Document:

ex4_4.htm

Exhibit 4.4

Confidential

EXECUTION VERSION

AMENDED AND RESTATED

CLASS B WARRANT AGREEMENT

This AMENDED AND RESTATED CLASS B WARRANT AGREEMENT (this “Warrant Agreement”) is dated and made as of February 24, 2006 and amended and restated as of June 30, 2006 (the “Restatement Date”), by and between ORTHOLOGIC CORP., a Delaware corporation (the “Company”), and PHARMABIO DEVELOPMENT INC., a North Carolina corporation, doing business as NovaQuest (“NovaQuest”).

WHEREAS, the Company and NovaQuest have entered into the Common Stock and Warrant Purchase Agreement (the “Purchase Agreement”), dated as of February 24, 2006, pursuant to which the Company granted to NovaQuest the rights set forth in that certain Class B Warrant Agreement (the “Prior Warrant Agreement”), dated as of February 24, 2006 (the “Prior Warrant Issuance Date”), and the Registration Rights Agreement (the “Registration Rights Agreement”), dated as of February 24, 2006;

WHEREAS, the Company and Quintiles, Inc. (“Quintiles”), an affiliate of NovaQuest, have entered into a Master Services Agreement also dated as February 24, 2006 (the “Services Agreement”);

WHEREAS, pursuant to the Purchase Agreement, as modified by that certain letter agreement between NovaQuest and the Company of even date herewith regarding a waiver of blocking events, the parties desire to amend and restate the Prior Warrant Agreement as set forth in this Warrant Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows:

1.             The Warrant.

(a)           The Company hereby agrees to issue and sell to NovaQuest, its designee or assigns (the “Holder”) 80,000 shares (the “Warrant Shares”) of the Company’s Common Stock, $0.0005 par value per share (“Common Stock”), at an exercise price of One Dollar and Ninety-One Cents ($1.91) per share (the “Exercise Price”) (such Exercise Price was calculated as follows: the average of the closing prices of the shares of Common Stock for the 15 trading days prior to the Restatement Date, multiplied by 115%), upon the terms and conditions herein set forth, including the vesting schedule set forth in this Section 1.  The Exercise Price and the number of Warrant Shares purchasable upon exercise of this Warrant Agreement are subject to adjustment from time to time as provided in Section 4 of this Warrant Agreement.

(b)           Upon ****(the “Milestone”), the Holder’s right to exercise this Warrant Agreement will vest as follows:

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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(i)             if ****, One Hundred Percent (100%) of the Warrant Shares shall vest;

(ii)            if ****, Seventy-Five (75%) of the Warrant Shares shall vest;

(iii)           if ****, Fifty Percent (50%) of the Warrant Shares shall vest;

(iv)           if ****, none of the Warrant Shares shall vest; and

(v)            any Warrant Shares not vested by **** shall expire.

(c)           In the event that the Milestone fails to be achieved, or fails to be achievable, by ****, or by another date specified in the vesting schedule set forth in Section 1(b) above, and such failure is not caused solely by Quintiles, then the Joint Development Committee (as defined in the Services Agreement) shall promptly and in good faith review the Milestone, the existing vesting schedule, and the events and circumstances that caused or resulted in such failure; and the Joint Development Committee shall determine a new vesting schedule that shall extend each date within the existing vesting schedule by the duration of the events or circumstances that caused or resulted in such failure, up to one year; provided that the vesting schedule shall be extended pursuant to this Section 1(c) only once. The parties hereto promptly shall enter into an appropriate amendment to this Warrant Agreement reflecting such extension.

(d)           Notwithstanding Section 1(b), the Holder’s right to exercise this Warrant Agreement will vest upon a Change of Control.  “Change of Control” means the occurrence of any of the following: (a) any “person” or “group” (as such terms are defined in Section 13(d) and Section 14(d) of the Securities Exchange Act of 1934, as amended, or any successor provisions (the “Exchange Act”)) becomes the “beneficial owner” (as determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of voting securities of the Company representing 50% or more of the total voting power of all outstanding voting securities of the Company; (b) the sale, lease, license, exchange or other transfer (in one or a series of transactions) of all or substantially all of the assets of the Company, or all or substantially all of the assets relating to TP508; or (c)  any merger, consolidation, share exchange, business combination or similar transaction in which the Company is not the surviving entity or in which the holders of the outstanding shares of stock of the Company immediately prior to such transaction hold, immediately after such transaction, less that 51% of the total voting power of the outstanding securities of the surviving or resulting entity in such transaction.

 

2.             Expiration Date.  This Warrant Agreement, and the Holder’s right to purchase any of the Warrant Shares, will expire at 5:00 p.m. Eastern Time on the tenth anniversary of the Prior Warrant Issuance Date (the “Expiration Date”).

