whole number of shares subject to the Warrant. No
fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued
determined in accordance with the foregoing formula is other than
a whole number, the Company shall pay to the Holder an amount in
cash equal to the fair market value of the resulting fractional
share on the Conversion Date (as defined below). Shares issued
pursuant to the Conversion Right shall be treated as if they were
issued upon the exercise of the Warrant.
(b) Method of Exercise. The Conversion
Right may be exercised by the Holder by the surrender of the
Warrant at the principal office of the Company together with
a notice in the form attached hereto as Schedule 2
specifying that the Holder thereby intends to exercise the
Conversion Right and indicating the total number of shares
under the Warrant that the Holder is exercising through the
Conversion Right. Such conversion shall be effective upon
receipt by the Company of the Warrant together with the
aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for
the shares issuable upon exercise of the Conversion Right
and, if applicable, a new warrant evidencing the balance of
the shares remaining subject to the Warrant, shall be issued
CUSIP No. 225235209 SCHEDULE 13G Page 22 of 68
as of the Conversion Date and shall be delivered to the
Holder promptly following the Conversion Date.
(c) Determination of Fair Market Value. For
purposes of this Section 1.5, the fair market value of a
share of Common Stock on the Conversion Date shall be the
average of the closing prices of the Common Stock as
reported on a Trading Market (as defined below) for the last
fifteen (15) trading day period ending two (2) days prior to
the Conversion Date. For purposes of this Warrant, "Trading
Market" shall mean one of the following which has been
determined by the Company's Board of Directors to be the
Company's principal trading market: NASD OTC Bulletin
Board, the Nasdaq SmallCap Market, the Nasdaq National
Market, the American Stock Exchange or the New York Stock
Exchange. Notwithstanding the foregoing, in the event the
Common Stock is not publicly trading on the Conversion Date,
the fair market value of a share of Common Stock on the
Conversion Date shall be determined in good faith by the
Company's Board of Directors.
(d) Limit on Exercise. Notwithstanding any
other provision of this Warrant, the Holder shall not be
entitled to exercise the Conversion Right, in whole or in
part, unless the Holder agrees, in writing, to immediately
convert the Shares issued pursuant to the Conversion Right
into shares of the Company's Common Stock (pursuant to the
terms of the Company's Amended and Restated Certificate of
Incorporation and Certificate of Designations, Preferences
and Rights of Series C Preferred Stock of the Company).
2. Adjustment of Exercise Price and Number of Shares.
The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this
Section 2. Upon each adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase,
at the Exercise Price resulting from such adjustment, the number
of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting
from such adjustment.
2.1 Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding shares of
Series C Preferred Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of Series C Preferred Stock of the Company
shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be
proportionately increased.
CUSIP No. 225235209 SCHEDULE 13G Page 23 of 68
2.2 Dividends in Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the
holders of the Series C Preferred Stock (or any shares of stock
or other securities at the time receivable upon the exercise of
this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Series C Preferred Stock, or any shares
of stock or other securities whether or not such securities
are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution, or
(b) any cash paid or payable otherwise than
as a cash dividend, or
(c) Series C Preferred Stock or other or
additional stock or other securities or property (including
cash) by way of spin off, split-up, reclassification,
combination of shares or similar corporate rearrangement,
(other than shares of Stock issued as a stock split,
adjustments in respect of which shall be covered by the
terms of Section 2.1 above),
Then and in each such case, the Holder hereof shall, upon
the exercise of this Warrant, be entitled to receive, in addition
to the number of shares of Stock receivable thereupon, and
without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such
Holder would hold on the date of such exercise had he been the
holder of record of such Stock as of the date on which holders of
Series C Preferred Stock received or became entitled to receive
such shares and/or all other additional stock and other
securities and property.
2.3 Reclassification or Reorganization. If the Stock
(or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant shall be changed into
the same or different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or
stock dividend provided for in Section 2.1 above, or a Corporate
Transaction, in which case this Warrant shall terminate if not
exercised), then and in each such event the Holder shall be
entitled to receive upon the exercise of this Warrant the kind
and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other
change, to which a holder of the number of shares of Stock (or
CUSIP No. 225235209 SCHEDULE 13G Page 24 of 68
any shares of stock or other securities which may be) issuable
upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such
reorganization, reclassification or other change, all subject to
further adjustment as provided herein.
2.4 Notice of Adjustments and Record Dates. The
Company shall promptly notify the Holder in writing of each
adjustment or readjustment of the exercise price hereunder and
the number of shares of Stock (or any shares of stock or other
securities which may be) issuable upon the exercise of this
Warrant. Such notice shall state the adjustment or readjustment
and show in reasonable detail the facts on which that adjustment
or readjustment is based. In the event of any taking by the
Company of a record of the holders of Common Stock for the
purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, the Company shall
notify the Holder in writing of such record date at least twenty
(20) days prior to the date specified therein.
2.5 Shares to be Fully Paid; Reservation of Shares.
The Company covenants and agrees that all shares of Stock which
may be issued upon the exercise of the rights represented by this
Warrant will, upon payment of the Exercise Price and issuance
pursuant to Section 1.4 or a net issuance pursuant to Section
1.5, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any
stockholder and free of all taxes, liens and charges with respect
to the issue thereof. The Company further covenants and agrees
that during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued
Series C Preferred Stock and Common Stock into which such Series
C Preferred Stock may be converted, or other securities and
property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of
Series C Preferred Stock and Common Stock may be issued as
provided herein without violation of any applicable law or
regulation.
3. Replacement of Warrants. On receipt by the Company
of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the
Company at its expense shall execute and deliver to the Holder,
in lieu thereof, a new Warrant of like tenor.
CUSIP No. 225235209 SCHEDULE 13G Page 25 of 68
4. Investment Intent. Unless a current registration
statement under the Securities Act, shall be in effect with
respect to the securities to be issued upon exercise of this
Warrant, the Holder, by accepting this Warrant, covenants and
agrees that, at the time of exercise hereof, and at the time of
any proposed transfer of any securities acquired upon exercise
hereof, the Holder shall deliver to the Company a written
statement that the securities acquired by the Holder upon
exercise hereof are for the own account of the Holder for
investment and are not acquired with a view to, or for sale in
connection with, any distribution thereof (or any portion
thereof) and with no present intention (at any such time) of
offering or distributing such securities (or any portion
thereof).
5. No Rights or Liability as a Shareholder. This
Warrant does not entitle the Holder hereof to any voting rights
or other rights as a shareholder of the Company. No provisions
hereof, in the absence of affirmative action by the Holder to
purchase Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder as a shareholder of the Company.
6. Representations of Holder. The Holder hereby
represents and acknowledges to the Company that:
6.1 this Warrant, the Stock issuable upon exercise of
this Warrant and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection
with a recapitalization, merger, consolidation or other
reorganization will be "restricted securities" as such term is
used in the rules and regulations under the Securities Act, and
that such securities have not been and may not be registered
under the Securities Act or any state securities law, and that
such securities must be held indefinitely unless registration is
effected or transfer can be made pursuant to appropriate
exemptions;
6.2 the Holder has read, and fully understands, the
terms of this Warrant set forth on its face and the attachments
hereto, including the restrictions on transfer contained herein;
6.3 the Holder is purchasing for investment for its
own account and not with a view to or for sale in connection with
any distribution of this Warrant or the Stock of the Company
issuable upon exercise of this Warrant and it has no intention of
selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities
laws;
CUSIP No. 225235209 SCHEDULE 13G Page 26 of 68
6.4 the Company may affix the following legends (in
addition to any other legend(s), if any, required by applicable
state corporate and/or securities laws) to certificates for
shares of Stock (or other securities) issued upon exercise of
this Warrant ("Warrant Shares"):
"These securities have not been registered
under the Securities Act of 1933, as amended.
They may not be sold, offered for sale,
pledged or hypothecated in the absence of a
registration statement in effect with respect
to the securities under such Act or an
opinion of counsel satisfactory to the
Company that such registration is not
required or unless sold pursuant to Rule 144
of such Act."
