10,000,000 Shares Discovery Laboratories, Inc. Common Stock PLACEMENT AGENCY AGREEMENT
Exhibit
10.1
10,000,000
Shares
Discovery
Laboratories, Inc.
Common
Stock
December
7, 2007
▇▇▇▇▇▇▇▇▇
& COMPANY, INC.
c/o
Jefferies & Company, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Introductory.
Discovery Laboratories, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell an aggregate of 10,000,000 shares (the “Offered
Shares”)
of its
common stock, par value $0.001 per share (the “Shares”),
pursuant to the terms of the Subscription Agreements in the form of Exhibit
G
attached
hereto (the “Subscription
Agreements”)
entered into with the purchasers identified therein (each a “Purchaser”
and
collectively, the “Purchasers”).
The
Company hereby confirms its agreement with Jefferies & Company, Inc. to act
as Placement Agent (the “Placement
Agent”)
in
accordance with the terms and conditions of this Placement Agency Agreement
(this “Agreement”).
The
Company has prepared and filed with the Securities and Exchange Commission
(the
“Commission”)
a
shelf registration statement on Form S-3 (File No. 333-128929), which
contains a form of prospectus (the “Base
Prospectus”)
to be
used in connection with the public offering and sale of the Offered Shares.
Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the “Securities
Act”),
including all documents incorporated or deemed to be incorporated by reference
therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430B under the Securities Act or the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Exchange
Act”),
is
called the “Registration
Statement.”
Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act that relates to the Registration Statement is called the
“Rule
462(b) Registration Statement,”
and
from and after the date and time of filing of the Rule 462(b) Registration
Statement the term “Registration Statement” shall include the Rule 462(b)
Registration Statement. Such
prospectus, in the form first used to confirm sales of the Offered Shares,
is
called the “Prospectus.”
As
used
herein,“Applicable
Time”
is
6:00
a.m. (New York time) on December
7, 2007. As
used
herein, “free
writing prospectus”
has
the
meaning set forth in Rule 405 under the Securities Act, and “Time
of Sale Prospectus”
means
the preliminary prospectus, as amended or supplemented immediately prior to
the
Applicable Time, together with the free writing prospectuses, if any, identified
in Schedule A
hereto,
and each “road show” (as defined in Rule 433 under the Securities Act), if any,
related to the offering of the Offered Shares contemplated hereby that is a
“written communication” (as defined in Rule 405 under the Securities Act) (each
such road show, a “Road
Show”).
As
used herein, the terms “Registration Statement,”“Rule
462(b) Registration Statement”, “preliminary
prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the
documents incorporated and deemed to be incorporated by reference therein.
All
references in this Agreement to financial statements and schedules and other
information which are “contained,”
“included”
or
“stated”
in
the
Registration Statement, the Rule 462(b) Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, the Rule 462(b) Registration
Statement, any preliminary prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be, and all references in this Agreement to
amendments or supplements to the Registration Statement, the Rule 462(b)
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus
or the Prospectus shall be deemed to mean and include the filing of any document
under the Exchange Act which is or is deemed to be incorporated by reference
in
the Registration Statement, the Rule 462(b) Registration Statement, any
preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or
the
Prospectus, as the case may be. All
references in this Agreement to (i) the
Registration Statement, the 462(b) Registration Statement, any preliminary
prospectus, or the Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant
to
its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”)
and
(ii) the Prospectus shall be deemed to include the “electronic
Prospectus”
provided for use in connection with the offering of the Offered Shares as
contemplated by Section 4(n) of this Agreement.
In
the
event that the Company has only one subsidiary, then all references herein
to
“subsidiaries” of the Company shall be deemed to refer to such single
subsidiary, mutatis mutandis.
The
Company hereby confirms its agreement as follows:
Section
1. Agreement
to Act As Placement Agent; Placement of Securities.
On
the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this
Agreement:
(a)
The
Company hereby authorizes the Placement Agent to act as its exclusive agent
to
solicit offers for the purchase of all or part of the Offered Shares from the
Company in connection with the proposed offering of the Offered Shares (the
‘‘Offering’’).
Until
the Closing Date (as hereinafter defined) or earlier upon termination of this
Agreement (as hereinafter provided), the Company shall not, without the prior
written consent of the Placement Agent, solicit or accept offers to purchase
Offered Shares otherwise than through the Placement Agent.
(b)
The
Placement Agent agrees, as agent of the Company, to use its best efforts to
solicit offers to purchase the Offered Shares from the Company. The Placement
Agent shall use commercially reasonable efforts to assist the Company in
obtaining performance by each Purchaser whose offer to purchase Offered Shares
has been solicited by the Placement Agent and accepted by the Company, but
the
Placement Agent shall not, except as otherwise provided in this Agreement,
be
obligated to disclose the identity of any potential purchaser or have any
liability to the Company in the event any such purchase is not consummated
for
any reason. Under no circumstances will the Placement Agent be obligated to
underwrite or purchase any Offered Shares for its own account and, in soliciting
purchases of Offered Shares, the Placement Agent shall act solely as the
Company’s agent and not as principal. Notwithstanding the foregoing and except
as otherwise provided in Section 1(b), it is understood and agreed that the
Placement Agent (or its affiliates) may, solely at its discretion and without
any obligation to do so, purchase Offered Shares as principal.
2
(c)
Subject to the provisions of this Section 1, offers for the purchase of Offered
Shares may be solicited by the Placement Agent as agent for the Company at
such
times and in such amounts as the Placement Agent deems advisable. The Placement
Agent shall communicate to the Company, orally or in writing, each reasonable
offer to purchase Offered Shares received by it as agent of the Company. The
Company shall have the sole right to accept offers to purchase the Offered
Shares and may reject any such offer, in whole or in part. The Placement Agent
shall have the right, in its discretion reasonably exercised, without notice
to
the Company, to reject any offer to purchase Offered Shares received by it,
in
whole or in part, and any such rejection shall not be deemed a breach of its
agreement contained herein.
(d)
The
Offered Shares are being sold to the Purchasers at a price of $2.50 per Offered
Share. The purchases of the Offered Shares by the Purchasers shall be evidenced
by the execution of Subscription Agreements by each of the Purchasers and the
Company.
(e)
As
compensation for services rendered, on the Closing Date, the Company shall
pay
to the Placement Agent by wire transfer of immediately available funds to an
account or accounts designated by the Placement Agent, an aggregate amount
equal
to five percent (5%) of
the
gross proceeds received by the Company from the sale of the Offered Shares
on
such Closing Date.
(f)
No
Offered Shares which the Company has agreed to sell pursuant to this Agreement
shall be deemed to have been purchased and paid for, or sold by the Company,
until such Offered Shares shall have been delivered to the Purchaser thereof
against payment by such Purchaser. If the Company shall default in its
obligations to deliver Offered Shares to a Purchaser whose offer it has
accepted, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim, damage or expense arising from or as a result of such
default by the Company in accordance with the procedures set forth in Section
9
herein.
Section
2. Representations
and Warranties of
the Company.
The
Company hereby represents and warrants, as of the date of this Agreement and
as
of the Closing Date (as hereinafter defined), and covenants as
follows:
(a)
Compliance
with Registration Requirements.
The
Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. The Company
has
complied to the Commission’s satisfaction with all requests of the Commission
for additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
Each
preliminary prospectus and the Prospectus when filed complied in all material
respects with the Securities Act and, if filed by electronic transmission
pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T under the
Securities Act), was identical to the copy thereof delivered to the Placement
Agent for use in connection with the offer and sale of the Offered Shares.
Each
of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at
all
subsequent times, complied and will comply through the completion of the
distribution of the Offered Shares in all material respects with the Securities
Act and did not and will not through the completion of the distribution of
the
Offered Shares contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. As of the Applicable Time, the Time of Sale
Prospectus did not, and at the time of sale of the Offered Shares and at the
Closing Date (as defined in Section 3), the Time of Sale Prospectus, as then
amended or supplemented by the Company, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus,
as
amended or supplemented, as of its date and at all subsequent times through
the
completion of the distribution of the Offered Shares, did not and will not
contain any untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the three immediately preceding sentences do not
apply to statements in or omissions from the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective amendment
thereto, or the Prospectus or the Time of Sale Prospectus, or any amendments
or
supplements thereto, made in reliance upon and in conformity with information
relating to the Placement Agent furnished to the Company in writing by the
Placement Agent expressly for use therein, it
being
understood and agreed that the only such information furnished by the Placement
Agent to the Company consists of the information described in Section 9(b)
below.
There
are no contracts or other documents required to be described in the Time of
Sale
Prospectus or the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.
3
The
Company is not an “ineligible issuer” in connection with the offering of the
Offered Shares pursuant to Rules 164, 405 and 433 under the Securities Act.