3.             Exercise of this Warrant Agreement.  (a) The Holder may exercise this Warrant Agreement, on any Business Day, at any time from and after the date hereof and prior to the Expiration Date, in whole or in part, as adjusted from time to time as provided in Section 4 of this Warrant Agreement, by:  (a) the surrender of this Warrant Agreement, with the Exercise Form substantially in the form attached hereto as Annex A properly completed and executed, at the principal office of the Company, and (b) upon payment by the delivery of a certified check or official bank check or wire transfer of immediately available funds, payable to the order of the Company in an amount equal to the aggregate purchase price for the Warrant Shares being purchased upon such exercise.  Upon receipt thereof by the Company, the Holder will be deemed to be the holder of record of the Warrant Shares issuable upon such exercise as of the close of business on the date of such receipt by the Company, and the Company will promptly execute or cause to be executed and delivered to the Holder, a certificate or certificates representing the aggregate number of Warrant Shares specified in the Exercise Form.  If this Warrant Agreement is exercised only in part, the Company will, at the time of delivery of said stock certificate or certificates, deliver to the Holder a new Warrant Agreement of like tenor evidencing the right of the Holder to purchase the remaining Warrant Shares then covered by this Warrant Agreement.  “Business Day” shall mean any day, other than a Saturday, Sunday or legal holiday during which banks in North Carolina, United States are open for the conduct of their banking business.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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(b)           In lieu of exercising this Warrant Agreement, the Holder may elect to receive shares equal to the value of this Warrant Agreement (or the portion of the Warrant Shares hereunder being cancelled or surrendered) by sending written notice of such election to the Company, in which event the Company shall deliver to the Holder a stock certificate representing a number of shares of Common Stock computed using the following formula:

X=Y(A-B)

A

Where:

X = the number of shares of Common Stock to be issued to the Holder

Y = the number of shares of Common Stock purchasable under this Warrant Agreement as to which the Holder is then exercising this Warrant Agreement

A = the fair market value of one share of Common Stock

B = the Exercise Price (as adjusted to the date of such calculations)

(c)           For purposes of this Section, “fair market value” of one share of Common Stock shall mean the closing price reported on the Nasdaq National Market or the principal exchange on which the Common Stock is listed, or the average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter market, whichever is applicable, in each such case averaged over a period of fifteen (15) consecutive trading days immediately preceding the date that the Exercise Form is delivered to the Company. If the Common Stock is not traded on such market or exchange, or Over-The-Counter, the fair market value of the Common Stock will be the price per share which the Company could obtain from a willing buyer for shares sold by the Company from authorized but unissued shares, as agreed upon by the Company and the Holder in good faith or, absent such agreement, as shall be determined by arbitration instituted by either party under the rules of the American Arbitration Association.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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(d)           If this Warrant Agreement has not been exercised prior to the Expiration Date, the Holder shall be deemed to have elected, prior to the close of business on the Expiration Date, to receive shares pursuant to this Section 3.

4.             Certain Adjustments.  The Exercise Price at which Warrant Shares may be purchased and the number of Warrant Shares to be purchased upon exercise of this Warrant Agreement are subject to change or adjustment from time to time as follows:

(a)           Merger, Sale of Assets, etc.  If at any time while this Warrant Agreement, or any portion hereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation or entity in which the Company is not the surviving entity, or a reverse triangular merger or share exchange in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger or share exchange are exchanged or converted by virtue of the merger or share exchange into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale, lease, license or other transfer of all or substantially all of the Company’s properties or assets to any other person or entity, then, as a part of such reorganization, merger, consolidation, exchange or other transfer, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant Agreement, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property resulting from such reorganization, merger, consolidation, exchange or other transfer that a holder of the shares deliverable upon exercise of this Warrant Agreement would have been entitled to receive in such reorganization, merger, consolidation, exchange or other transfer if this Warrant Agreement had been exercised immediately before the record date of (or the date of, if no record date is fixed) such reorganization, merger, consolidation, exchange or other transfer, all subject to further adjustment as provided in this Section 4.  The foregoing provisions of this Section 4(a) shall similarly apply to successive reorganizations, mergers, consolidations, exchanges or other transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant Agreement.  If the per-share consideration payable to the Holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be reasonably determined in good faith by the Company’s Board of Directors.  In all events, appropriate adjustment (as reasonably determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant Agreement with respect to the rights and interests of the Holder after any of the above-referenced transactions, to the end that the provisions of this Warrant Agreement shall be applicable after such event, as near as reasonably may be, in relation to any shares or other property deliverable after such event upon exercise of this Warrant Agreement.