7. Reserved.
8. Reserved.
9. Limitations on Disposition. The Holder of this
Warrant, by acceptance hereof, agrees to comply in all respects
with the provisions of this Section 9. Without in any way
limiting the representations set forth above, the Holder of this
Warrant agrees not to make any disposition of this Warrant or any
Warrant Shares, unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this
Section 9 and the other provisions of this Warrant as if such
transferee were the original Holder hereof, provided and to the
extent such provisions are then applicable, and
(a) There is then in effect a Registration
Statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such
Registration Statement; or
(b) (i) the Holder shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances
surrounding the proposed disposition, and the Company has given
its prior written consent (which consent shall not be
unreasonably withheld), and (ii) if reasonably requested by the
Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of the Warrant
and/or the Warrant Shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
Notwithstanding any other provision of this Section 9,
Holder may transfer this Warrant and/or the Warrant Shares to any
investment fund in which MedCap Management & Research LLC or any
of its affiliates is the General Partner or the manager; provided
that, such fund is an "accredited investor" as such term is then
defined in Section 501 of Regulation D promulgated pursuant to
the Securities Act.
CUSIP No. 225235209 SCHEDULE 13G Page 27 of 68
10. Miscellaneous.
10.1 Transfer of Warrant. In addition to the transfer
restrictions set forth in Section 9, this Warrant shall not be
transferable or assignable in any manner and no interest shall be
pledged or otherwise encumbered by the Holder without the express
written consent of the Company.
10.2 Titles and Subtitles. The titles and subtitles
used in this Warrant are for convenience only and are not to be
considered in construing or interpreting this Warrant.
10.3 Notice. Notice or demand pursuant to this
Warrant shall be sufficiently given or made, if sent by first-
class mail, postage prepaid, addressed, if to the Holder of this
Warrant, to the Holder at its last known address as it shall
appear in the records of the Company, and if to the Company, at
14114 Dallas Pkwy., Suite 600, Dallas, TX 75254, Attention:
Secretary. The Company may alter the address to which
communications are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 10.3
for the giving of notice.
10.4 Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this
Warrant, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
10.5 Amendment. This Warrant may be modified, amended
or terminated by a writing signed by the Company and the Holder.
10.6 Severability. If one or more provisions of this
Warrant are held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant and the balance of
the Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
10.7 Governing Law. This Warrant shall be governed by
and construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to its conflicts of laws
principles.
CUSIP No. 225235209 SCHEDULE 13G Page 28 of 68
Counterparts. This Warrant may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
Date: October 18, 2004 CRDENTIA CORP.
/s/ James D. Durham
-----------------------------
By: James D. Durham
Its: Chief Executive Officer
ACKNOWLEDGED AND AGREED:
MEDCAP PARTNERS L.P.
By: MedCap Management & Research LLC
Its: General Partner
/s/ C. Fred Toney
-------------------------
By: C. Fred Toney
Its: Managing Member
CUSIP No. 225235209 SCHEDULE 13G Page 29 of 68
SCHEDULE 1
SUBSCRIPTION NOTICE
(To be signed only on exercise of Warrant for cash)
To: Crdentia Corp.
The undersigned, the holder of the Warrant attached hereto,
hereby irrevocably elects to exercise the purchase rights
represented by such Warrant for, and to purchase thereunder,
__________* shares of Stock of Crdentia Corp., and herewith makes
payment of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and
delivered to ____________________, whose address is
______________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
*Insert here the number of shares as to which the Warrant is being exercised.
CUSIP No. 225235209 SCHEDULE 13G Page 30 of 68
SCHEDULE 2
NOTICE OF NET ISSUANCE EXERCISE
(To be signed only on net issuance exercise of Warrant)
To: Crdentia Corp.:
Pursuant to Section 1.5 of the Warrant, the undersigned, the
holder of the Warrant attached hereto, hereby irrevocably elects
to exercise the net issuance rights with respect to _____________
shares of such Warrant for that number of shares of Stock of
Crdentia Corp., determined pursuant to the formula set forth in
Section 1.5 of the Warrant, and requests that the certificates
for such shares be issued in the name of, and delivered to
___________________, whose address is
_________________________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
CUSIP No. 225235209 SCHEDULE 13G Page 31 of 68
Exhibit 7
WARRANT TO PURCHASE SHARES OF SERIES C
PREFERRED STOCK OF THE ISSUER ISSUED TO MEDCAP
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
Void after
October 25, 2009
WARRANT TO PURCHASE SHARES
OF SERIES C PREFERRED STOCK
of
CRDENTIA CORP.
This certifies that, for value received, MedCap Partners
L.P., together with its successors and assigns (the "Holder") is
entitled to subscribe for and purchase, on the terms hereof,
shares of Series C Preferred Stock (the "Stock") of Crdentia
Corp., a Delaware corporation (the "Company"), which is
convertible into shares of Common Stock of the Company (the
"Common Stock"), subject to adjustment as provided herein.
This Warrant is subject to the following terms and
conditions:
1. Exercise of Warrant. The terms and conditions upon
which this Warrant may be exercised, and the Stock covered hereby
may be purchased, are as follows:
1.1 Term. Subject to the terms hereof, this Warrant
may be exercised at any time after the date hereof, or from time
to time, in whole or in part; provided, however, that in no event
may this Warrant be exercised (the "Exercise Date") later than
5:00 p.m. (Pacific Time) on the earlier of (a) the close of
business on October 25, 2009 or (b) the closing of a Corporate
Transaction (as defined below) (the "Exercise Period"); provided
that at least twenty (20) days prior to the occurrence of the
closing of a Corporate Transaction, the Company shall have sent
to the Holder notice of such event.
CUSIP No. 225235209 SCHEDULE 13G Page 32 of 68
For purposes hereof, the term "Corporate Transaction"
shall mean (a) the sale, conveyance or disposal of all or
substantially all of the Company's property or business; (b) the
Company's merger into or consolidation with any other corporation
(other than a merger effected exclusively for the purpose of
changing the domicile of the Company or a merger in which the
owners of the voting stock of the Company prior to the merger own
at least 50% of the voting interests in the surviving entity) or
any other transaction or series of transactions, in which more
than fifty percent (50%) of the voting power of the Company is
disposed of (other than a sale by the Company of shares of its
capital stock in an equity financing); or (c) the closing of an
underwritten public offering of the Company's Common Stock
pursuant to a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with aggregate net
proceeds to the Company in excess of twenty-five million dollars
($25,000,000).
1.2 Number of Shares. This Warrant may be exercised
for 17,712 shares of Stock, subject to adjustment as provided
herein.
1.3 Exercise Price. The per share exercise price for
the shares of Stock to be issued upon exercise of this Warrant
shall be $60.00, subject to adjustment as provided herein (such
price as adjusted from time to time as provided herein is called
the "Exercise Price").
1.4 Method of Exercise. The exercise of the purchase
rights evidenced by this Warrant shall be effected by (a) the
surrender of the Warrant, together with a duly executed copy of
the form of a subscription attached hereto as Schedule 1, to the
Company at its principal offices and (b) except as set forth in
Section 1.5, the delivery of the aggregate Exercise Price by
check or bank draft payable to the Company's order or by wire
transfer to the Company's account for the number of shares for
which the purchase rights hereunder are being exercised or any
other form of consideration approved by the Company's Board of
Directors (the "Board"). Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been
surrendered to the Company as provided herein or at such later
date as may be specified in the executed form of subscription,
and at such time the person or persons in whose name or names any
certificate or certificates for shares of Stock shall be issuable
upon such exercise as provided herein shall be deemed to have
become the holder or holders of record thereof.