Any
free writing prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act. Each free writing
prospectus that the Company has filed, or is required to file, pursuant to
Rule
433(d) under the Securities Act or that was prepared by or on behalf of or
used
or referred to by the Company complies or will comply through the completion
of
the distribution of the Offered Shares in all material respects with the
requirements of Rule 433 under the Securities Act including timely filing with
the Commission or retention where required and legending, and each such free
writing prospectus, as of its issue date and at all subsequent times through
the
completion of the public offer and sale of the Offered Shares did not, does
not
and will not through the completion of the distribution of the Offered Shares
include any information that conflicted, conflicts with or will through the
completion of the distribution of the Offered Shares conflict with the
information contained in the Registration Statement, the Prospectus or any
preliminary prospectus, including any document incorporated by reference
therein. Except for the free writing prospectuses, if any, identified in
Schedule
A
hereto,
furnished to the Placement Agent before first use, the Company has not prepared,
used or referred to, and will not, without your prior consent not to be
unreasonably withheld, prepare, use or refer to, any free writing
prospectus.
4
(b)
Offering
Materials Furnished to Placement
Agent.
The
Company has delivered to the Placement Agent one
complete
copy of the Registration Statement, each amendment thereto and any Rule 462(b)
Registration Statement and of each consent and certificate of experts filed
as a
part thereof, and conformed copies of the Registration Statement, each amendment
thereto and any Rule 462(b) Registration Statement (without exhibits) and
preliminary prospectuses, the Time of Sale Prospectus, the Prospectus, as
amended or supplemented, and any free writing prospectus reviewed and consented
to by the Placement Agent, in such quantities and at such places as the
Placement Agent has reasonably requested.
(c)
Distribution
of Offering Material By the Company.
The
Company has not distributed and will not distribute, prior to the completion
of
the distribution of the Offered Shares, any offering material in connection
with
the offering and sale of the Offered Shares other than a preliminary prospectus,
the Time of Sale Prospectus, the Prospectus, any free writing prospectus
reviewed and consented to by the Placement Agent, or the Registration Statement.
(d)
The
Placement Agency Agreement.
Each of
this Agreement, the Subscription Agreements and that certain Escrow Agreement
(the “Escrow
Agreement”)
dated
as of the date hereof has been duly authorized, executed and delivered by,
and
is a valid and binding agreement of, the Company, enforceable in accordance
with
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(e)
Authorization
of the Offered Shares.
The
Offered Shares have been duly authorized for issuance and sale pursuant to
this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement, will be validly issued, fully paid and nonassessable, and the
issuance and sale of the Offered Shares is not subject to any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase
the
Offered Shares.
(f)
No
Applicable Registration or Other Similar Rights.
There
are no persons with registration or other similar rights to have any equity
or
debt securities registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement.
5
(g)
No
Material Adverse Change.
Except
as otherwise disclosed in the Time of Sale Prospectus, subsequent to the
respective dates as of which information is given in Time of Sale Prospectus:
(i) there has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, operations
or
prospects, whether or not arising from transactions in the ordinary course
of
business, of the Company and its subsidiaries, considered as one entity (any
such change is called a “Material
Adverse Change”);
(ii) the Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business nor entered into any material transaction
or agreement not in the ordinary course of business; and (iii) there has
been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries,
any
of its subsidiaries on any class of capital stock or repurchase or redemption
by
the Company or any of its subsidiaries of any class of capital
stock.
(h)
Independent
Accountants.
Ernst
& Young LLP, who have expressed their opinion with respect to the financial
statements (which term as used in this Agreement includes the related notes
thereto) and supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus and Time of Sale
Prospectus (each, an “Applicable
Prospectus”
and
collectively, the “Applicable
Prospectuses”),
are
(i) independent public or certified public accountants as required by the
Securities Act and the Exchange Act,
and (ii)
a registered public accounting firm as defined by the Public Company Accounting
Oversight Board (the “PCAOB”).
(i)
Preparation
of the Financial Statements.
The
financial statements filed with the Commission as a part of the Registration
Statement and included in the Time of Sale Prospectus and the Prospectus present
fairly the consolidated financial position of the Company and its subsidiaries
as of and at the dates indicated and the results of their operations and cash
flows for the periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been prepared
in conformity with generally accepted accounting principles as applied in the
United States
applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial statements
or
supporting schedules are required to be included in the Registration Statement
or any Applicable Prospectus.
No
person who has been suspended or barred from being associated with a registered
public accounting firm, or who has failed to comply with any sanction pursuant
to Rule 5300 promulgated by the PCAOB, has participated in or otherwise aided
the preparation of, or audited, the financial statements, supporting schedules
or other financial data filed with the Commission as a part of the Registration
Statement and included in any Applicable Prospectus. The
Company’s ratios of earnings to fixed charges set forth in the Prospectus under
the caption “Ratio of Earnings to Fixed Charges” and in Exhibit 12 to the
Registration Statement have been calculated in compliance with Item 503(d)
of Regulation S-K under the Securities Act.
(j)
Company’s
Accounting System.
The
Company and each of its subsidiaries make and keep accurate books and records
and maintain a system of internal
accounting
controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
as applied in the United States and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
There
has not been and is no material weakness in the Company’s internal control
over financial reporting (whether or not remediated) and since December 31,
2006, there has been no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
6
(k)
Incorporation
and Good Standing of the Company and its Subsidiaries.
Each of
the Company and its subsidiaries has been duly incorporated or organized, as
the
case may be, and is validly existing as a corporation, partnership or limited
liability company, as applicable, in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority (corporate or other) to own, lease and operate its properties and
to
conduct its business as described in each Applicable Prospectus and, in the
case
of the Company, to enter into and perform its obligations under this Agreement.
Each of the Company and each subsidiary is duly qualified as a foreign
corporation, partnership or limited liability company, as applicable, to
transact business and is in good standing in the State of Pennsylvania and
each
other jurisdiction in which such qualification is required, whether by reason
of
the ownership or leasing of property or the conduct of business. All of the
issued and outstanding capital stock or other equity or ownership interests
of
each subsidiary have been duly authorized and validly issued, are fully paid
and
nonassessable and are owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance
or
adverse claim. The Company does not own or control, directly or indirectly,
any
corporation, association or other entity other than (i) the subsidiaries listed
in Exhibit 21
to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006
and (ii) such other entities omitted from Exhibit 21 which, when such omitted
entities are considered in the aggregate as a single subsidiary, would not
constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of
Regulation S-X.
(l)
Capitalization
and Other Capital Stock Matters.
The
authorized, issued and outstanding capital stock of the Company is as set forth
in each Applicable Prospectus under the caption “Capitalization” (other than for
subsequent issuances, if any, pursuant to employee benefit plans described
in
the Time of Sale Prospectus or upon the exercise of outstanding options or
warrants described in each Applicable Prospectus). The Shares (including the
Offered Shares) conform in all material respects to the description thereof
contained in the Time of Sale Prospectus. All of the issued and outstanding
Shares have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding Shares was issued in violation of
any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of
its
subsidiaries other than those accurately described in each Applicable
Prospectus. The description of the Company’s stock option, stock bonus and other
stock plans or arrangements, and the options or other rights granted thereunder,
set forth in each Applicable Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights. Except
as
described in the Prospectus, the Company has not sold or issued any Shares
during the six-month period preceding the date of the Prospectus, including
any
sales pursuant to Rule 144A under, or Regulations D or S of, the Securities
Act
other than Shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
7
(m)
Stock
Exchange Listing.
The
Shares are registered pursuant to Section 12(b) of the Exchange Act and are
listed on the Nasdaq Global Market, and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Shares
under the Exchange Act or delisting the Shares from the Nasdaq Global Market,
nor has the Company received any notification or have any reason to
believe that it will or is reasonably likely to receive
a
notification that the Commission or the Nasdaq Global Market is contemplating
terminating such registration or listing, including without limitation for
any
violation of Nasdaq Marketplace Rule 4350(i)(1)(D) in connection with this
Offering or otherwise.
(n)
Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals
Required.
Neither
the Company nor any of its subsidiaries is in violation of its charter or
by-laws, partnership agreement or operating agreement or similar organizational
document, as applicable, or is in default (or, with the giving of notice or
lapse of time, would be in default) (“Default”)
under
any indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which the Company or any of its subsidiaries is
a
party or by which it or any of them may be bound (including, without limitation,
any credit agreement, indenture, pledge agreement, security agreement or other
instrument or agreement evidencing, guaranteeing, securing or relating to
indebtedness of the Company or any of its subsidiaries),
or to
which any of the property or assets of the Company or any of its subsidiaries
is
subject (each, an “Existing
Instrument”),
except for such Defaults as would not, individually or in the aggregate, result
in a Material Adverse Change. The Company’s execution, delivery and performance
of each of this Agreement, the Subscription Agreements and the Escrow Agreement,
the consummation of the transactions contemplated hereby and by each Applicable
Prospectus and the issuance and sale of the Offered Securities (i) have
been duly authorized by all necessary corporate action and will not result
in
any violation of the provisions of the charter or by-laws, partnership agreement
or operating agreement or similar organizational document of the Company or
any
subsidiary, as applicable, (ii) will not conflict with or constitute a
breach of, or Default under,
or
result in the creation or imposition of any lien, charge or encumbrance upon
any
property or assets of the Company or any of its subsidiaries pursuant to, or
require the consent of any other party to, any Existing Instrument and
(iii) will not result in any violation of any law, administrative
regulation or administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution, delivery and
performance of this Agreement, the Subscription Agreements and the Escrow
Agreement and consummation of the transactions contemplated hereby and by each
Applicable Prospectus, except such
as
have been obtained or made by the Company and are in full force and effect
under
the Securities Act, applicable state securities or blue sky laws and from the
NASD.