 

(b)           Reclassification, etc.  If the Company, at any time while this Warrant Agreement, or any portion hereof, remains outstanding and unexpired, by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any other class or classes, this Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as the Holder would have received if this Warrant Agreement had been exercised in full immediately prior to such reclassification or other change or immediately prior to the record date with respect thereto and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 4.  The foregoing provisions of this Section 4(b) shall similarly apply to successive reclassifications or other changes.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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(c)           Split, Subdivision or Combination of Shares.  If the Company, at any time while this Warrant Agreement, or any portion hereof, remains outstanding and unexpired, shall split, subdivide or combine the securities as to which purchase rights under this Warrant Agreement exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination.  Upon each adjustment in the Exercise Price pursuant to this subsection, the number of shares of such securities purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of shares purchasable immediately prior to such adjustment in the Exercise Price by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price immediately thereafter.

(d)           Certificate as to Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment in accordance with the terms hereof and furnish to any Holder of this Warrant Agreement a certificate signed by its Chief Financial Officer setting forth such adjustment and showing in detail the event requiring the adjustment, the amount of such adjustment, the method by which such adjustment was calculated, the Exercise Price at the time in effect, and the number of shares and the amount, if any, of the property that at the time would be received upon the exercise of this Warrant Agreement, together with the facts upon which such adjustment is based.  The Company shall, upon the written request, at any time, of any Holder, promptly furnish or cause to be furnished to such Holder a like certificate setting forth: (i) all such previous adjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of this Warrant Agreement.

(e)           No Dilution or Impairment.  The Company will not, by amendment of its certificate of incorporation or through any reorganization, recapitalization, reclassification, transfer of assets, consolidation, merger, business combination, or dissolution, avoid or seek to avoid the intent of this Section 4 or the observance or performance of any of the terms to be observed or performed by the Company under this Warrant Agreement, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant Agreement against impairment.

 

(f)            Conformity with Warrant Agreement.  In the event that at any time, as a result of any adjustment made pursuant to this Section 4, the Holder thereafter shall become entitled to receive any shares of capital stock of the Company other than Common Stock, thereafter the number of such other shares so receivable upon exercise of the Warrant Agreement shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 4.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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5.             Fractional Shares.  Fractional shares will not be issued upon the exercise of this Warrant Agreement, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms of this Warrant Agreement to receive a fractional share upon the exercise of this Warrant Agreement, the Company will, upon the exercise of this Warrant Agreement for the largest number of whole shares then called for, pay a sum in cash equal to the excess of the fair market value of such fractional share (determined in such reasonable manner as may be prescribed by the Board of Directors of the Company in its discretion) over the proportional part of the per share purchase price represented by such fractional share.

6.             Notices of Certain Events.  In case:

(a)           the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant Agreement) for the purpose of entitling them to receive any dividend or other distribution, or stock subdivision or combination, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

(b)           of any reorganization or recapitalization of the Company, any reclassification of the capital stock of the Company, any consolidation, merger, share exchange or other business combination of the Company with or into another corporation or entity, or any sale, lease, license or other transfer of all or substantially all of the assets of the Company to another corporation or entity, or

(c)           of any voluntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will cause written notice thereof to be delivered to the Holder specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right or (ii) the date on which such reorganization, recapitalization, reclassification, consolidation, merger, share exchange, business combination, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant Agreement) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, share exchange, business combination, transfer, dissolution, liquidation or winding-up.  Such notice shall be delivered at least ten (10) Business Days prior to the date required to be specified therein pursuant to this Section 6.

 

7.             No Rights as Stockholder; Limitation of Liability.  This Warrant Agreement, as distinct from the shares for which this Warrant Agreement is exercisable, will not entitle the Holder to any of the rights of a stockholder of the Company.  No provision of this Warrant Agreement, prior to the exercise of this Warrant Agreement, and no mere enumeration herein of the rights or privileges of the Holder, will give rise to any liability of the Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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8.             Miscellaneous.

(a)           Representations by the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has all necessary corporate power and authority to carry on its business as now conducted.  The Company has all necessary corporate power and authority to execute and deliver this Warrant Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Warrant Agreement and consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Warrant Agreement or to consummate the transactions contemplated hereby.  No further approval or authority of the board of directors or stockholders of the Company will be required for the issuance and sale of the Warrant Shares to be issued by the Company as contemplated herein.  This Warrant Agreement has been duly and validly executed and delivered by the Company and constitutes a valid, legal and binding agreement of the Company, enforceable against the Company in accordance with its terms.

(b)           Successors and Assigns.  This Warrant Agreement shall be binding on and inure to the benefit of the Holder and the Company and their respective successors and assigns.