CUSIP No. 225235209 SCHEDULE 13G Page 33 of 68
1.5 Net Issuance.
(a) Right to Convert. In addition to and
without limiting the rights of the Holder under the terms of
this Warrant, the Holder shall have the right to convert
this Warrant or any portion thereof (the "Conversion Right")
into shares of Stock as provided in this Section 1.5 at any
time or from time to time during the Exercise Period. Upon
exercise of the Conversion Right with respect to a
particular number of shares subject to the Warrant (the
"Converted Warrant Shares"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise
price or any cash or other consideration) that number of
shares of fully paid and nonassessable Stock computed using
the following formula:
X = Y (A - B)
A
Where X = the number of shares of Stock to be
delivered to the Holder
Y = the number of Converted Warrant Shares
A = the fair market value of the total
number of shares of Common Stock into
which one share of Stock can be
converted on the Conversion Date (as
defined below)
B = the Exercise Price (as adjusted to the
Conversion Date)
The Conversion Right may only be exercised with respect
to a whole number of shares subject to the Warrant. No
fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued
determined in accordance with the foregoing formula is other than
a whole number, the Company shall pay to the Holder an amount in
cash equal to the fair market value of the resulting fractional
share on the Conversion Date (as defined below). Shares issued
pursuant to the Conversion Right shall be treated as if they were
issued upon the exercise of the Warrant.
(b) Method of Exercise. The Conversion
Right may be exercised by the Holder by the surrender of the
Warrant at the principal office of the Company together with
a notice in the form attached hereto as Schedule 2
specifying that the Holder thereby intends to exercise the
Conversion Right and indicating the total number of shares
under the Warrant that the Holder is exercising through the
Conversion Right. Such conversion shall be effective upon
receipt by the Company of the Warrant together with the
aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for
the shares issuable upon exercise of the Conversion Right
and, if applicable, a new warrant evidencing the balance of
the shares remaining subject to the Warrant, shall be issued
as of the Conversion Date and shall be delivered to the
Holder promptly following the Conversion Date.
CUSIP No. 225235209 SCHEDULE 13G Page 34 of 68
(c) Determination of Fair Market Value. For
purposes of this Section 1.5, the fair market value of a
share of Common Stock on the Conversion Date shall be the
average of the closing prices of the Common Stock as
reported on a Trading Market (as defined below) for the last
fifteen (15) trading day period ending two (2) days prior to
the Conversion Date. For purposes of this Warrant, "Trading
Market" shall mean one of the following which has been
determined by the Company's Board of Directors to be the
Company's principal trading market: NASD OTC Bulletin
Board, the Nasdaq SmallCap Market, the Nasdaq National
Market, the American Stock Exchange or the New York Stock
Exchange. Notwithstanding the foregoing, in the event the
Common Stock is not publicly trading on the Conversion Date,
the fair market value of a share of Common Stock on the
Conversion Date shall be determined in good faith by the
Company's Board of Directors.
(d) Limit on Exercise. Notwithstanding any
other provision of this Warrant, the Holder shall not be
entitled to exercise the Conversion Right, in whole or in
part, unless the Holder agrees, in writing, to immediately
convert the Shares issued pursuant to the Conversion Right
into shares of the Company's Common Stock (pursuant to the
terms of the Company's Amended and Restated Certificate of
Incorporation and Certificate of Designations, Preferences
and Rights of Series C Preferred Stock of the Company).
2. Adjustment of Exercise Price and Number of Shares.
The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this
Section 2. Upon each adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase,
at the Exercise Price resulting from such adjustment, the number
of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting
from such adjustment.
2.1 Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding shares of
Series C Preferred Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of Series C Preferred Stock of the Company
shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be
proportionately increased.
2.2 Dividends in Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the
holders of the Series C Preferred Stock (or any shares of stock
or other securities at the time receivable upon the exercise of
this Warrant) shall have received or become entitled to receive,
without payment therefor,
CUSIP No. 225235209 SCHEDULE 13G Page 35 of 68
(a) Series C Preferred Stock, or any shares
of stock or other securities whether or not such securities
are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution, or
(b) any cash paid or payable otherwise than
as a cash dividend, or
(c) Series C Preferred Stock or other or
additional stock or other securities or property (including
cash) by way of spin off, split-up, reclassification,
combination of shares or similar corporate rearrangement,
(other than shares of Stock issued as a stock split,
adjustments in respect of which shall be covered by the
terms of Section 2.1 above),
Then and in each such case, the Holder hereof shall, upon
the exercise of this Warrant, be entitled to receive, in addition
to the number of shares of Stock receivable thereupon, and
without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such
Holder would hold on the date of such exercise had he been the
holder of record of such Stock as of the date on which holders of
Series C Preferred Stock received or became entitled to receive
such shares and/or all other additional stock and other
securities and property.
2.3 Reclassification or Reorganization. If the Stock
(or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant shall be changed into
the same or different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or
stock dividend provided for in Section 2.1 above, or a Corporate
Transaction, in which case this Warrant shall terminate if not
exercised), then and in each such event the Holder shall be
entitled to receive upon the exercise of this Warrant the kind
and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other
change, to which a holder of the number of shares of Stock (or
any shares of stock or other securities which may be) issuable
upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such
reorganization, reclassification or other change, all subject to
further adjustment as provided herein.
CUSIP No. 225235209 SCHEDULE 13G Page 36 of 68
2.4 Notice of Adjustments and Record Dates. The
Company shall promptly notify the Holder in writing of each
adjustment or readjustment of the exercise price hereunder and
the number of shares of Stock (or any shares of stock or other
securities which may be) issuable upon the exercise of this
Warrant. Such notice shall state the adjustment or readjustment
and show in reasonable detail the facts on which that adjustment
or readjustment is based. In the event of any taking by the
Company of a record of the holders of Common Stock for the
purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, the Company shall
notify the Holder in writing of such record date at least twenty
(20) days prior to the date specified therein.
2.5 Shares to be Fully Paid; Reservation of Shares.
The Company covenants and agrees that all shares of Stock which
may be issued upon the exercise of the rights represented by this
Warrant will, upon payment of the Exercise Price and issuance
pursuant to Section 1.4 or a net issuance pursuant to Section
1.5, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any
stockholder and free of all taxes, liens and charges with respect
to the issue thereof. The Company further covenants and agrees
that during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued
Series C Preferred Stock and Common Stock into which such Series
C Preferred Stock may be converted, or other securities and
property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of
Series C Preferred Stock and Common Stock may be issued as
provided herein without violation of any applicable law or
regulation.
3. Replacement of Warrants. On receipt by the Company
of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the
Company at its expense shall execute and deliver to the Holder,
in lieu thereof, a new Warrant of like tenor.
CUSIP No. 225235209 SCHEDULE 13G Page 37 of 68
4. Investment Intent. Unless a current registration
statement under the Securities Act, shall be in effect with
respect to the securities to be issued upon exercise of this
Warrant, the Holder, by accepting this Warrant, covenants and
agrees that, at the time of exercise hereof, and at the time of
any proposed transfer of any securities acquired upon exercise
hereof, the Holder shall deliver to the Company a written
statement that the securities acquired by the Holder upon
exercise hereof are for the own account of the Holder for
investment and are not acquired with a view to, or for sale in
connection with, any distribution thereof (or any portion
thereof) and with no present intention (at any such time) of
offering or distributing such securities (or any portion
thereof).
5. No Rights or Liability as a Shareholder. This
Warrant does not entitle the Holder hereof to any voting rights
or other rights as a shareholder of the Company. No provisions
hereof, in the absence of affirmative action by the Holder to
purchase Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder as a shareholder of the Company.