(o)
No
Material Actions or Proceedings.
Except
as otherwise disclosed in each Applicable Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the Company’s
knowledge, threatened (i) against or affecting the Company or any of its
subsidiaries, (ii) which have as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company, such
subsidiary or such officer or director, (B) any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to result
in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement or (C) any such action, suit or
proceeding is or would be material in the context of the sale of Shares. No
material labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is threatened or
imminent.
8
(p)
Intellectual
Property Rights.
The
Company and its subsidiaries own or possess sufficient trademarks, trade names,
patent rights, copyrights, domain names, licenses, approvals, trade secrets
and
other similar rights (collectively, “Intellectual
Property Rights”)
reasonably necessary to conduct their businesses as now conducted; and the
expected expiration of any of such Intellectual Property Rights would not result
in a Material Adverse Change. Neither the Company nor any of its subsidiaries
has received, or has any reason to believe that it will receive, any notice
of
infringement or conflict with asserted Intellectual Property Rights of others.
The Company is not a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property Rights of any other person or entity
that are required to be set forth in the Prospectus and are not described
therein. (The Time of Sale Prospectus contains in all material respects the
same
description of the matters set forth in the preceding sentence contained in
the
Prospectus.) None of the technology employed by the Company or any of its
subsidiaries has been obtained or is being used by the Company or any of its
subsidiaries in violation of any contractual obligation binding on the Company
or any of its subsidiaries or, to the Company’s knowledge, any of its or its
subsidiaries’ officers, directors or employees or otherwise in violation of the
rights of any persons.
(q)
All
Necessary Permits, etc.The
Company and each subsidiary possess such valid and current certificates,
authorizations or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct their respective businesses,
and neither the Company nor any subsidiary has received, or has any reason
to
believe that it will receive, any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of
an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(r)
Title
to Properties.
Except
as otherwise disclosed in each Applicable Prospectus, the Company and each
of
its subsidiaries has good and marketable title to all of the real and personal
property and other assets reflected as owned in the financial statements
referred to in Section 2 (i) above (or elsewhere in any Applicable
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, adverse claims and other defects, except such
as
do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The real property, improvements, equipment
and personal property held under lease by the Company or any subsidiary are
held
under valid and enforceable leases, with such exceptions as are not material
and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company
or
such subsidiary.
(s)
Tax
Law Compliance.
The
Company and its consolidated subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes
required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them. The Company
has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 2
(i)
above in respect of all federal, state and foreign income and franchise taxes
for all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
9
(t)
Company
Not an “Investment Company”.
The
Company has been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the “Investment
Company Act”).
The
Company is not, and will not be, either after receipt of payment for the Offered
Shares or after the application of the proceeds therefrom as described under
“Use of Proceeds” in each Applicable Prospectus, an “investment
company”
within
the meaning of Investment Company Act.
(u)
Insurance.
Each of
the Company and its subsidiaries are insured pursuant to policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism
and
policies covering the Company and its subsidiaries for product liability claims
and clinical trial liability claims. The Company has no reason to believe that
it or any subsidiary will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.
(v)
No
Price
Stabilization or Manipulation;
Compliance with Regulation M.
The
Company has not taken, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation
of the price of the Shares or any other “reference
security”
(as
defined in Rule 100 of Regulation M under the Exchange Act (“Regulation
M”))
whether to facilitate the sale or resale of the Offered Shares or otherwise,
and
has taken no action which would directly or indirectly violate Regulation
M.
(w)
Related
Party Transactions.
There
are no business relationships or related-party transactions involving the
Company or any of its subsidiaries or any other person required to be described
in each Applicable Prospectus which have not been described as required.
(The
Time
of Sale Prospectus contains in all material respects the same description of
the
matters set forth in the preceding sentence contained in the
Prospectus.)
(x)
NASD
Matters.
All
of
the information provided to the Placement Agent or to counsel for the Placement
Agent by the Company, its officers and directors and the holders of any
securities (debt or equity) or options to acquire any securities of the Company
in connection with letters, filings or other supplemental information provided
to NASD Regulation Inc. pursuant to NASD Conduct Rule 2710 or 2720, if
any, is true, complete and correct.
(y)
Parties
to Lock-Up Agreements.
Each of
the Company’s directors and executive officers listed in Exhibit C
has
executed and delivered to the Placement Agent a lock-up agreement substantially
in the form of Exhibit D
hereto.
Exhibit C
hereto
contains a true, complete and correct list of all directors and executive
officers of the Company. If any additional persons shall become directors or
executive
officers
of the Company prior to the end of the Company Lock-up Period (as defined
below), the Company shall cause each such person,
prior
to or contemporaneously with their appointment or election as a director or
executive officer of the Company,
to
execute and deliver to the Placement Agent an agreement in the form attached
hereto as Exhibit
D.
10
(z)
Statistical
and Market-Related Data.
The
statistical, demographic and market-related data included in the Registration
Statement and each Applicable Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate or represent the Company’s
good faith estimates that are made on the basis of data derived from such
sources.
(aa)
S-3 Eligibility. At
the
time the Registration Statement was originally declared effective and at the
time the Company’s Annual Report on Form 10-K for the year ended
December 31, 2006 (the “Annual
Report”)
was
filed with the Commission, the Company met the then applicable requirements
for
use of Form S-3 under the Securities Act. The Company meets the
requirements for use of Form S-3 under the Securities Act specified in
Conduct Rule 2710(b)(7)(C)(i) of the National Association of Securities
Dealers Inc. (the “NASD”).
(bb)
Exchange Act Compliance.The
documents incorporated or deemed to be incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of
the
Exchange Act, and, when read together with the other information in the
Prospectus, at the time the Registration Statement and any amendments thereto
become effective and at the Closing Date will not contain an untrue statement
of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the fact required to be stated therein or necessary to
make
the statements therein, in the light of the circumstances under which they
were
made, not misleading.
(cc)
No
Unlawful Contributions or Other Payments.
Neither
the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution
or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or regulation of the character required
to be disclosed in the Registration
Statement and each Applicable Prospectus.
(dd) Disclosure
Controls and Procedures; Deficiencies in or Changes to Internal Control Over
Financial Reporting.
The
Company has established and maintains disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)),
which
(i) are designed to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to the Company’s
principal executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) have been evaluated
by
management of the Company for effectiveness as of the
end
of the Company’s most recent fiscal quarter;
and
(iii) are effective in all material respects to perform the functions for which
they were established. The Company is not aware of (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal control
over financial reporting.
The
Company is not aware of any change in its internal control over financial
reporting that has occurred during its most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
11
(ee) Compliance
with Environmental Laws.
Except
as
described in each
Applicable Prospectus
and
except as would not, singly or in the aggregate, result in a Material Adverse
Change, (i) neither the Company nor any of its subsidiaries is in violation
of
any federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, “Hazardous
Materials”)
or to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, “Environmental
Laws”),
(ii)
the Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with
their requirements, (iii) there are no pending or, to the Company’s knowledge,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up
or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(ff) ERISA
Compliance.
The
Company and its subsidiaries and any “employee
benefit plan”
(as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
“ERISA”))
established or maintained by the Company, its subsidiaries or their
“ERISA
Affiliates”
(as
defined below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate”
means,
with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”)
of
which the Company or such subsidiary is a member. No “reportable
event”
(as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any “employee
benefit plan”
established or maintained by the Company, its subsidiaries or any of their
ERISA
Affiliates. No “employee
benefit plan”
established or maintained by the Company, its subsidiaries or any of their
ERISA
Affiliates, if such “employee
benefit plan”
were
terminated, would have any “amount
of unfunded benefit liabilities”
(as
defined under ERISA). Neither the Company, its subsidiaries nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability
under
(i) Title IV of ERISA with respect to termination of, or withdrawal
from, any “employee
benefit plan”
or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee
benefit plan”
established or maintained by the Company, its subsidiaries or any of their
ERISA
Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure
to
act, which would cause the loss of such qualification.
(gg) Brokers.
Except
for the fee payable to the Placement Agent as described in
the
Time
of
Sale Prospectus and the Prospectus, there is no broker, finder or other party
that is entitled to receive from the Company any brokerage or finder’s fee or
other fee or commission as a result of any transactions contemplated by this
Agreement.
12
(hh) No
Outstanding Loans or Other Extensions of Credit.Since
the
adoption of Section 13(k) of the Exchange Act, neither the Company nor any
of
its subsidiaries has extended or maintained credit, arranged for the extension
of credit, or renewed any extension of credit, in the form of a personal loan,
to or for any director or executive officer (or equivalent thereof) of the
Company and/or such subsidiary except for such extensions of credit as are
expressly permitted by Section 13(k) of the Exchange Act.