(c)           Amendments and Waivers.  This Warrant Agreement and any provision hereof may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by both parties hereto.

(d)           Loss, Theft, Destruction or Mutilation.  Upon receipt by the Company of evidence reasonably satisfactory to it that this Warrant Agreement has been lost, stolen, destroyed or mutilated, and in the case of any lost, stolen or destroyed Warrant Agreement, an indemnity reasonably satisfactory to the Company, or in the case of a mutilated Warrant Agreement, upon surrender and cancellation hereof, the Company will execute and deliver in the name of the registered holder of this Warrant Agreement, in exchange and substitution for the Warrant Agreement so lost, stolen, destroyed or mutilated, a new Warrant Agreement of like tenor and amount.

(e)           Warrant Exchangeable for Different Denominations.  This Warrant Agreement is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company for new Warrant Agreements of like tenor representing in the aggregate the right to purchase the number of shares which may be purchased hereunder, each of such new Warrant Agreements to represent the right to purchase such number of Warrant Shares as shall be designated by said Holder hereof at the time of such surrender.

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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(f)            Law Governing.  This Warrant Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of North Carolina, without regard to conflicts-of-laws principles that would require the application of any other law.

(g)           Entire Agreement.  This Warrant Agreement, together with the Purchase Agreement, the Registration Rights Agreement, and the other transaction documents referred to therein or contemplated thereby, constitutes the full and entire understanding and agreement among the parties with regard to the subject matter of this Warrant Agreement, and supersedes all prior agreements, understandings, inducements or conditions, express or implied, oral or written, with respect to the subject matter of this Warrant Agreement including, without limitation, the Prior Warrant Agreement, which is hereby terminated in its entirety.

(h)           Notices.  Unless otherwise provided herein, all notices, requests, demands and other communications required or permitted under this Warrant Agreement shall be in writing and will be deemed to have been duly made and received:  (i) upon personal delivery; (ii) three (3) Business Days after deposit with the United States Post Office, by registered or certified mail or by first class mail, postage prepaid, addressed as set forth below; or (iii) one (1) Business Day after deposit with a nationally recognized, overnight courier (for next business day delivery), shipping prepaid, addressed as set forth below:

	
  

	
If to Company:

	
OrthoLogic Corp.

	
  

	
1275 West Washington Street

	
  

	
Tempe, Arizona 85281

	
  

	
Attn:  Chief Executive Officer

	
  

	
Facsimile: (602) 470-7080

	
  

	
With a copy to

	
  

	
(which shall not

	
  

	
constitute notice):

	
Quarles & Brady Streich Lang llp

	
  

	
One Renaissance Square

	
  

	
Two North Central Avenue

	
  

	
Phoenix, Arizona 85004

	
  

	
 

	
 
Attn:  Steven P. Emerick

	
  

	
Facsimile:  (602) 417-2980

 

	
  

	
If to Purchaser:

	
PharmaBio Development Inc.

	
  

	
(d/b/a NovaQuest)

	
  

	
4709 Creekstone Drive

	
  

	
Suite 200 Riverbirch Building

	
  

	
Durham, NC 27703

	
  

	
Attn:  President

	
  

	
Facsimile:  (919) 998-2090

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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With a copy to

	
  

	
(which shall not

	
  

	
constitute notice):

	
Smith, Anderson, Blount, Dorsett

	
  

	
Mitchell & Jernigan, L.L.P.

	
  

	
2500 Wachovia Capitol Center

	
  

	
Raleigh, NC 27601

	
  

	
Attn: Christopher B. Capel

	
  

	
Facsimile:  (919) 821-6800

Either party may change the address to which communications are to be sent by giving five (5) Business Days’ advance notice of such change of address to the other party in conformity with the provisions of this Section.

(i)            Execution; Counterparts.  This Warrant Agreement and any amendment hereto may be executed in counterparts, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.  The exchange of copies of this Warrant Agreement or amendments thereto and of signature pages by facsimile transmission or by email transmission in portable digital format, or similar format, shall constitute effective execution and delivery of such instrument(s) as to the parties and may be used in lieu of the original Warrant Agreement or amendment for all purposes.  Signatures of the parties transmitted by facsimile or by email transmission in portable digital format, or similar format, shall be deemed to be their original signatures for all purposes.

[signature page follows]

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

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[Signature Page to Amended and Restated Class B Warrant Agreement]

IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to be duly executed and delivered as of the day and year first written above.

	  	
ORTHOLOGIC CORP.