6. Representations of Holder. The Holder hereby
represents and acknowledges to the Company that:
6.1 this Warrant, the Stock issuable upon exercise of
this Warrant and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection
with a recapitalization, merger, consolidation or other
reorganization will be "restricted securities" as such term is
used in the rules and regulations under the Securities Act, and
that such securities have not been and may not be registered
under the Securities Act or any state securities law, and that
such securities must be held indefinitely unless registration is
effected or transfer can be made pursuant to appropriate
exemptions;
6.2 the Holder has read, and fully understands, the
terms of this Warrant set forth on its face and the attachments
hereto, including the restrictions on transfer contained herein;
6.3 the Holder is purchasing for investment for its
own account and not with a view to or for sale in connection with
any distribution of this Warrant or the Stock of the Company
issuable upon exercise of this Warrant and it has no intention of
selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities
laws;
CUSIP No. 225235209 SCHEDULE 13G Page 38 of 68
6.4 the Company may affix the following legends (in
addition to any other legend(s), if any, required by applicable
state corporate and/or securities laws) to certificates for
shares of Stock (or other securities) issued upon exercise of
this Warrant ("Warrant Shares"):
"These securities have not been registered
under the Securities Act of 1933, as amended.
They may not be sold, offered for sale,
pledged or hypothecated in the absence of a
registration statement in effect with respect
to the securities under such Act or an
opinion of counsel satisfactory to the
Company that such registration is not
required or unless sold pursuant to Rule 144
of such Act."
7. Reserved.
8. Reserved.
9. Limitations on Disposition. The Holder of this
Warrant, by acceptance hereof, agrees to comply in all respects
with the provisions of this Section 9. Without in any way
limiting the representations set forth above, the Holder of this
Warrant agrees not to make any disposition of this Warrant or any
Warrant Shares, unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this
Section 9 and the other provisions of this Warrant as if such
transferee were the original Holder hereof, provided and to the
extent such provisions are then applicable, and
(a) There is then in effect a Registration
Statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such
Registration Statement; or
(b) (i) the Holder shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances
surrounding the proposed disposition, and the Company has given
its prior written consent (which consent shall not be
unreasonably withheld), and (ii) if reasonably requested by the
Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of the Warrant
and/or the Warrant Shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
CUSIP No. 225235209 SCHEDULE 13G Page 39 of 68
Notwithstanding any other provision of this Section 9,
Holder may transfer this Warrant and/or the Warrant Shares to any
investment fund in which MedCap Management & Research LLC or any
of its affiliates is the General Partner or the manager; provided
that, such fund is an "accredited investor" as such term is then
defined in Section 501 of Regulation D promulgated pursuant to
the Securities Act.
10. Miscellaneous.
10.1 Transfer of Warrant. In addition to the transfer
restrictions set forth in Section 9, this Warrant shall not be
transferable or assignable in any manner and no interest shall be
pledged or otherwise encumbered by the Holder without the express
written consent of the Company.
10.2 Titles and Subtitles. The titles and subtitles
used in this Warrant are for convenience only and are not to be
considered in construing or interpreting this Warrant.
10.3 Notice. Notice or demand pursuant to this
Warrant shall be sufficiently given or made, if sent by first-
class mail, postage prepaid, addressed, if to the Holder of this
Warrant, to the Holder at its last known address as it shall
appear in the records of the Company, and if to the Company, at
14114 Dallas Pkwy., Suite 600, Dallas, TX 75254, Attention:
Secretary. The Company may alter the address to which
communications are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 10.3
for the giving of notice.
10.4 Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this
Warrant, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
10.5 Amendment. This Warrant may be modified, amended
or terminated by a writing signed by the Company and the Holder.
10.6 Severability. If one or more provisions of this
Warrant are held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant and the balance of
the Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
10.7 Governing Law. This Warrant shall be governed by
and construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to its conflicts of laws
principles.
CUSIP No. 225235209 SCHEDULE 13G Page 40 of 68
Counterparts. This Warrant may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
Date: October 25, 2004 CRDENTIA CORP.
/s/ James D. Durham
-----------------------------
By: James D. Durham
Its: Chief Executive Officer
ACKNOWLEDGED AND AGREED:
MEDCAP PARTNERS L.P.
By: MedCap Management & Research LLC
Its: General Partner
/s/ C. Fred Toney
--------------------------
By: C. Fred Toney
Its: Managing Member
CUSIP No. 225235209 SCHEDULE 13G Page 41 of 68
SCHEDULE 1
SUBSCRIPTION NOTICE
(To be signed only on exercise of Warrant for cash)
To: Crdentia Corp.
The undersigned, the holder of the Warrant attached hereto,
hereby irrevocably elects to exercise the purchase rights
represented by such Warrant for, and to purchase thereunder,
__________* shares of Stock of Crdentia Corp., and herewith makes
payment of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and
delivered to ____________________, whose address is
______________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
*Insert here the number of shares as to which the Warrant is being exercised.
CUSIP No. 225235209 SCHEDULE 13G Page 42 of 68
SCHEDULE 2
NOTICE OF NET ISSUANCE EXERCISE
(To be signed only on net issuance exercise of Warrant)
To: Crdentia Corp.:
Pursuant to Section 1.5 of the Warrant, the undersigned, the
holder of the Warrant attached hereto, hereby irrevocably elects
to exercise the net issuance rights with respect to _____________
shares of such Warrant for that number of shares of Stock of
Crdentia Corp., determined pursuant to the formula set forth in
Section 1.5 of the Warrant, and requests that the certificates
for such shares be issued in the name of, and delivered to
___________________, whose address is
_________________________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
CUSIP No. 225235209 SCHEDULE 13G Page 43 of 68
Exhibit 8
WARRANT TO PURCHASE SHARES OF SERIES C
PREFERRED STOCK OF THE ISSUER ISSUED TO MEDCAP
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
Void after
November 3, 2009
WARRANT TO PURCHASE SHARES
OF SERIES C PREFERRED STOCK
of
CRDENTIA CORP.
This certifies that, for value received, MedCap Partners
L.P., together with its successors and assigns (the "Holder") is
entitled to subscribe for and purchase, on the terms hereof,
shares of Series C Preferred Stock (the "Stock") of Crdentia
Corp., a Delaware corporation (the "Company"), which is
convertible into shares of Common Stock of the Company (the
"Common Stock"), subject to adjustment as provided herein.
This Warrant is subject to the following terms and
conditions:
1. Exercise of Warrant. The terms and conditions upon
which this Warrant may be exercised, and the Stock covered hereby
may be purchased, are as follows:
1.1 Term. Subject to the terms hereof, this Warrant
may be exercised at any time after the date hereof, or from time
to time, in whole or in part; provided, however, that in no event
may this Warrant be exercised (the "Exercise Date") later than
5:00 p.m. (Pacific Time) on the earlier of (a) the close of
business on November 3, 2009 or (b) the closing of a Corporate
Transaction (as defined below) (the "Exercise Period"); provided
that at least twenty (20) days prior to the occurrence of the
closing of a Corporate Transaction, the Company shall have sent
to the Holder notice of such event.
CUSIP No. 225235209 SCHEDULE 13G Page 44 of 68
For purposes hereof, the term "Corporate Transaction"
shall mean (a) the sale, conveyance or disposal of all or
substantially all of the Company's property or business; (b) the
Company's merger into or consolidation with any other corporation
(other than a merger effected exclusively for the purpose of
changing the domicile of the Company or a merger in which the
owners of the voting stock of the Company prior to the merger own
at least 50% of the voting interests in the surviving entity) or
any other transaction or series of transactions, in which more
than fifty percent (50%) of the voting power of the Company is
disposed of (other than a sale by the Company of shares of its
capital stock in an equity financing); or (c) the closing of an
underwritten public offering of the Company's Common Stock
pursuant to a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with aggregate net
proceeds to the Company in excess of twenty-five million dollars
($25,000,000).
1.2 Number of Shares. This Warrant may be exercised
for 73,875 shares of Stock, subject to adjustment as provided
herein.
1.3 Exercise Price. The per share exercise price for
the shares of Stock to be issued upon exercise of this Warrant
shall be $60.00, subject to adjustment as provided herein (such
price as adjusted from time to time as provided herein is called
the "Exercise Price").