(ii) Compliance
with Laws.
The
Company has not been advised, and has no reason to believe, that it and each
of
its subsidiaries are not conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is conducting
business, except where failure to be so in compliance would not result in a
Material Adverse Change.
(jj) Foreign
Corrupt Practices Act.
Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or other person acting on
behalf of the Company or any of its subsidiaries is aware of or has taken any
action, directly or indirectly, that has resulted or would result in a violation
of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything
of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the Company and its
subsidiaries and, to the knowledge of the Company, the Company’s affiliates have
conducted their respective businesses in compliance with the FCPA.
(kk) OFAC.
Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or person acting on behalf
of
the Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”);
and
the Company will not directly or indirectly use the proceeds of this offering,
or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
Any
certificate signed by any officer of the Company or any of its subsidiaries
and
delivered to the Placement Agent or to counsel for the Placement Agent shall
be
deemed a representation and warranty by the Company to the Placement Agent
as to
the matters covered thereby.
The
Company acknowledges that the Placement Agent and, for purposes of the opinions
to be delivered pursuant to Section 7 hereof, counsel to the Company and counsel
to the Placement Agent, will rely upon the accuracy and truthfulness of the
foregoing representations and hereby consents to such reliance.
Section
3. Purchase,
Sale and Delivery of the Offered Shares.
(a)
The
Offered Shares.
The
Company agrees to issue and sell to the Purchasers the Offered Shares upon
the
terms set forth in the Subscription Agreements. The purchase price per Offered
Share to be paid by the Purchasers to the Company shall be $2.50 per
share.
13
(b)
The
Closing Date.
Delivery of certificates for the Offered Shares to be purchased by the
Purchasers and payment therefor shall be made at the offices of the Placement
Agent, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (or such other place as may
be agreed to by the Company and the Placement Agent) at 9:00 a.m. New York
time,
on December
12, 2007
(the
time and date of such closing are called the “Closing
Date”).
The
Company hereby acknowledges that circumstances under which the Placement Agent
may provide notice to postpone the Closing Date as originally scheduled include,
but are in no way limited to, any determination by the Company or the Placement
Agent to recirculate to the public copies of an amended or supplemented
Prospectus.
(c)
Payment
for the Offered Shares.
Payment
for the Offered Shares shall be made at the Closing Date by wire transfer of
immediately available funds to the order of the Company.
(d)
Delivery
of the Offered Shares.
The
Company shall deliver, or cause to be delivered, to the Purchasers certificates
for the Offered Shares at the Closing Date, against the irrevocable release
of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. The certificates for the Offered Shares shall be in definitive
form and registered in such names and denominations as the Purchasers shall
have
requested at least two full business days prior to the Closing Date and shall
be
made available for inspection on the business day preceding the Closing Date
at
a location in New York City as the Placement Agent may designate. Time shall
be
of the essence, and delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Purchasers.
Section
4. Additional
Covenants.
The
Company further covenants and agrees with the Placement Agent as
follows:
(a) Delivery
of Registration Statement, Time of Sale Prospectus and
Prospectus.Upon
request, the Company shall furnish to the Placement Agent, without charge,
two
copies of the Registration Statement, any amendments thereto and any Rule 462(b)
Registration Statement (including exhibits thereto) and shall furnish to the
Placement
Agent
in New
York City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and during the period
mentioned in Section 4(e) or 4(f) below, as many copies of the Time of Sale
Prospectus, the Prospectus and any supplements and amendments thereto or to
the
Registration Statement as the Placement
Agent
may
reasonably request.
(b) Placement
Agent’s Review of Proposed Amendments and Supplements.Prior
to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act), any
preliminary prospectus, the Time of Sale Prospectus or the Prospectus (including
any amendment or supplement through incorporation of any report filed under
the
Exchange Act), the Company shall furnish to the Placement
Agent
for
review, a reasonable amount of time prior to the proposed time of filing or
use
thereof, a copy of each such proposed amendment or supplement, and the Company
shall not file or use any such proposed amendment or supplement without the
Placement Agent’s consent (which shall not be unreasonably withheld), and to
file with the Commission within the applicable period specified in Rule 424(b)
under the Securities Act any prospectus required to be filed pursuant to such
Rule.
14
(c)
Free
Writing Prospectuses.The
Company shall furnish to the Placement
Agent
for
review, a reasonable amount of time prior to the proposed time of filing or
use
thereof, a copy of each proposed free writing prospectus or any amendment or
supplement thereto to be prepared by or on behalf of, used by, or referred
to by
the Company and the Company shall not file, use or refer to any proposed free
writing prospectus or any amendment or supplement thereto without the Placement
Agent’s consent. Upon request, the
Company shall furnish to the Placement Agent, without charge, as many copies
of
any free writing prospectus prepared by or on behalf of, or used by the Company,
as the Placement Agent may reasonably request. If at any time when a prospectus
is required by the Securities Act (including, without limitation, pursuant
to
Rule 173(d)) to be delivered in connection with sales of the Offered Shares
(but in any event if at any time through and including the Closing Date) there
occurred or occurs an event or development as a result of which any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company
conflicted or would conflict with the information contained in the Registration
Statement or included or would include an untrue statement of a material fact
or
omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, the Company shall promptly amend or supplement
such free writing prospectus to eliminate or correct such conflict or so that
the statements in such free writing prospectus as so amended or supplemented
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of
the circumstances prevailing at such subsequent time, not misleading, as the
case may be; provided, however, that prior to amending or supplementing any
such
free writing prospectus, the Company shall furnish to the Placement Agent for
review, a reasonable amount of time prior to the proposed time of filing or
use
thereof, a copy of such proposed amended or supplemented free writing prospectus
and the Company shall not file, use or refer to any such amended or supplemented
free writing prospectus without the Placement Agent’s consent.
(d)
Filing
of Free Writing Prospectuses.
The
Company shall not to take any action that would result in the Placement
Agent
or the
Company being required to file with the Commission pursuant to Rule 433(d)
under
the Securities Act a free writing prospectus prepared by or on behalf of the
Placement
Agent
that the
Placement
Agent
otherwise would not have been required to file thereunder.
(e)
Amendments
and Supplements to Time of Sale Prospectus.
If
the
Time of Sale Prospectus is being used to solicit offers to buy the Shares at
a
time when the Prospectus is not yet available to prospective purchasers and
any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Prospectus so
that
the Time of Sale Prospectus does not include an untrue statement of a material
fact or omit to state a material fact necessary in
order
to make the statements therein, in the light of the circumstances when
delivered to a prospective purchaser,
not
misleading, or if any event shall occur or condition exist as a result of which
the Time of Sale Prospectus conflicts with the information contained in the
Registration Statement, or if, in the opinion of counsel for the Placement
Agent,
it is
necessary to amend or supplement the Time of Sale Prospectus to comply with
applicable law, including the Securities Act, the Company shall (subject to
Sections 4(b) and 4(c)) forthwith prepare, file with the Commission and furnish,
at its own expense, to the Placement
Agent
and to
any dealer upon request, either amendments or supplements to the Time of Sale
Prospectus so that the statements in the Time of Sale Prospectus as so amended
or supplemented will not
include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein,
in the
light of the circumstances when delivered to a prospective purchaser, not
misleading or so that the Time of Sale Prospectus, as amended or supplemented,
will no longer conflict with the Registration Statement, or so that the Time
of
Sale Prospectus, as amended or supplemented, will comply with applicable law
including the Securities Act.
15
(f)
Securities
Act Compliance.
After
the date of this Agreement, the Company shall promptly advise the Placement
Agent
in
writing (i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of
any
filing of any post-effective amendment to the Registration Statement, any Rule
462(b) Registration Statement or any amendment or supplement to any Prospectus,
the Time of Sale Prospectus, any free writing prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the Registration
Statement or any Rule 462(b) Registration Statement becomes effective and (iv)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto, any
Rule
462(b) Registration Statement or any amendment or supplement to any preliminary
prospectus, the Time of Sale Prospectus or the Prospectus or of any order
preventing or suspending the use of any preliminary prospectus, the Time of
Sale
Prospectus, any free writing prospectus or the Prospectus, or of any proceedings
to remove, suspend or terminate from listing or quotation the Shares from any
securities exchange upon which they are listed for trading or included or
designated for quotation, or of the threatening or initiation of any proceedings
for any of such purposes. If the Commission shall enter any such stop order
at
any time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees that
it
shall comply with the provisions of Rule 424(b), Rule 433 and Rule 430B, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) or Rule
433
were received in a timely manner by the Commission.
(g)
Amendments
and Supplements to the Prospectus and Other Securities Act Matters.