	  	  	  
	  	
By:  

	
/s/ Les M. Taeger

	  	
Name:  

	
Les M. Taeger

	  	
Title:  

	
CFO

	  	  	  
	  	  	  
	  	
PHARMABIO DEVELOPMENT INC

	  	
(D/B/A NOVAQUEST)

	  	  	  
	  	
By:  

	
/s/ Patrick B. Jordan

	  	
Name:  

	
Patrick B. Jordan

	  	
Title:  

	
Vice President, Corporate Development

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.

  

 

  

ANNEX A

EXERCISE FORM

TO BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THE ATTACHED

AMENDED AND RESTATED CLASS B WARRANT AGREEMENT OF

ORTHOLOGIC CORP.

The undersigned, [________________], pursuant to the provisions of the Class B Warrant Agreement between OrthoLogic Corp. (the “Company”) and PharmaBio Development Inc. dated as of February 24, 2006, as amended and restated on June __, 2006 (the “Warrant Agreement”), hereby elects to exercise the Warrant Agreement by agreeing to subscribe for and purchase [_______________] shares (the “Warrant Shares”) of Common Stock, $.0005 par value per share, of the Company, and hereby makes payment of $[___________] by certified or official bank check or wire transfer of immediately available funds payable to the order of the Company in payment of the exercise price therefor.

The undersigned acknowledges that the sale, transfer, assignment or hypothecation of the Warrant Shares to be issued upon exercise of this Warrant Agreement is subject to the terms and conditions of the Warrant Agreement.

	 	
PharmaBio Development Inc.

	 	
(d/b/a NovaQuest)

	 	  	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  
	 	  	  
	 	  	  
	 	
Address:  

	
4709 Creekstone Drive

	 	  	
Suite 200 Riverbirch Building

	 	  	
Durham, NC 27703

Dated: ___________________, _____

 

 

****Text has been omitted pursuant to a confidentiality request. Omitted text has been filed with the Securities and Exchange Commission.ex4_8.htm

Exhibit 4.8

 

EXECUTION VERSION

OrthoLogic Corp.

Registration Rights Agreement

February 24, 2006

PharmaBio Development Inc.

as Investor

  

  

  

TABLE OF CONTENTS

	  	  	
Page

	 	 	 
	  	  	  
	
1.

	
Certain Definitions

	
1

	 	 	 
	
2.

	
Registration Requirements

	
2

	 	 	 
	
3.

	
Registration Procedures

	
3

	 	 	 
	
4.

	
Suspensions of Effectiveness

	
4

	 	 	 
	
5.

	
Indemnification

	
5

	 	 	 
	
6.

	
Contribution

	
7

	 	 	 
	
7.

	
Survival

	
8

	 	 	 
	
8.

	
Transfer or Assignment of Rights

	
8

	 	 	 
	
9.

	
Miscellaneous

	
8

  

  

  

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Rights Agreement”), is dated and entered into as of February 24, 2006, between PharmaBio Development Inc., a North Carolina corporation (the “Investor”) and OrthoLogic Corp., a Delaware corporation (the “Company”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Common Stock and Warrant Purchase Agreement by and between the Company and the Investor dated as of the date hereof (the “Agreement”), the parties desire that, upon the terms and subject to the conditions thereof, the Company shall issue to the Investor, and, subject to the terms and conditions thereof, the Investor shall purchase from the Company, from time to time as provided in the Agreement, shares of the Company’s common stock, par value $.0005 per share (“Common Shares”), and Warrants to purchase shares of such Common Shares as described therein (the “Warrant Shares” and, together with the Common Shares, the “Common Stock”);

WHEREAS, pursuant to the terms of, and in partial consideration for, the Investor’s commitment to enter into the Agreement, the Company has agreed to provide the Investor with certain registration rights with respect to the Common Stock as set forth in this Rights Agreement;

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in the Agreement and this Rights Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intended to be legally bound hereby, the Company and the Investor agree as follows:

1.            Certain Definitions.  Capitalized terms used in this Rights Agreement and not otherwise defined herein shall have the same meaning ascribed to them in the Agreement.  The following terms shall have the following respective meanings:

“Agreement Date” shall mean the date as of which the Agreement was duly executed by the parties thereto.

“Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as from time to time amended, and the rules and regulations of the SEC promulgated thereunder.

“Investor” shall include the Investor and any permitted assignee or transferee of the rights under the Agreement to whom the registration rights conferred by this Rights Agreement have been transferred in compliance with Section 8 of this Rights Agreement.

  

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“Principal Market” shall mean the Nasdaq National Market, or any similar organization or agency succeeding such market or exchange’s functions of reporting prices, whichever is at the time the principal U.S. trading exchange or market for the Common Stock.

“Securities Act” means the Securities Act of 1933, as from time to time amended, and the rules and regulations of the SEC promulgated thereunder.