1.4 Method of Exercise. The exercise of the purchase
rights evidenced by this Warrant shall be effected by (a) the
surrender of the Warrant, together with a duly executed copy of
the form of a subscription attached hereto as Schedule 1, to the
Company at its principal offices and (b) except as set forth in
Section 1.5, the delivery of the aggregate Exercise Price by
check or bank draft payable to the Company's order or by wire
transfer to the Company's account for the number of shares for
which the purchase rights hereunder are being exercised or any
other form of consideration approved by the Company's Board of
Directors (the "Board"). Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been
surrendered to the Company as provided herein or at such later
date as may be specified in the executed form of subscription,
and at such time the person or persons in whose name or names any
certificate or certificates for shares of Stock shall be issuable
upon such exercise as provided herein shall be deemed to have
become the holder or holders of record thereof.
CUSIP No. 225235209 SCHEDULE 13G Page 45 of 68
1.5 Net Issuance.
(a) Right to Convert. In addition to and
without limiting the rights of the Holder under the terms of
this Warrant, the Holder shall have the right to convert
this Warrant or any portion thereof (the "Conversion Right")
into shares of Stock as provided in this Section 1.5 at any
time or from time to time during the Exercise Period. Upon
exercise of the Conversion Right with respect to a
particular number of shares subject to the Warrant (the
"Converted Warrant Shares"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise
price or any cash or other consideration) that number of
shares of fully paid and nonassessable Stock computed using
the following formula:
X = Y (A - B)
A
Where X = the number of shares of Stock to be
delivered to the Holder
Y = the number of Converted Warrant Shares
A = the fair market value of the total
number of shares of Common Stock into
which one share of Stock can be
converted on the Conversion Date (as
defined below)
B = the Exercise Price (as adjusted to the
Conversion Date)
The Conversion Right may only be exercised with respect
to a whole number of shares subject to the Warrant. No
fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued
determined in accordance with the foregoing formula is other than
a whole number, the Company shall pay to the Holder an amount in
cash equal to the fair market value of the resulting fractional
share on the Conversion Date (as defined below). Shares issued
pursuant to the Conversion Right shall be treated as if they were
issued upon the exercise of the Warrant.
(b) Method of Exercise. The Conversion
Right may be exercised by the Holder by the surrender of the
Warrant at the principal office of the Company together with
a notice in the form attached hereto as Schedule 2
specifying that the Holder thereby intends to exercise the
Conversion Right and indicating the total number of shares
under the Warrant that the Holder is exercising through the
Conversion Right. Such conversion shall be effective upon
receipt by the Company of the Warrant together with the
aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for
the shares issuable upon exercise of the Conversion Right
and, if applicable, a new warrant evidencing the balance of
CUSIP No. 225235209 SCHEDULE 13G Page 46 of 68
the shares remaining subject to the Warrant, shall be issued
as of the Conversion Date and shall be delivered to the
Holder promptly following the Conversion Date.
(c) Determination of Fair Market Value. For
purposes of this Section 1.5, the fair market value of a
share of Common Stock on the Conversion Date shall be the
average of the closing prices of the Common Stock as
reported on a Trading Market (as defined below) for the last
fifteen (15) trading day period ending two (2) days prior to
the Conversion Date. For purposes of this Warrant, "Trading
Market" shall mean one of the following which has been
determined by the Company's Board of Directors to be the
Company's principal trading market: NASD OTC Bulletin
Board, the Nasdaq SmallCap Market, the Nasdaq National
Market, the American Stock Exchange or the New York Stock
Exchange. Notwithstanding the foregoing, in the event the
Common Stock is not publicly trading on the Conversion Date,
the fair market value of a share of Common Stock on the
Conversion Date shall be determined in good faith by the
Company's Board of Directors.
(d) Limit on Exercise. Notwithstanding any
other provision of this Warrant, the Holder shall not be
entitled to exercise the Conversion Right, in whole or in
part, unless the Holder agrees, in writing, to immediately
convert the Shares issued pursuant to the Conversion Right
into shares of the Company's Common Stock (pursuant to the
terms of the Company's Amended and Restated Certificate of
Incorporation and Certificate of Designations, Preferences
and Rights of Series C Preferred Stock of the Company).
2. Adjustment of Exercise Price and Number of Shares.
The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this
Section 2. Upon each adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase,
at the Exercise Price resulting from such adjustment, the number
of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting
from such adjustment.
2.1 Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding shares of
Series C Preferred Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of Series C Preferred Stock of the Company
shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be
proportionately increased.
CUSIP No. 225235209 SCHEDULE 13G Page 47 of 68
2.2 Dividends in Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the
holders of the Series C Preferred Stock (or any shares of stock
or other securities at the time receivable upon the exercise of
this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Series C Preferred Stock, or any shares
of stock or other securities whether or not such securities
are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution, or
(b) any cash paid or payable otherwise than
as a cash dividend, or
(c) Series C Preferred Stock or other or
additional stock or other securities or property (including
cash) by way of spin off, split-up, reclassification,
combination of shares or similar corporate rearrangement,
(other than shares of Stock issued as a stock split,
adjustments in respect of which shall be covered by the
terms of Section 2.1 above),
Then and in each such case, the Holder hereof shall, upon
the exercise of this Warrant, be entitled to receive, in addition
to the number of shares of Stock receivable thereupon, and
without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such
Holder would hold on the date of such exercise had he been the
holder of record of such Stock as of the date on which holders of
Series C Preferred Stock received or became entitled to receive
such shares and/or all other additional stock and other
securities and property.
2.3 Reclassification or Reorganization. If the Stock
(or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant shall be changed into
the same or different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or
stock dividend provided for in Section 2.1 above, or a Corporate
Transaction, in which case this Warrant shall terminate if not
exercised), then and in each such event the Holder shall be
entitled to receive upon the exercise of this Warrant the kind
and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other
change, to which a holder of the number of shares of Stock (or
any shares of stock or other securities which may be) issuable
upon the exercise of this Warrant would have received if this
CUSIP No. 225235209 SCHEDULE 13G Page 48 of 68
Warrant had been exercised immediately prior to such
reorganization, reclassification or other change, all subject to
further adjustment as provided herein.
2.4 Notice of Adjustments and Record Dates. The
Company shall promptly notify the Holder in writing of each
adjustment or readjustment of the exercise price hereunder and
the number of shares of Stock (or any shares of stock or other
securities which may be) issuable upon the exercise of this
Warrant. Such notice shall state the adjustment or readjustment
and show in reasonable detail the facts on which that adjustment
or readjustment is based. In the event of any taking by the
Company of a record of the holders of Common Stock for the
purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, the Company shall
notify the Holder in writing of such record date at least twenty
(20) days prior to the date specified therein.
2.5 Shares to be Fully Paid; Reservation of Shares.
The Company covenants and agrees that all shares of Stock which
may be issued upon the exercise of the rights represented by this
Warrant will, upon payment of the Exercise Price and issuance
pursuant to Section 1.4 or a net issuance pursuant to Section
1.5, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any
stockholder and free of all taxes, liens and charges with respect
to the issue thereof. The Company further covenants and agrees
that during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued
Series C Preferred Stock and Common Stock into which such Series
C Preferred Stock may be converted, or other securities and
property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of
Series C Preferred Stock and Common Stock may be issued as
provided herein without violation of any applicable law or
regulation.
3. Replacement of Warrants. On receipt by the Company
of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the
Company at its expense shall execute and deliver to the Holder,
in lieu thereof, a new Warrant of like tenor.
CUSIP No. 225235209 SCHEDULE 13G Page 49 of 68
4. Investment Intent. Unless a current registration
statement under the Securities Act, shall be in effect with
respect to the securities to be issued upon exercise of this
Warrant, the Holder, by accepting this Warrant, covenants and
agrees that, at the time of exercise hereof, and at the time of
any proposed transfer of any securities acquired upon exercise
hereof, the Holder shall deliver to the Company a written
statement that the securities acquired by the Holder upon
exercise hereof are for the own account of the Holder for
investment and are not acquired with a view to, or for sale in
connection with, any distribution thereof (or any portion
thereof) and with no present intention (at any such time) of
offering or distributing such securities (or any portion
thereof).