If any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus so that the Prospectus does not
include
an untrue statement of a material fact or omit to state a material fact
necessary in
order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if in the reasonable
opinion of the Placement Agent or counsel for the Placement
Agent
it is
otherwise necessary to amend or supplement the Prospectus to comply with
applicable law, including the Securities Act, the Company agrees (subject to
Section 4(b) and 4(c)) to promptly prepare, file with the Commission and
furnish at its own expense to the Placement
Agent
and to
dealers, amendments or supplements to the Prospectus so that the statements
in
the Prospectus as so amended or supplemented will not
include
an untrue statement of a material fact or omit to state a material fact
necessary
in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable law
including the Securities Act. Neither the Placement Agent’s consent to, or
delivery of, any such amendment or supplement shall constitute a waiver of
any
of the Company’s obligations under Sections 4(b) or 4(c).
(h)
Blue
Sky Compliance.
The
Company shall cooperate with the Placement
Agent
and
counsel for the Placement
Agent
to
qualify or register the Offered Shares for sale under (or obtain exemptions
from
the application of) the state securities or blue sky laws of
those
jurisdictions designated by the Placement
Agent,
shall
comply with such laws and shall continue such qualifications, registrations
and
exemptions in effect so long as required for the distribution of the Offered
Shares. The Company shall not be required to qualify as a foreign corporation
or
to take any action that would subject it to general service of process in any
such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Placement
Agent
promptly
of the suspension of the qualification or registration of (or any such exemption
relating to) the Offered Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain
the
withdrawal thereof at the earliest possible moment.
16
(i)
Use
of Proceeds.
The
Company shall apply the net proceeds from the sale of the Offered Shares sold
by
it in the manner described under the caption “Use of Proceeds” in each
Applicable Prospectus.
(j)
Transfer
Agent.
The
Company shall engage and maintain, at its expense, a registrar and transfer
agent for the Shares.
(k)
Earnings
Statement.
As soon
as practicable, but in any event no later than 12 months after the date of
this
Agreement, the Company will make generally available to its security holders
and
upon request to the Placement
Agent
an
earnings statement (which need not be audited) covering a period of at least
12
months beginning after the date of this Agreement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder.
(l)
Exchange
Act Compliance.
During
the period when a prospectus is required by the Securities Act to be delivered
in connection with sales of the Offered Shares (but in any event if at any
time
through and including the Closing Date), the Company shall file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of
the
Exchange Act in the manner and within the time periods required by the Exchange
Act.
(m)
Listing.
The
Company will use its best efforts to maintain the listing of the Shares on
the
Nasdaq Global Market.
(n)
Company
to Provide Copy of the Prospectus in Form That May be Downloaded from the
Internet.
The
Company shall cause to be prepared and delivered, at its expense, within one
business day from the effective date of this Agreement, to the Placement Agent
an “electronic
Prospectus”
to
be
used by the Placement Agent in connection with the offering and sale of the
Offered Shares. As used herein, the term “electronic
Prospectus”
means
a
form of Time of Sale Prospectus, and any amendment or supplement thereto, that
meets each of the following conditions: (i) it shall be encoded in an electronic
format, satisfactory to the Placement Agent, that may be transmitted
electronically by the Placement Agent to offerees and purchasers of the Offered
Shares; (ii) it shall disclose the same information as the paper Time of
Sale Prospectus, except to the extent that graphic and image material cannot
be
disseminated electronically, in which case such graphic and image material
shall
be replaced in the electronic Prospectus with a fair and accurate narrative
description or tabular representation of such material, as appropriate; and
(iii) it shall be in or convertible into a paper format or an electronic
format, satisfactory to the Placement Agent, that will allow investors to store
and have continuously ready access to the Time of Sale Prospectus at any future
time, without charge to investors (other than any fee charged for subscription
to the Internet as a whole and for on-line time). The Company hereby confirms
that it has included or will include in the Prospectus filed pursuant to ▇▇▇▇▇
or otherwise with the Commission and in the Registration Statement at the time
it was declared effective an undertaking that, upon receipt of a request by
an
investor or his or her representative, the Company shall transmit or cause
to be
transmitted promptly, without charge, a paper copy of the Time of Sale
Prospectus.
17
(o)
Agreement
Not to Offer or Sell Additional Shares.
During
the period commencing on and including the date hereof and ending on and
including the 60 day following the date of this Agreement (as the same may
be
extended as described below, the “Lock-up
Period”),
the
Company will not, without the prior written consent of the Placement Agent,
directly or indirectly, sell (including, without limitation, any short sale),
offer, contract or grant any option to sell, pledge, transfer or establish
an
open “put equivalent position” within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering
of,
or file any registration statement under the Securities Act in respect of,
any
Shares, options, rights or warrants to acquire Shares or securities exchangeable
or exercisable for or convertible into Shares (other than as contemplated by
this Agreement with respect to the Offered Shares) or publicly announce the
intention to do any of the foregoing; provided,
however,
that
the Company may issue (A) Shares or options to purchase Shares to unaffiliated
third parties in connection with or pursuant to joint ventures, collaborative
arrangements, strategic alliances or similar transactions the primary purpose
of
which is not for capital raising, (B) other than during the 30 days following
the date of this Agreement, Shares to Kingsbridge Capital Limited under the
Company’s Committed Equity Financing Facility, and (C) options to purchase
Shares, or issue Shares upon exercise of options, pursuant to any stock option,
stock bonus or other stock plan or arrangement described in each Applicable
Prospectus or subsequently approved by the Company’s stockholders.
Notwithstanding the foregoing, if (i) during the last 17 days of the Lock-up
Period, the Company issues an earnings release or material news or a material
event relating to the Company occurs or (ii) prior to the expiration of the
Lock-up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Lock-up Period, then
in each case the Lock-up Period will be extended until the expiration of the
18-day period beginning on the date of the issuance of the earnings release
or
the occurrence of the material news or material event, as applicable,
unless
the Placement Agent waives, in writing, such extension, except that such
extension will not apply if, within three business days prior to the
15th
calendar
day before the last day of the Lock-up Period, the Company delivers a
certificate, signed by the Chief Financial Officer or Chief Executive Officer
of
the Company, certifying on behalf of the Company that (i) the Shares are
“actively traded securities” (as defined in Regulation M), (ii) the Company
meets the applicable requirements of paragraph (a)(1) of Rule 139
under the Securities Act in the manner contemplated by NASD Conduct
Rule 2711(f)(4), and (iii) the provisions of NASD Conduct
Rule 2711(f)(4) are not applicable to any research reports relating to the
Company published or distributed by the Placement Agent during the 15 days
before or after the last day of the Lock-up Period (before giving effect to
such
extension).
The
Company will provide the Placement
Agent
with
prior notice of any such announcement that gives rise to an extension of the
Lock-up Period.
(p)
Investment
Limitation.
The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Offered Shares in such a manner as would require the
Company or any of its subsidiaries to register as an investment company under
the Investment Company Act.
(q)
No
Stabilization or Manipulation;
Compliance with Regulation M.
The
Company will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation
of the price of the Shares or any other reference security,
whether
to
facilitate the sale or resale of the Offered Shares or otherwise, and the
Company will, and shall cause each of its affiliates to, comply with all
applicable provisions of Regulation M. If
the
limitations of Rule 102 of Regulation M (“Rule
102”)
do not
apply with respect to the Offered Shares or any other reference security
pursuant to any exception set forth in Section (d) of Rule 102, then promptly
upon notice from the Placement Agent (or, if later, at the time stated in the
notice), the Company
will, and shall cause each of its affiliates to,
comply
with Rule 102 as though such exception were not available but the other
provisions of Rule 102 (as interpreted by the Commission) did apply.
18
(r)
Existing
Lock-Up Agreements.
During
the Lock-up Period, the Company will enforce all existing agreements between
the
Company and any of its security holders that prohibit the sale, transfer,
assignment, pledge or hypothecation of any of the Company’s securities. In
addition, the Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by such
existing “lock-up” agreements for the duration of the periods contemplated in
such agreements, including, without limitation, “lock-up” agreements entered
into by the Company’s officers and directors pursuant to Section 7(h).
The
Placement Agent may, in its sole discretion, waive in writing the
performance
by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
Section
5. Payment
of Expenses.
The
Company agrees to pay, or reimburse if paid by the Placement Agent, all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery
of the Offered Shares (including all printing and engraving costs),
(ii) all fees and expenses of the registrar and transfer agent of the
Shares, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Offered Shares to the Purchasers,
(iv) all fees and expenses of the Company’s counsel, independent public or
certified public accountants and other advisors, (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Time of Sale
Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf
of, used by, or referred to by the Company, and each preliminary prospectus,
and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, reasonable attorneys’ fees and expenses incurred by the Company or the
Placement
Agent
in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Offered Shares for
offer and sale under the state securities or blue sky laws, and, if requested
by
the Placement Agent, preparing and printing a “Blue
Sky Survey”
or
memorandum, and any supplements thereto, advising the Placement
Agent
of such
qualifications, registrations, determinations and exemptions, which fees shall
not exceed $5,000, (vii) the fees and expenses associated with listing
the
Shares on the Nasdaq Global Market, (viii) all other fees, costs and expenses
of
the nature referred to in Item 14 of Part II of the Registration
Statement.