The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing an appropriate registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

2.            Registration Requirements.  The Company shall use its reasonable best efforts to effect the registration of the Common Stock (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the resale of all the Common Stock in the manner (including manner of sale) and in all states reasonably requested by the Investor for purposes of maximizing the proceeds realizable by the Investor from such sale.  Such reasonable best efforts by the Company shall include without limitation the following:

(a)            Subject to the terms and conditions of this Rights Agreement, the Company shall, within forty-five (45) days after the date of this Rights Agreement, file with the Commission an appropriate registration statement on Form S-3 (or any successor or other appropriate form) under the Securities Act for the registration of the Common Stock (the “Registration Statement”).  Furthermore, at the time of filing of the Registration Statement, the Company shall file (A) such blue sky filings as shall have been requested by the Investor; and (B) any required filings with the National Association of Securities Dealers, Inc. or exchange or market where the Common Stock is traded.  The Company shall use its best efforts to have all filings declared effective as promptly as practicable.

(b)           The Company shall enter into such customary agreements and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Common Stock.

3.            Registration Procedures.  The Company will keep the Investor advised in writing as to the initiation of each registration and as to the completion thereof.  The Company also will provide to Investor’s counsel a copy of the Registration Statement prior to filing with the Commission, and promptly inform such counsel as to the substance of any comment letters or similar notices received by the Company from the Commission with respect thereto. At its expense, the Company will use its reasonable best efforts to:

(a)           Keep such registration continuously effective until the earlier of (i) the sale under the Registration Statement of all of the shares of Common Stock and (ii) and such date as all remaining unsold shares of Common Stock can be sold by the Investor without restriction pursuant to the requirements of Rule 144 of the Securities Act.

  

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(b)           Furnish such number of prospectuses and amendments and supplements thereto, and other documents incident thereto as the Investor from time to time may reasonably request;

(c)           Prepare and file with the Commission such amendments and post- effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period; cause the related prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or supplement to such prospectus;

(d)           Notify the Investor and its counsel (as designated in writing by the Investor) promptly, and confirm such notice (a “Notice”) in writing, (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to the Registration Statement or related prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event as a result of which the prospectus included in the Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading, and (vi) of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate or that there exist circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosure and post-effective amendment;

(e)           Upon the occurrence of any event contemplated by Section 3(d)(ii)-(vi) (unless a Blocking Notice shall be in effect) and immediately upon the expiration of any Blocking Notice (as defined in Section 4), prepare, if the occurrence of such event or period requires such preparation, a supplement or post-effective amendment to the Registration Statement or related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Common Stock being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements, in light of the circumstances under which they were made, not misleading;

(f)           Obtain the withdrawal of any order suspending the effectiveness of the Registration Statement, or the lifting of any suspension of the qualification of any of the Common Stock for sale in any jurisdiction, at the earliest possible moment;

  

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(g)           Cause all Common Stock subject to the Registration Statement at all times to be registered or qualified for offer and sale under the securities or blue sky laws of such jurisdictions as any Investor reasonably requests in writing; use its best efforts to keep each such registration or qualification effective, including through new filings or amendments or renewals, during the period the Registration Statement is required to be kept effective and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Common Stock covered by the Registration Statement; provided, however, that the Company will not be required to qualify to do business or take any action that would subject it to taxation or general service of process in any jurisdiction where it is not then so qualified or subject; and

(h)           Cause all Common Stock included in such Registration Statement to be listed, by the date of first sale of Common Stock pursuant to such Registration Statement, on the Principal Market.

4.             Suspensions of Effectiveness.  The Company may suspend dispositions under the Registration Statement and notify the Investor that it may not sell the Common Stock pursuant to any Registration Statement or prospectus (a “Blocking Notice”) if the Company’s management determines in its good faith judgment that the Company’s obligation to ensure that such Registration Statement and prospectus are current and complete would require the Company to take actions that might reasonably be expected to have a materially adverse effect on the Company and its shareholders; provided, that such suspension pursuant to a Blocking Notice or Prospectus Inadequacy Notice (as defined below) or as a result of the circumstances described in Section 3(d)(ii)-(vi) may not exceed sixty (60) days (whether or not consecutive) in any twelve (12) month period.  The Investor agrees by acquisition of the Common Stock that, upon receipt of a Blocking Notice or “Prospectus Inadequacy Notice” from the Company of the existence of any fact of the kind described in the following sentence, the Investor shall not dispose of, sell or offer for sale the Common Stock pursuant to the Registration Statement until such Investor receives (i) copies of the supplemented or amended prospectus, or until counsel for the Company shall have determined that such disclosure is not required due to subsequent events, (ii) notice in writing (the “Advice”) from the Company that the use of the prospectus may be resumed and (iii) copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.  Pursuant to the immediately preceding sentence, the Company may provide such Prospectus Inadequacy Notice to the Investor upon the determination by the Company of the existence of any fact or the happening or any event that makes any statement of a material fact made in the Registration Statement, the prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue in any material respect, or that requires the making of any additions to or changes in the Registration Statement or the prospectus, in order to make the statements therein not misleading in any material respect. If so directed by the Company in connection with any such notice, each Investor will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Investor’s possession, of the prospectus covering such Common Stock that was current immediately prior to the time of receipt of such notice.  Delivery of a Blocking Notice or Prospectus Inadequacy Notice and the related suspension of any Registration Statement shall not constitute a default under this Rights Agreement.  During any suspension as contemplated by this section, the Company will not allow any of its officers or directors to buy or sell securities of the Company.