5. No Rights or Liability as a Shareholder. This
Warrant does not entitle the Holder hereof to any voting rights
or other rights as a shareholder of the Company. No provisions
hereof, in the absence of affirmative action by the Holder to
purchase Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder as a shareholder of the Company.
6. Representations of Holder. The Holder hereby
represents and acknowledges to the Company that:
6.1 this Warrant, the Stock issuable upon exercise of
this Warrant and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection
with a recapitalization, merger, consolidation or other
reorganization will be "restricted securities" as such term is
used in the rules and regulations under the Securities Act, and
that such securities have not been and may not be registered
under the Securities Act or any state securities law, and that
such securities must be held indefinitely unless registration is
effected or transfer can be made pursuant to appropriate
exemptions;
6.2 the Holder has read, and fully understands, the
terms of this Warrant set forth on its face and the attachments
hereto, including the restrictions on transfer contained herein;
6.3 the Holder is purchasing for investment for its
own account and not with a view to or for sale in connection with
any distribution of this Warrant or the Stock of the Company
issuable upon exercise of this Warrant and it has no intention of
selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities
laws;
CUSIP No. 225235209 SCHEDULE 13G Page 50 of 68
6.4 the Company may affix the following legends (in
addition to any other legend(s), if any, required by applicable
state corporate and/or securities laws) to certificates for
shares of Stock (or other securities) issued upon exercise of
this Warrant ("Warrant Shares"):
"These securities have not been registered
under the Securities Act of 1933, as amended.
They may not be sold, offered for sale,
pledged or hypothecated in the absence of a
registration statement in effect with respect
to the securities under such Act or an
opinion of counsel satisfactory to the
Company that such registration is not
required or unless sold pursuant to Rule 144
of such Act."
7. Reserved.
8. Reserved.
9. Limitations on Disposition. The Holder of this
Warrant, by acceptance hereof, agrees to comply in all respects
with the provisions of this Section 9. Without in any way
limiting the representations set forth above, the Holder of this
Warrant agrees not to make any disposition of this Warrant or any
Warrant Shares, unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this
Section 9 and the other provisions of this Warrant as if such
transferee were the original Holder hereof, provided and to the
extent such provisions are then applicable, and
(a) There is then in effect a Registration
Statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such
Registration Statement; or
(b) (i) the Holder shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances
surrounding the proposed disposition, and the Company has given
its prior written consent (which consent shall not be
unreasonably withheld), and (ii) if reasonably requested by the
Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of the Warrant
and/or the Warrant Shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
CUSIP No. 225235209 SCHEDULE 13G Page 51 of 68
Notwithstanding any other provision of this Section 9,
Holder may transfer this Warrant and/or the Warrant Shares to any
investment fund in which MedCap Management & Research LLC or any
of its affiliates is the General Partner or the manager; provided
that, such fund is an "accredited investor" as such term is then
defined in Section 501 of Regulation D promulgated pursuant to
the Securities Act.
10. Miscellaneous.
10.1 Transfer of Warrant. In addition to the transfer
restrictions set forth in Section 9, this Warrant shall not be
transferable or assignable in any manner and no interest shall be
pledged or otherwise encumbered by the Holder without the express
written consent of the Company.
10.2 Titles and Subtitles. The titles and subtitles
used in this Warrant are for convenience only and are not to be
considered in construing or interpreting this Warrant.
10.3 Notice. Notice or demand pursuant to this
Warrant shall be sufficiently given or made, if sent by first-
class mail, postage prepaid, addressed, if to the Holder of this
Warrant, to the Holder at its last known address as it shall
appear in the records of the Company, and if to the Company, at
14114 Dallas Pkwy., Suite 600, Dallas, TX 75254, Attention:
Secretary. The Company may alter the address to which
communications are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 10.3
for the giving of notice.
10.4 Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this
Warrant, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
10.5 Amendment. This Warrant may be modified, amended
or terminated by a writing signed by the Company and the Holder.
10.6 Severability. If one or more provisions of this
Warrant are held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant and the balance of
the Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
10.7 Governing Law. This Warrant shall be governed by
and construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to its conflicts of laws
principles.
CUSIP No. 225235209 SCHEDULE 13G Page 52 of 68
Counterparts. This Warrant may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
Date: November 3, 2004 CRDENTIA CORP.
/s/ James D. Durham
-----------------------------
By: James D. Durham
Its: Chief Executive Officer
ACKNOWLEDGED AND AGREED:
MEDCAP PARTNERS L.P.
By: MedCap Management & Research LLC
Its: General Partner
/s/ C. Fred Toney
-------------------------
By: C. Fred Toney
Its: Managing Member
CUSIP No. 225235209 SCHEDULE 13G Page 53 of 68
SCHEDULE 1
SUBSCRIPTION NOTICE
(To be signed only on exercise of Warrant for cash)
To: Crdentia Corp.
The undersigned, the holder of the Warrant attached hereto,
hereby irrevocably elects to exercise the purchase rights
represented by such Warrant for, and to purchase thereunder,
__________* shares of Stock of Crdentia Corp., and herewith makes
payment of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and
delivered to ____________________, whose address is
______________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
*Insert here the number of shares as to which the Warrant is being exercised.
CUSIP No. 225235209 SCHEDULE 13G Page 54 of 68
SCHEDULE 2
NOTICE OF NET ISSUANCE EXERCISE
(To be signed only on net issuance exercise of Warrant)
To: Crdentia Corp.:
Pursuant to Section 1.5 of the Warrant, the undersigned, the
holder of the Warrant attached hereto, hereby irrevocably elects
to exercise the net issuance rights with respect to _____________
shares of such Warrant for that number of shares of Stock of
Crdentia Corp., determined pursuant to the formula set forth in
Section 1.5 of the Warrant, and requests that the certificates
for such shares be issued in the name of, and delivered to
___________________, whose address is
_________________________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
CUSIP No. 225235209 SCHEDULE 13G Page 55 of 68
Exhibit 9
WARRANT TO PURCHASE SHARES OF SERIES C
PREFERRED STOCK OF THE ISSUER ISSUED TO MEDCAP
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
Void after
October 18, 2009
WARRANT TO PURCHASE SHARES
OF SERIES C PREFERRED STOCK
of
CRDENTIA CORP.
This certifies that, for value received, MedCap Partners
L.P., together with its successors and assigns (the "Holder") is
entitled to subscribe for and purchase, on the terms hereof,
shares of Series C Preferred Stock (the "Stock") of Crdentia
Corp., a Delaware corporation (the "Company"), which is
convertible into shares of Common Stock of the Company (the
"Common Stock"), subject to adjustment as provided herein.
This Warrant is subject to the following terms and
conditions:
1. Exercise of Warrant. The terms and conditions upon
which this Warrant may be exercised, and the Stock covered hereby
may be purchased, are as follows:
1.1 Term. Subject to the terms hereof, this Warrant
may be exercised at any time after the date hereof, or from time
to time, in whole or in part; provided, however, that in no event
may this Warrant be exercised (the "Exercise Date") later than
5:00 p.m. (Pacific Time) on the earlier of (a) the close of
business on October 18, 2009 or (b) the closing of a Corporate
Transaction (as defined below) (the "Exercise Period"); provided
that at least twenty (20) days prior to the occurrence of the
closing of a Corporate Transaction, the Company shall have sent
to the Holder notice of such event.
CUSIP No. 225235209 SCHEDULE 13G Page 56 of 68
For purposes hereof, the term "Corporate Transaction"
shall mean (a) the sale, conveyance or disposal of all or
substantially all of the Company's property or business; (b) the
Company's merger into or consolidation with any other corporation
(other than a merger effected exclusively for the purpose of
changing the domicile of the Company or a merger in which the
owners of the voting stock of the Company prior to the merger own
at least 50% of the voting interests in the surviving entity) or
any other transaction or series of transactions, in which more
than fifty percent (50%) of the voting power of the Company is
disposed of (other than a sale by the Company of shares of its
capital stock in an equity financing); or (c) the closing of an
underwritten public offering of the Company's Common Stock
pursuant to a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with aggregate net
proceeds to the Company in excess of twenty-five million dollars
($25,000,000).
