AMENDED AND RESTATED CLASS C WARRANT AGREEMENT
EXHIBIT
4.1
AMENDED
AND RESTATED
This
AMENDED AND RESTATED CLASS C
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 C 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
completion of patient enrollment for the existing Phase 2b clinical study of
the
TP508 distal radius fracture study by or on behalf of the Company or its
affiliates (the “Milestone”), the Holder’s right to exercise this Warrant
Agreement will vest as follows:
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(i)
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if
the Milestone is achieved by September 30, 2006, One Hundred Percent
(100%) of the Warrant Shares shall
vest;
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(ii)
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if
the Milestone is achieved after September 30, 2006, but before December
31, 2006, Fifty Percent (50%) of the Warrant Shares shall
vest;
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(iii)
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if
the Milestone is not achieved by December 31, 2006, none of the Warrant
Shares shall vest; and
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(iv)
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any
Warrant Shares not vested by December 31, 2006 shall
expire.
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(c) In
the event that the Milestone fails to be achieved, or fails to be achievable,
by
September 30, 2006, 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.
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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.
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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.
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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
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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.
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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.
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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.
(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.
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(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:
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If
to Company:
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0000
Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Attn: Chief
Executive Officer
Facsimile:
(000) 000-0000
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With
a copy to
(which
shall not
constitute
notice):
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Xxxxxxx
& Xxxxx Xxxxxxx Xxxx LLP
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One
Renaissance Square
Xxx
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxxx
Facsimile: (000)
000-0000
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If
to Purchaser:
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PharmaBio
Development Inc.
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(d/b/a
NovaQuest)
0000
Xxxxxxxxxx Xxxxx
Xxxxx
000 Xxxxxxxxxx Xxxxxxxx
Xxxxxx,
XX 00000
Attn: President
Facsimile: (000)
000-0000
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With
a copy to
(which
shall not
constitute
notice):
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Smith,
Anderson, Xxxxxx, Xxxxxxx
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Xxxxxxxx
& Xxxxxxxx, L.L.P.
0000
Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxxxxx X. Xxxxx
Facsimile: (000)
000-0000
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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]
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[Signature
Page to Amended and Restated Class C 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.
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By:
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/s/
Xxx X. Xxxxxx
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Name:
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Xxx
X. Xxxxxx
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Title:
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Sr.VP
and Chief Financial Officer
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PHARMABIO
DEVELOPMENT INC.
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(D/B/A
NOVAQUEST)
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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Vice
President, Corporate Development
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ANNEX
A
EXERCISE
FORM
TO
BE
EXECUTED BY THE REGISTERED HOLDER
TO
EXERCISE THE ATTACHED
AMENDED
AND RESTATED CLASS C WARRANT AGREEMENT OF
The
undersigned, [________________],
pursuant to the provisions of the Class C 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.
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PharmaBio
Development Inc.
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(d/b/a
NovaQuest)
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By:
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Name:
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Title:
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Address:
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0000
Xxxxxxxxxx Xxxxx
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Xxxxx
000 Xxxxxxxxxx Xxxxxxxx
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Xxxxxx,
XX 00000
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Dated:
___________________, _____
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