  

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5.             Indemnification.

(a)           Company Indemnity.  The Company will indemnify and hold harmless the Investor, each of its officers, directors and partners, and each person controlling the Investor, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the rules and regulations thereunder with respect to which registration, qualification or compliance has been effected pursuant to this Rights Agreement, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus (including any related registration statement, notification or the like or any amendment thereto) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any state securities law or in either case, any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse the Investor, each of its officers, directors and partners, and each person controlling the Investor, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission (or alleged untrue statement or omission) that is made in reliance upon and in conformity with written information furnished to the Company by the Investor and stated to be specifically for use therein; provided, however, that nothing contained herein shall limit the Company’s obligation to provide indemnification pursuant to the Agreement.  In addition to any other information furnished in writing to the Company by the Investor, the information in the Registration Statement concerning the Investor or any of its Affiliates under the caption “Plan of Distribution” (or any similarly captioned Section containing information required pursuant to Item 508 of Regulation S-K) shall be deemed information furnished in writing to the Company by the Investor to the extent it conforms to information actually supplied in writing by the Investor.  The indemnity agreement contained in this Section 5(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld).

(b)           Investor Indemnity.  The Investor will indemnify and hold harmless the Company, each of its directors, officers, partners, and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the rules and regulations thereunder, and each of their officers, directors and partners, and each person controlling such other Investor (if any), and each of their officers, directors, and partners, and each person controlling such other Investor against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement (or any amendment thereto) or prospectus or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, and will reimburse the Company and its directors, officers and partners, or control persons for any legal or any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement or prospectus in reliance upon and in conformity with written information furnished to the Company by the Investor and stated to be specifically for use therein, and provided that the Investor shall not be liable under this indemnity for an amount in excess of the proceeds received by the Investor from the sale of the Common Stock pursuant to such Registration Statement; provided, however, that nothing contained herein shall limit the Investor’s obligation to provide indemnification pursuant to the Agreement.  In addition to any other information furnished in writing to the Company by the Investor, the information in the Registration Statement concerning the Investor under the caption “Plan of Distribution” (or any similarly captioned Section containing information required pursuant to Item 508 of Regulation S-K) shall be deemed information furnished in writing to the Company by the Investor to the extent it conforms to information actually supplied in writing by the Investor.  The indemnity agreement contained in this Section 5(b) shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities if such settlement is effected without the written consent of the Investor (which consent shall not be unreasonably withheld).

  

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(c)           Procedure.  Each party entitled to indemnification under this Section 5 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim in any litigation resulting therefrom, provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense, and, provided, further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Article except to the extent that the Indemnifying Party is materially and adversely affected by such failure to provide notice.  The Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Party, provided, however, that if separate firm(s) of attorneys are required due to a conflict of interest, then the indemnifying party shall be liable for the reasonable fees and expenses of one additional firm.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

6.            Contribution.  If the indemnification provided for in Section 5 hereof is unavailable to the Indemnified Party in respect of any losses, claims, damages or liabilities referred to herein (other than by reason of the exceptions provided therein), then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company on the one hand and the Investor on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand or Investor on the other from the offering of the Common Stock, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of the Investor on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and the Investor on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of the Investor in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.

  

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The relative benefits received by the Company on the one hand and the Investor on the other shall be deemed to be in the same proportion as the proceeds from the offering of Common Stock by the Company to the Investor pursuant to the Agreement bear to the proceeds received by the Investor from the sale of Common Stock pursuant to the Registration Statement.  The relative fault of the Company on the one hand and of the Investor on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Investor.

In no event shall the obligation of any Indemnifying Party to contribute under this Section 6 exceed the amount that such Indemnifying Party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 5(a) or Section 5(b) hereof had been available under the circumstances.