CUSIP No. 225235209 SCHEDULE 13G Page 57 of 68
1.2 Number of Shares. This Warrant may be exercised
for 22,986 shares of Stock, subject to adjustment as provided
herein.
1.3 Exercise Price. The per share exercise price for
the shares of Stock to be issued upon exercise of this Warrant
shall be $60.00, subject to adjustment as provided herein (such
price as adjusted from time to time as provided herein is called
the "Exercise Price").
1.4 Method of Exercise. The exercise of the purchase
rights evidenced by this Warrant shall be effected by (a) the
surrender of the Warrant, together with a duly executed copy of
the form of a subscription attached hereto as Schedule 1, to the
Company at its principal offices and (b) except as set forth in
Section 1.5, the delivery of the aggregate Exercise Price by
check or bank draft payable to the Company's order or by wire
transfer to the Company's account for the number of shares for
which the purchase rights hereunder are being exercised or any
other form of consideration approved by the Company's Board of
Directors (the "Board"). Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been
surrendered to the Company as provided herein or at such later
date as may be specified in the executed form of subscription,
and at such time the person or persons in whose name or names any
certificate or certificates for shares of Stock shall be issuable
upon such exercise as provided herein shall be deemed to have
become the holder or holders of record thereof.
1.5 Net Issuance.
(a) Right to Convert. In addition to and without
limiting the rights of the Holder under the terms of this
Warrant, the Holder shall have the right to convert this Warrant
or any portion thereof (the "Conversion Right") into shares of
Stock as provided in this Section 1.5 at any time or from time to
time during the Exercise Period. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to
the Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the Holder (without payment by the Holder of any
exercise price or any cash or other consideration) that number of
shares of fully paid and nonassessable Stock computed using the
following formula:
CUSIP No. 225235209 SCHEDULE 13G Page 58 of 68
X = Y (A - B)
A
Where X = the number of shares of Stock to be
delivered to the Holder
Y = the number of Converted Warrant Shares
A = the fair market value of the total
number of shares of Common Stock into
which one share of Stock can be
converted on the Conversion Date (as
defined below)
B = the Exercise Price (as adjusted to the
Conversion Date)
The Conversion Right may only be exercised with respect
to a whole number of shares subject to the Warrant. No
fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued
determined in accordance with the foregoing formula is other than
a whole number, the Company shall pay to the Holder an amount in
cash equal to the fair market value of the resulting fractional
share on the Conversion Date (as defined below). Shares issued
pursuant to the Conversion Right shall be treated as if they were
issued upon the exercise of the Warrant.
(b) Method of Exercise. The Conversion Right may
be exercised by the Holder by the surrender of the Warrant at the
principal office of the Company together with a notice in the
form attached hereto as Schedule 2 specifying that the Holder
thereby intends to exercise the Conversion Right and indicating
the total number of shares under the Warrant that the Holder is
exercising through the Conversion Right. Such conversion shall
be effective upon receipt by the Company of the Warrant together
with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for the
shares issuable upon exercise of the Conversion Right and, if
applicable, a new warrant evidencing the balance of the shares
remaining subject to the Warrant, shall be issued as of the
Conversion Date and shall be delivered to the Holder promptly
following the Conversion Date.
CUSIP No. 225235209 SCHEDULE 13G Page 59 of 68
(c) Determination of Fair Market Value. For
purposes of this Section 1.5, the fair market value of a share of
Common Stock on the Conversion Date shall be the average of the
closing prices of the Common Stock as reported on a Trading
Market (as defined below) for the last fifteen (15) trading day
period ending two (2) days prior to the Conversion Date. For
purposes of this Warrant, "Trading Market" shall mean one of the
following which has been determined by the Company's Board of
Directors to be the Company's principal trading market: NASD OTC
Bulletin Board, the Nasdaq SmallCap Market, the Nasdaq National
Market, the American Stock Exchange or the New York Stock
Exchange. Notwithstanding the foregoing, in the event the Common
Stock is not publicly trading on the Conversion Date, the fair
market value of a share of Common Stock on the Conversion Date
shall be determined in good faith by the Company's Board of
Directors.
(d) Limit on Exercise. Notwithstanding any other
provision of this Warrant, the Holder shall not be entitled to
exercise the Conversion Right, in whole or in part, unless the
Holder agrees, in writing, to immediately convert the Shares
issued pursuant to the Conversion Right into shares of the
Company's Common Stock (pursuant to the terms of the Company's
Amended and Restated Certificate of Incorporation and Certificate
of Designations, Preferences and Rights of Series C Preferred
Stock of the Company).
2. Adjustment of Exercise Price and Number of Shares.
The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this
Section 2. Upon each adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase,
at the Exercise Price resulting from such adjustment, the number
of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting
from such adjustment.
2.1 Subdivision or Combination of Stock. In case the
Company shall at any time subdivide its outstanding shares of
Series C Preferred Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of Series C Preferred Stock of the Company
shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be
proportionately increased.
CUSIP No. 225235209 SCHEDULE 13G Page 60 of 68
2.2 Dividends in Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the
holders of the Series C Preferred Stock (or any shares of stock
or other securities at the time receivable upon the exercise of
this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Series C Preferred Stock, or any shares of
stock or other securities whether or not such securities are at
any time directly or indirectly convertible into or exchangeable
for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution, or
(b) any cash paid or payable otherwise than as a
cash dividend, or
(c) Series C Preferred Stock or other or
additional stock or other securities or property (including cash)
by way of spin off, split-up, reclassification, combination of
shares or similar corporate rearrangement, (other than shares of
Stock issued as a stock split, adjustments in respect of which
shall be covered by the terms of Section 2.1 above),
Then and in each such case, the Holder hereof shall, upon
the exercise of this Warrant, be entitled to receive, in addition
to the number of shares of Stock receivable thereupon, and
without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such
Holder would hold on the date of such exercise had he been the
holder of record of such Stock as of the date on which holders of
Series C Preferred Stock received or became entitled to receive
such shares and/or all other additional stock and other
securities and property.
2.3 Reclassification or Reorganization. If the Stock
(or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant shall be changed into
the same or different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or
stock dividend provided for in Section 2.1 above, or a Corporate
Transaction, in which case this Warrant shall terminate if not
exercised), then and in each such event the Holder shall be
entitled to receive upon the exercise of this Warrant the kind
and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other
change, to which a holder of the number of shares of Stock (or
any shares of stock or other securities which may be) issuable
upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such
reorganization, reclassification or other change, all subject to
further adjustment as provided herein.
CUSIP No. 225235209 SCHEDULE 13G Page 61 of 68
2.4 Notice of Adjustments and Record Dates. The
Company shall promptly notify the Holder in writing of each
adjustment or readjustment of the exercise price hereunder and
the number of shares of Stock (or any shares of stock or other
securities which may be) issuable upon the exercise of this
Warrant. Such notice shall state the adjustment or readjustment
and show in reasonable detail the facts on which that adjustment
or readjustment is based. In the event of any taking by the
Company of a record of the holders of Common Stock for the
purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, the Company shall
notify the Holder in writing of such record date at least twenty
(20) days prior to the date specified therein.
2.5 Shares to be Fully Paid; Reservation of Shares.
The Company covenants and agrees that all shares of Stock which
may be issued upon the exercise of the rights represented by this
Warrant will, upon payment of the Exercise Price and issuance
pursuant to Section 1.4 or a net issuance pursuant to Section
1.5, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any
stockholder and free of all taxes, liens and charges with respect
to the issue thereof. The Company further covenants and agrees
that during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer
upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued
Series C Preferred Stock and Common Stock into which such Series
C Preferred Stock may be converted, or other securities and
property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of
Series C Preferred Stock and Common Stock may be issued as
provided herein without violation of any applicable law or
regulation.