Except
as provided in this Section 5, Section 8, Section 9 and
Section 10 hereof, the Placement Agent shall pay its own expenses,
including the fees and disbursements of its counsel in excess of the amounts
described above.
Section
6. Covenant
of the Placement Agent.
The
Placement Agent covenants with the Company not to take any action that would
result in the Company being required to file with the Commission pursuant to
Rule 433(d) under the Securities Act a free writing prospectus prepared by
or on
behalf of the Placement Agent that otherwise would not be required to be filed
by the Company thereunder, but for the action of the Placement
Agent.
19
Section
7. Conditions
of the Obligations of the Placement
Agent.
The
obligations of the Placement Agent hereunder and the Purchasers under the
Subscription Agreements, shall be subject to the accuracy of the representations
and warranties on the part of the Company set forth in Section 2 hereof as
of the date hereof and as of the Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder,
and
to each of the following additional conditions:
(a)
Accountants’
Comfort Letter;
Chief
Financial Officer Certificate.
On the
date hereof, the Placement Agent shall have received from Ernst & Young LLP,
independent public or certified public accountants for the Company, (i) a
letter dated the date hereof addressed to the Placement Agent, in form and
substance satisfactory to the Placement Agent, containing statements and
information of the type ordinarily included in accountant’s “comfort letters” to
underwriters, delivered according to Statement of Auditing Standards No. 72
(or
any successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement, Time of Sale Prospectus, and each free writing prospectus, if any,
and, with respect to each letter dated the date hereof only, the Prospectus,
and
(ii) confirming that they are (A) independent public or certified public
accountants as required by the Securities Act and the Exchange Act and (B)
in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X. On
the
date hereof, the Company shall have furnished to the Placement Agent a
certificate, dated the date hereof, of its Chief Financial Officer in the form
set forth in Exhibit
E
attached
hereto.
(b)
Compliance
with Registration Requirements; No Stop Order; No Objection from
NASD.
For
the
period from and after effectiveness of this Agreement and prior to the Closing
Date:
(i) the
Company shall have filed the Prospectus with the Commission (including the
information previously omitted from the Registration Statement pursuant to
Rule
430B under the Securities Act) in the manner and within the time period required
by Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information previously omitted pursuant to such Rule 430B, and such
post-effective amendment shall have become effective;
(ii) no
stop
order suspending the effectiveness of the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective amendment to the
Registration Statement, shall be in effect and no proceedings for such purpose
shall have been instituted or threatened by the Commission; and
(iii) the
NASD
shall have raised no objection to the fairness and reasonableness of the
compensation allowable or payable to the Placement Agent as described in the
Prospectus.
(c)
No
Material Adverse Change or Ratings Agency Change.
For the
period from and after the date of this Agreement and through and including
the
Closing Date, in the judgment of the Placement Agent there shall not have
occurred any Material Adverse Change.
20
(d)
Opinion
of Counsel for the Company.
On the
Closing Date the Placement Agent shall have received (i) the opinion of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, corporate counsel for the Company, dated as of such
Closing Date, the form of which is attached as Exhibit A
and to
such further effect as counsel for the Placement Agent shall reasonably request
and (ii) the opinion of Drinker,
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, intellectual property counsel
for the Company, dated as of such Closing Date, the form of which is attached
as
Exhibit B
and to
such further effect as counsel for the Placement Agent shall reasonably request.
(e)
Opinion
of Counsel for the Placement
Agent.
On the
Closing Date the Placement Agent shall have received the opinion of ▇▇▇▇▇▇▇
Procter LLP, counsel for the Placement Agent, in form and substance satisfactory
to the Placement Agent, dated as of the Closing Date.
(f)
Officers’
Certificate.
On the
Closing Date the Placement Agent shall have received a written certificate
executed by the Chief Executive Officer or President of the Company and the
Chief Financial Officer of the Company, on behalf of the Company, dated as
of
such Closing Date, to the effect set forth in subsections (b)(ii) of this
Section 7, and further to the effect that:
(i) for
the
period from and including the date of this Agreement through and including
such
Closing Date, there has not occurred any Material Adverse Change;
(ii) the
representations, warranties and covenants of the Company set forth in
Section 2 of this Agreement are true and correct with the same force and
effect as though expressly made on and as of such Closing Date;
and
(iii) the
Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date.
(g)
Bring-down
Comfort Letter;
Bring-down Chief Financial Officer Certificate.
On the
Closing Date the Placement Agent shall have received from Ernst & Young LLP,
independent public or certified public accountants for the Company, a letter
dated such date, in form and substance satisfactory to the Placement Agent,
to
the effect that they reaffirm the statements made in the letter furnished by
them pursuant to subsection (a) of this Section 7, except that the
specified date referred to therein for the carrying out of procedures shall
be
no more than three business days prior to the Closing Date. On the Closing
Date,
the
Company shall have furnished to the Placement Agent a certificate, dated the
date hereof, of its Chief Financial Officer in the form set forth in
Exhibit F
attached
hereto.
(h)Subscription
Agreements.
The
Company shall have entered into the Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
(i)Escrow
Agreement.
The
Company shall have entered into the Escrow Agreement and such agreement shall
be
in full force and effect.
(j)Lock-Up
Agreement from Certain Securityholders of the Company.
On or
prior to the date hereof, the Company shall have furnished to the Placement
Agent an agreement in the form of Exhibit D
hereto
from the persons listed on Exhibit
C
hereto,
and
such agreement shall be in full force and effect on the Closing
Date.
21
(k)
Rule 462(b)
Registration Statement.
In the
event that a Rule 462(b) Registration Statement is filed in connection with
the offering contemplated by this Agreement, such Rule 462(b) Registration
Statement shall have been filed with the Commission on the date of this
Agreement and shall have become effective automatically upon such
filing.
(k)
Additional
Documents.
On or
before the Closing Date, the Placement Agent and counsel for the Placement
Agent
shall have received such information, documents and opinions as they may
reasonably request for the purposes of enabling them to pass upon the issuance
and sale of the Offered Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Offered
Shares as contemplated herein and in connection with the other transactions
contemplated by this Agreement shall be satisfactory in form and substance
to
the Placement Agent and counsel for the Placement Agent.
If
any
condition specified in this Section 7 is not satisfied when and as required
to
be satisfied, this Agreement may be terminated by the Placement Agent by notice
to the Company at any time on or prior to the Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 5, Section 7 and Section 9 shall at all times be
effective and shall survive such termination.
Section
8. Reimbursement
of Placement Agent’s Expenses.
If this
Agreement is terminated by the Placement Agent pursuant to Section 7 or
Section 11, or if the sale of the Offered Shares on the Closing Date is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse the Placement Agent upon demand for all
reasonable out-of-pocket expenses that shall have been reasonably incurred
by
the Placement Agent in connection with the proposed purchase and the offering
and sale of the Offered Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
Section
9. Indemnification.
(a)
Indemnification
of the Placement
Agent.
The
Company agrees to indemnify and hold harmless the Placement Agent, its officers
and employees, affiliates, members, agents, directors, officers and
representatives, and each person, if any, who controls the Placement Agent
within the meaning of the Securities Act or the Exchange Act (collectively
the
“Placement
Agent Indemnified Parties,”
and
each a “Placement
Agent Indemnified Party”)
against any loss, claim, damage, liability or expense, as incurred, to which
such Placement Agent Indemnified
Party may become subject, under the Securities Act, the Exchange Act, other
federal or state statutory law or regulation or
at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected in accordance with this Agreement), insofar as such
loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon
(i) any
untrue statement or alleged untrue statement of a material fact contained in
the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430B under the Securities Act,
or the omission or alleged omission therefrom of a material fact required to
be
stated therein or necessary to make the statements therein not misleading;
or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the
Time
of Sale Prospectus, any free writing prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act
or the
Prospectus (or any amendment or supplement thereto),
or the
omission or alleged omission therefrom of a material fact necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading; or (iii) any act or failure to act or any alleged
act
or failure to act by the Placement Agent Indemnified Parties in connection
with,
or relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any matter covered by clause
(i) or (ii) above, provided that the Company shall not be liable under this
clause (iii) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by the Placement Agent through its bad faith or willful
misconduct;
and to
reimburse the Placement Agent Indemnified Parties for any and all reasonable
expenses (including the fees and disbursements of counsel chosen by the
Placement Agent) as such expenses are incurred by the Placement Agent or such
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense
to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent expressly for use in the Registration Statement,
any preliminary prospectus, the Time of Sale Prospectus, any such free writing
prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the Placement
Agent to the Company consists of the information described in subsection (b)
below; provided,
further, that with respect to the preliminary prospectus only and not any free
writing prospectus or any other writing or instrument, the foregoing indemnity
agreement shall not inure to the benefit of the Placement Agent Indemnified
Parties from whom the person asserting any loss, claim, damage, liability or
expense purchased Offered Shares, if a copy of the Time of Sale Prospectus
or
the Prospectus (in each case, as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of the Placement Agent to such person, if required by
law
so to have been delivered, at or prior to the written confirmation of the sale
of the Offered Shares to such person, and if the Time of Sale Prospectus or
the
Prospectus (in each case, as so amended or supplemented), as applicable, would
have cured the defect giving rise to such loss, claim, damage, liability or
expense, unless such failure is the result of noncompliance by the Company
with
Section 4(a) hereof.