The Company and the Investor agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraphs.  The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraphs shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this section, the Investor shall not be required to contribute any amount in excess of the amount by which the total price at which the shares of Common Stock offered by the Investor and distributed to the public, or offered to the public, exceeds the amount of any damages that the Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

7.            Survival.  The indemnity and contribution agreements contained in Section 5 and Section 6 shall remain operative and in full force and effect regardless of (i) any termination of the Agreement or any underwriting agreement, (ii) any investigation made by or on behalf of any Indemnified Party or by or on behalf of the Company and (iii) the consummation of the sale or successive resales of the Registrable Securities.

  

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8.            Transfer or Assignment of Rights.  Neither this Rights Agreement nor any rights of the Investor or the Company hereunder may be assigned by either party to any other person.  Notwithstanding the foregoing, upon prior written notice to the Company, the Investor’s rights and obligations under this Rights Agreement may be assigned, in whole or in part, to (each a “Permitted Transferee”): (a) any Affiliate of the Investor, provided, however, that any such assignment shall not release the Investor from its obligations hereunder and (b) an assignee of each of (i) the Initial Class A Warrant and the Additional Class A Warrants, (ii) the Class B Warrant, (iii) the Class C Warrant, and (iv) the Class D Warrant.

9.             Miscellaneous.

(a)           Entire Agreement.  This Rights Agreement, together with the Agreement, contains the entire understanding and agreement of the parties relating to the registration of Registrable Securities, and may not be modified or terminated except by a written agreement signed by both parties.

(b)           Notices.  All notices, demands, requests, consents, approvals or other communications required or permitted to be given hereunder or which are given with respect to this Rights Agreement shall be in writing and shall be personally served or deposited in the mail, registered or certified, return receipt requested, postage prepaid, or delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice:

	
If to the Company:

	
OrthoLogic Corp.

	  	
Attn:  James M. Pusey, M.D.

	  	
1275 West Washington Street

	  	
Tempe, Arizona 85281

	  	
Phone: (602) 286-5520

	  	
Fax:     (602) 470-7080

	  	  
	
With a copy to:

	
Quarles & Brady Streich Lang llp

	  	
Attn:  Steven P. Emerick

	  	
Two North Central Avenue

	  	
Phoenix, Arizona 85004

	  	
Phone: (602) 230-5517

	  	
Fax:     (602) 417-2980

	  	  
	
If to the Investor:

	
PharmaBio Development Inc.

	  	
4709 Creekstone Drive

	  	
Suite 200 Riverbirch Building

	  	
Durham, NC 27703

	  	
Attn:  President

	  	
Phone: (919) 998-2080

	  	
Fax:     (919) 998-2090

	  	  
	
With a copy to

	
Smith, Anderson, Blount, Dorsett

	  	
Mitchell & Jernigan, L.L.P.

	  	
2500 Wachovia Capitol Center

	  	
Raleigh, NC 27601

	  	
Attn: Christopher B. Capel

	  	
Phone: 919-821-6759

	  	
Fax:    (919) 821-6800

  

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Subject to Section 2.3(b) of the Agreement, notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile during normal business hours of the recipient.  Notice otherwise sent as provided herein shall be deemed given on the third business day following the date mailed or on the second business day following delivery of such notice by a reputable air courier service.

(c)           Registration Expenses.  The Company shall be responsible for the expenses to be incurred by the Company in connection with Investor’s exercise of its registration rights under this Rights Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits that may be required in connection herewith.

(d)           Gender of Terms.  All terms used herein shall be deemed to include the feminine and the neuter, and the singular and the plural, as the context requires.

(e)           Governing Law.  This Rights Agreement, including, without limitation, the interpretation, performance, enforcement, breach or termination thereof and any remedies relating thereto, shall be governed by and construed in accordance with the laws of the State of North Carolina, as applied to agreements executed and performed entirely in the State of North Carolina, without regard to conflicts of law rules.

(f)            Titles.  The titles used in this Rights Agreement are used for convenience only and are not to be considered in construing or interpreting this Rights Agreement.

(g)           Counterparts.  This Rights Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature Page follows]

  

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[Signature Page to Registration Rights Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be duly executed as of the date first above written.

	
OrthoLogic Corp.

	  	  
	  	  
	
By:

	
/s/ Les M. Taeger

	  
	  	
Name:  Les M. Taeger

	  	
Title:  Sr. VP and CFO

	  	  
	  	  
	
PharmaBio Development Inc.

	  	  
	  	  
	
By:

	
/s/ Patrick B. Jordan

	  
	  	
Name:  Patrick B. Jordan

	  	
Title:  Vice President, Corporate Development

 

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