3. Replacement of Warrants. On receipt by the Company
of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the
Company at its expense shall execute and deliver to the Holder,
in lieu thereof, a new Warrant of like tenor.
CUSIP No. 225235209 SCHEDULE 13G Page 62 of 68
4. Investment Intent. Unless a current registration
statement under the Securities Act, shall be in effect with
respect to the securities to be issued upon exercise of this
Warrant, the Holder, by accepting this Warrant, covenants and
agrees that, at the time of exercise hereof, and at the time of
any proposed transfer of any securities acquired upon exercise
hereof, the Holder shall deliver to the Company a written
statement that the securities acquired by the Holder upon
exercise hereof are for the own account of the Holder for
investment and are not acquired with a view to, or for sale in
connection with, any distribution thereof (or any portion
thereof) and with no present intention (at any such time) of
offering or distributing such securities (or any portion
thereof).
5. No Rights or Liability as a Shareholder. This
Warrant does not entitle the Holder hereof to any voting rights
or other rights as a shareholder of the Company. No provisions
hereof, in the absence of affirmative action by the Holder to
purchase Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder as a shareholder of the Company.
6. Representations of Holder. The Holder hereby
represents and acknowledges to the Company that:
6.1 this Warrant, the Stock issuable upon exercise of
this Warrant and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection
with a recapitalization, merger, consolidation or other
reorganization will be "restricted securities" as such term is
used in the rules and regulations under the Securities Act, and
that such securities have not been and may not be registered
under the Securities Act or any state securities law, and that
such securities must be held indefinitely unless registration is
effected or transfer can be made pursuant to appropriate
exemptions;
6.2 the Holder has read, and fully understands, the
terms of this Warrant set forth on its face and the attachments
hereto, including the restrictions on transfer contained herein;
6.3 the Holder is purchasing for investment for its
own account and not with a view to or for sale in connection with
any distribution of this Warrant or the Stock of the Company
issuable upon exercise of this Warrant and it has no intention of
selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities
laws;
CUSIP No. 225235209 SCHEDULE 13G Page 63 of 68
6.4 the Company may affix the following legends (in
addition to any other legend(s), if any, required by applicable
state corporate and/or securities laws) to certificates for
shares of Stock (or other securities) issued upon exercise of
this Warrant ("Warrant Shares"):
"These securities have not been registered
under the Securities Act of 1933, as amended.
They may not be sold, offered for sale,
pledged or hypothecated in the absence of a
registration statement in effect with respect
to the securities under such Act or an
opinion of counsel satisfactory to the
Company that such registration is not
required or unless sold pursuant to Rule 144
of such Act."
7. Reserved.
8. Reserved.
9. Limitations on Disposition. The Holder of this
Warrant, by acceptance hereof, agrees to comply in all respects
with the provisions of this Section 9. Without in any way
limiting the representations set forth above, the Holder of this
Warrant agrees not to make any disposition of this Warrant or any
Warrant Shares, unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this
Section 9 and the other provisions of this Warrant as if such
transferee were the original Holder hereof, provided and to the
extent such provisions are then applicable, and
(a) There is then in effect a Registration
Statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such
Registration Statement; or
(b) (i) the Holder shall have notified the
Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances
surrounding the proposed disposition, and the Company has given
its prior written consent (which consent shall not be
unreasonably withheld), and (ii) if reasonably requested by the
Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of the Warrant
and/or the Warrant Shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
CUSIP No. 225235209 SCHEDULE 13G Page 64 of 68
Notwithstanding any other provision of this Section 9,
Holder may transfer this Warrant and/or the Warrant Shares to any
investment fund in which MedCap Management & Research LLC or any
of its affiliates is the General Partner or the manager; provided
that, such fund is an "accredited investor" as such term is then
defined in Section 501 of Regulation D promulgated pursuant to
the Securities Act.
10. Miscellaneous.
10.1 Transfer of Warrant. In addition to the transfer
restrictions set forth in Section 9, this Warrant shall not be
transferable or assignable in any manner and no interest shall be
pledged or otherwise encumbered by the Holder without the express
written consent of the Company.
10.2 Titles and Subtitles. The titles and subtitles
used in this Warrant are for convenience only and are not to be
considered in construing or interpreting this Warrant.
10.3 Notice. Notice or demand pursuant to this
Warrant shall be sufficiently given or made, if sent by first-
class mail, postage prepaid, addressed, if to the Holder of this
Warrant, to the Holder at its last known address as it shall
appear in the records of the Company, and if to the Company, at
14114 Dallas Pkwy., Suite 600, Dallas, TX 75254, Attention:
Secretary. The Company may alter the address to which
communications are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 10.3
for the giving of notice.
10.4 Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this
Warrant, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
10.5 Amendment. This Warrant may be modified, amended
or terminated by a writing signed by the Company and the Holder.
10.6 Severability. If one or more provisions of this
Warrant are held to be unenforceable under applicable law, such
provision shall be excluded from this Warrant and the balance of
the Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
10.7 Governing Law. This Warrant shall be governed by
and construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to its conflicts of laws
principles.
CUSIP No. 225235209 SCHEDULE 13G Page 65 of 68
Counterparts. This Warrant may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
Date: March 29, 2005 CRDENTIA CORP.
/s/James D. Durham
-----------------------------
By: James D. Durham
Its: Chief Executive Officer
ACKNOWLEDGED AND AGREED:
MEDCAP PARTNERS L.P.
By: MedCap Management & Research LLC
Its: General Partner
s/s C. Fred Toney
-------------------------
By: C. Fred Toney
Its: Managing Member
CUSIP No. 225235209 SCHEDULE 13G Page 66 of 68
SCHEDULE 1
SUBSCRIPTION NOTICE
(To be signed only on exercise of Warrant for cash)
To: Crdentia Corp.
The undersigned, the holder of the Warrant attached hereto,
hereby irrevocably elects to exercise the purchase rights
represented by such Warrant for, and to purchase thereunder,
__________* shares of Stock of Crdentia Corp., and herewith makes
payment of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and
delivered to ____________________, whose address is
______________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
*Insert here the number of shares as to which the Warrant is being exercised.
CUSIP No. 225235209 SCHEDULE 13G Page 67 of 68
SCHEDULE 2
NOTICE OF NET ISSUANCE EXERCISE
(To be signed only on net issuance exercise of Warrant)
To: Crdentia Corp.:
Pursuant to Section 1.5 of the Warrant, the undersigned, the
holder of the Warrant attached hereto, hereby irrevocably elects
to exercise the net issuance rights with respect to _____________
shares of such Warrant for that number of shares of Stock of
Crdentia Corp., determined pursuant to the formula set forth in
Section 1.5 of the Warrant, and requests that the certificates
for such shares be issued in the name of, and delivered to
___________________, whose address is
_________________________________________.
(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
(Print Name)
(Address)
Dated: ____________________
CUSIP No. 225235209 SCHEDULE 13G Page 68 of 68
Exhibit A
"(g) The term "Registrable Securities" means (i) the
Common Stock of the Company (the "Common Stock") issued to the
Investors listed on Schedule A attached hereto pursuant to
conversion of the Series C Preferred Stock of the Company or the
Series A Preferred Stock of the Company, as the case may be, (ii)
the Common Stock issued upon conversion of the Series C Preferred
Stock of the Company and the Series B-1 Preferred Stock of the
Company issued to the Investors listed on Schedule A upon
exercise of the Warrants, and (iii) any Common Stock issued as
(or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in
replacement of the shares referenced in (i) or (ii) above,
excluding in all cases, however, (y) any Registrable Securities
sold by a person in a transaction in which his rights under this
Section 1 are not assigned pursuant to the terms of this
Agreement, and (z) any Registrable Securities registered under
the Act pursuant to that certain Letter Agreement dated March 29,
2005 by and among the Company and MedCap Partners L.P."