The
indemnity agreement set forth in this Section 9(a) shall be in addition to
any liabilities that the Company may otherwise have.
22
(b)
Indemnification
of the Company, its Directors and Officers.
The
Placement Agent agrees to indemnify and hold harmless the Company, each of
its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, or any such director, officer or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation,
if such
settlement is effected with the written consent of the Placement
Agent), insofar as such loss, claim, damage, liability or expense (or actions
in
respect thereof as contemplated below) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus the
Time
of Sale Prospectus, any free writing prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act
or the
Prospectus (or such amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, such preliminary prospectus, the
Time
of Sale Prospectus, such free writing prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act,
the
Prospectus (or such amendment or supplement thereto), in reliance upon and
in
conformity with written information furnished to the Company by the Placement
Agent expressly for use therein; and to reimburse the Company, or any such
director, officer or controlling person for any and all reasonable expenses
(including
the fees and disbursements of counsel chosen by the Company, or any such
director, officer or controlling person, as applicable) as such expenses are
incurred
by the Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising or paying
any
such loss, claim, damage, liability, expense or action. The Company hereby
acknowledges that the only information that the Placement Agent has furnished
to
the Company expressly for use in the Registration Statement, any preliminary
prospectus, the
Time
of Sale Prospectus, any free writing prospectus that the Company has filed,
or
is required to file, pursuant to Rule 433(d) of the Securities Act
or the
Prospectus (or any amendment or supplement thereto) are the statements set
forth
in
the
last paragraph on the cover page of the Prospectus concerning the terms of
the
offering by the Placement Agent and the statements concerning the Placement
Agent contained in the first paragraph under the caption “Plan of Distribution”.
The indemnity agreement set forth in this Section 9(b) shall be in addition
to any liabilities that the Placement Agent may otherwise have.
23
(c)
Notifications
and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 9 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
this
Section 9, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 9 or to the extent it is not materially prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants
in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 9 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the fees and
expenses of more than one separate counsel (together with local counsel),
representing the indemnified parties who are parties to such action)
, which
counsel (together with any local counsel) for the indemnified parties shall
be
selected by the Placement Agent (in the case of counsel for the indemnified
parties referred to in Section 9(a) above) or by the Company (in the case
of counsel for the indemnified parties referred to in Section 9(b)
above))
or
(ii) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the
fees
and expenses of counsel shall be at the expense of the indemnifying party and
shall be paid as they are incurred.
24
(d)
Settlements.
The
indemnifying party under this Section 9 shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by Section 9(c) hereof,
the indemnifying party agrees that it shall be liable for any settlement of
any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (i) includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (ii) does not include
a
statement as to or an admission of fault, culpability or any failure to act,
by
or on behalf of the indemnified party.
Section
10. Contribution.If
the
indemnification provided for in Section 9 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses referred
to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in
such proportion as is appropriate to reflect the relative benefits received
by
the Company, on the one hand, and the Placement Agent, on the other hand, from
the offering of the Offered Shares pursuant to this Agreement or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and the Placement Agent, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the
one hand, and the Placement Agent, on the other hand, in connection with the
offering of the Offered Shares pursuant to this Agreement shall be deemed to
be
in the same respective proportions as the total net proceeds from the offering
of the Offered Shares pursuant to this Agreement (after deducting the aggregate
placement agent’s fee but before deducting expenses) received by the Company,
and the aggregate placement agent’s fee received by the Placement Agent, in each
case as set forth on the front cover page of the Prospectus bear to the
aggregate public offering price of the Offered Shares as set forth on such
cover. The relative fault of the Company, on the one hand, and the Placement
Agent, on the other hand, shall be determined by reference to, among other
things, whether any such 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, on the one hand, or the Placement Agent, on the other
hand, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
25
The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 9(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or
defending any action or claim. The provisions set forth in Section 9(c)
with respect to notice of commencement of any action shall apply if a claim
for
contribution is to be made under this Section 10; provided,
however,
that no
additional notice shall be required with respect to any action for which notice
has been given under Section 9(c) for purposes of
indemnification.
The
Company and the Placement Agent agree that it would not be just and equitable
if
contribution pursuant to this Section 10 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 this Section 10.
Section
11. Termination
of this Agreement. Prior
to
the purchase of the Offered Shares by the Purchasers on the Closing Date this
Agreement may be terminated by the Placement Agent by notice given to the
Company if at any time: (i) trading or quotation in any of the Company’s
securities shall have been suspended or limited by the Commission or by the
Nasdaq Global Market,
or
trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or maximum
prices shall have been generally established on any of such stock exchanges
by
the Commission or the NASD; (ii) a general banking moratorium shall have
been declared by any of federal or New York; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities
or
any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political,
financial or economic conditions, as in the judgment of the Placement Agent
is
material and adverse and makes it impracticable to market the Offered Shares
in
the manner and on the terms described in the Time of Sale Prospectus or to
enforce contracts for the sale of securities; (iv) in the judgment of the
Placement Agent there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the Placement
Agent may interfere materially with the conduct of the business and operations
of the Company regardless of whether or not such loss shall have been insured.
Any termination pursuant to this Section 11 shall be without liability on
the part of (a) the Company to the Placement Agent, except that the Company
shall be obligated to reimburse the expenses of the Placement Agent pursuant
to
Sections 5 and 8 hereof, (b) the Placement Agent to the Company,
or (c) of any party hereto to any other party except that the provisions of
Section 9 and Section 10 shall at all times be effective and shall
survive such termination.
26
Section
12. No
Advisory or Fiduciary Relationship. The
Company acknowledges and agrees that (a) the purchase and sale of the Offered
Shares by the Purchasers, including the determination of the public offering
price of the Offered Shares and any related discounts and commissions, is an
arm’s-length commercial transaction between the Company, on the one hand, and
the Placement Agent, on the other hand, (b) in connection with the offering
contemplated hereby and the process leading to such transaction the Placement
Agent is and has been acting solely as a principal and is not the agent or
fiduciary of the Company, or its stockholders, creditors, employees or any
other
party, (c) the Placement Agent has
not
assumed or will not assume an advisory or fiduciary responsibility in favor
of
the Company with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether the Placement Agent has advised or
is
currently advising the Company on other matters) and the Placement Agent has
no
obligation to the Company with respect to the offering contemplated hereby
except the obligations expressly set forth in this Agreement, (d) the Placement
Agent and
its
respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Company, and (e) the Placement
Agent has not provided any legal, accounting, regulatory or tax advice with
respect to the offering contemplated hereby and the Company has consulted its
own legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate
Section
13. Representations
and Indemnities to Survive Delivery.
The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the Placement Agent set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Placement Agent
or
the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and, anything herein to the contrary
notwithstanding, will survive delivery of and payment for the Offered Shares
sold hereunder and any termination of this Agreement.
Section
14. Notices.
All
communications hereunder shall be in writing and shall be mailed, hand delivered
or telecopied and confirmed to the parties hereto as follows:
If
to the
Placement Agent:
▇▇▇▇▇▇▇▇▇
& Company, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
General Counsel
27
with
a
copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If
to the
Company:
Discovery
Laboratories, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP
1177
Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Attention:
▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any
party
hereto may change the address for receipt of communications by giving written
notice to the others.
Section
15. Successors;
Persons Entitled to Benefit of Agreement.
This
Agreement will inure to the benefit of and be binding upon the parties hereto,
and to the benefit of the employees, officers and directors and controlling
persons referred to in Section 9 and Section 10, and in each case
their respective successors, and no other person will have any right or
obligation hereunder. This Agreement shall also inure to the benefit of the
Purchasers, and each of their respective successors and assigns, which shall
be
third party beneficiaries hereof.
Section
16. Partial
Unenforceability.
The
invalidity or unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes)
as
are necessary to make it valid and enforceable.
Section
17. Governing
Law Provisions.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in such state. Any legal suit, action or proceeding arising out of or based
upon
this Agreement or the transactions contemplated hereby may be instituted in
the
federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in
each
case located in the Borough of Manhattan in the City of New York (collectively,
the “Specified
Courts”),
and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court, as to which such jurisdiction is non-exclusive) of such courts in any
such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any
such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in
any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
28
Section
18. General
Provisions.
This
Agreement constitutes the entire agreement of the parties to this Agreement
and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof.
This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
Each
of
the parties hereto acknowledges that it is a sophisticated business person
who
was adequately represented by counsel during negotiations regarding the
provisions hereof, including, without limitation, the indemnification provisions
of Section 9 and the contribution provisions of Section 10, and is
fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 9 and 10 hereto fairly
allocate the risks in light of the ability of the parties to investigate the
Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, each free writing prospectus and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
[Remainder
of Page Intentionally Left Blank.]
29
Exhibit
10.1
If
the
foregoing is in accordance with your understanding of our agreement, kindly
sign
and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
|
Very
truly yours,
DISCOVERY
LABORATORIES, INC.
|
||
| |
|
|
| By: |
/s/
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Name: ▇▇▇▇▇ ▇▇▇▇▇ |
||
| Title: EVP | ||
The
foregoing Placement Agency Agreement is hereby confirmed and accepted by the
Placement Agent in New York, New York as of the date first above
written.
| ▇▇▇▇▇▇▇▇▇ & COMPANY, INC. | ||||
| By: |
/s/
▇▇▇▇ ▇▇▇▇▇▇
|
|||
|
Name: ▇▇▇▇ ▇▇▇▇▇▇ |
||||
| Title: First Vice President | ||||
[Signature
Page to Placement Agency Agreement]
SCHEDULE
A
Schedule
of Free Writing Prospectuses included in the Time of Sale
Prospectus:
Filed
Pursuant to Rule 433
Issuer
Free Writing Prospectus dated December 7, 2007
Relating
to Prospectus dated October 11, 2005
Registration
No. 333-128929
Up
to
10,000,000 Shares
Discovery
Laboratories, Inc.
Common
Stock
ISSUER
FREE WRITING PROSPECTUS
|
Issuer:
|
Discovery
Laboratories, Inc.
|
|
|
Ticker
/ Exchange:
|
DSCO
/ Nasdaq Global Market
|
|
|
Offering
size:
|
Up
to 10,000,000 shares
|
|
|
Public
offering price:
|
$2.50
|
|
|
Net
proceeds to Issuer:
|
We
expect the net proceeds from this offering of common stock to be
up to
approximately $23,590,000 after deducting the estimated placement
agent’s
fees and estimated offering expenses.
|
|
|
Use
of Proceeds:
|
Except
as described in any prospectus supplement or post effective amendment,
we
currently anticipate using the net proceeds from the sale of our
common
stock primarily for:
· Preparing
for the anticipated U.S. commercial launch of Surfaxin®
for Respiratory Distress Syndrome in premature infants, including
establishing our own U.S. commercial sales and marketing organization
specialized in neonatal and pediatric indications, enhancing our
medical
affairs capabilities with medical science liaison personnel deployed
throughout the U.S. and enhancing our manufacturing, compliance and
regulatory capabilities;
· Pursuing
potential collaboration arrangements with international partners
to
co-develop and/or co-commercialize our neonatal and pediatric pipeline
for
Surfaxin and Aerosurf™, and potential world-wide strategic alliances for
the development and/or commercialization of our novel Surfaxin Replacement
Therapy (SRT) for respiratory conditions and disorders affecting
adult
patients;
· Research,
development and clinical trial activities associated with ongoing
development of Aerosurf, including development and manufacture of
a
second-generation aerosolization system that will potentially be
used in
anticipated Phase 2b/3 clinical trials for treatment of respiratory
conditions prevalent in the NICU and PICU and, if approved, in the
commercial market;
|
|
· Clinical
trial costs associated with conducting clinical trials in 2008 and
into
2009, including our ongoing ▇▇▇▇▇ ▇ and anticipated Phase 3 clinical
trials for Surfaxin for the treatment of Acute Respiratory Failure
and our
anticipated Phase 2b/3 clinical trials for Surfaxin for the prevention
of
Bronchopulmonary Dysplasia; and
· Exploratory
development of our aerosolized SRT platform in other disease targets,
such
as Acute Lung Injury and Cystic Fibrosis.
The
amounts and timing of the expenditures may vary significantly depending
on
numerous factors, such as the progress of our research and development
efforts, technological advances and the competitive environment for
Surfaxin and our other SRT drug candidates and their intended uses.
Pending the application of the net proceeds, we are investing the
proceeds
in short-term, interest-bearing instruments or other investment-grade
securities.
|
||
|
Trade
date:
|
December
7, 2007
|
|
|
Settlement
date:
|
December
12, 2007
|
|
|
Placement
Agent:
|
▇▇▇▇▇▇▇▇▇
& Company, Inc.
|
THE
ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) WITH THE
SEC
FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES BEFORE YOU INVEST, YOU
SHOULD READ THE PROSPECTUS IN THAT REGISTRATION STATEMENT AND OTHER DOCUMENTS
THE ISSUER HAS FILED WITH THE SEC FOR MORE COMPLETE INFORMATION ABOUT THE ISSUER
AND THIS OFFERING. YOU MAY GET THESE DOCUMENTS FOR FREE BY VISITING ▇▇▇▇▇ ON
THE
SEC WEB SITE AT ▇▇▇.▇▇▇.▇▇▇. ALTERNATIVELY, THE ISSUER, THE PLACEMENT AGENT
OR
ANY DEALER PARTICIPATING IN THE OFFERING WILL ARRANGE TO SEND YOU THE PROSPECTUS
IF YOU REQUEST IT BY CALLING TOLL-FREE ▇-▇▇▇-▇▇▇-▇▇▇▇.
EXHIBIT
A
Opinion
of corporate counsel for the Company to be delivered pursuant to
Section 7(d)(i) of the Placement Agency Agreement.
i. The
Company validly exists under the laws of the State of Delaware, with corporate
power and authority to own, lease and operate its properties and to conduct
its
business as described or incorporated by reference in the Prospectus Supplement
and to enter into and perform its obligations under the Placement Agency
Agreement and the Subscription Agreement.
ii. The
Company is in good standing under the laws of the State of Delaware and is
qualified to do business and is in good standing as a foreign corporation in
the
State of California and the Commonwealth of Pennsylvania.
iii. The
authorized, issued and outstanding capital stock of the Company (including
the
Shares) conforms to the descriptions thereof set forth or incorporated by
reference in the Prospectus Supplement.
iv. No
stockholder of the Company or any other person has any preemptive right, right
of first refusal or other similar right to subscribe for or purchase securities
of the Company (i) arising by operation of the Restated Certificate of
Incorporation, as amended, or by-laws of the Company or the General Corporation
Law of the State of Delaware or (ii) to our knowledge, otherwise.
v. The
Placement Agency Agreement and the Subscription Agreements have been duly
authorized, executed and delivered by the Company.
vi. The
Shares to be purchased by the Purchasers from the Company have been duly
authorized for issuance and sale pursuant to the Subscription Agreements and,
when issued and delivered by the Company pursuant to the Subscription Agreements
against payment of the consideration set forth therein, will be validly issued,
fully paid and nonassessable.
vii. The
Registration Statement has been declared effective by the Commission under
the
Securities Act. To our knowledge, no stop order suspending the effectiveness
of
either of the Registration Statement or the Rule 462(b) Registration Statement,
if any, has been issued under the Securities Act and no proceedings for such
purpose have been instituted or are pending or are contemplated or threatened
by
the Commission. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the manner
and
within the time period required by such Rule 424(b).
viii. The
statements (i) in the Time of Sale Prospectus under the captions “Risk
Factors--Provisions of our Restated Certificate of Incorporation, Shareholders
Rights Agreement and Delaware law could defer a change of our management which
could discourage or delay offers to acquire us,” “Preferred Stock” and “Common
Stock,” and (ii) in the Registration Statement in Item 15, in each case insofar
as such statements purport to describe matters of law or certain provisions
of
documents, instruments, agreements, statutes or regulations referred to therein,
are accurate in all material respects.
A-1
ix. To
our
knowledge, there are no legal or governmental actions, suits or proceedings
pending or threatened against the Company which are required to be disclosed
in
the Registration Statement, other than those disclosed therein.
x. To
our
knowledge, there are no persons with registration or other similar rights to
have any debt or equity securities registered for sale under the Registration
Statement or included in the offering contemplated by the Placement Agency
Agreement, except for such rights as have been duly waived.
xi. The
execution and delivery of the Placement Agency Agreement and the Subscription
Agreements by the Company, and the performance by the Company of its obligations
under such agreements (other than performance by the Company of its
indemnification obligations, as to which no opinion is rendered) will not result
in any(i) violation of the provisions of the Restated Certificate of
Incorporation, as amended, or by-laws of the Company; (ii) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
of
its subsidiaries pursuant to, any of the agreements (the “Material Agreements”)
that are exhibits contained in filings made by the Company pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
incorporated by reference in the Prospectus Supplement; or (iii) will not result
in any violation of any federal or New York law or, to our knowledge any
administrative regulation or administrative or court decree, applicable to
the
Company.
xii. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the consummation of the transactions contemplated by the Placement
Agency Agreement, except such as have been obtained or made by the Company
and
are in full force and effect under the Securities Act, applicable state
securities or blue sky laws or The Nasdaq Global Market.
xiii. To
our
knowledge, the Company is not in violation of its Restated Certificate of
Incorporation, as amended, or in default under any of the Material Agreements,
except for such violation or default as would not, individually or in the
aggregate, result in a Material Adverse Change.
xiv. The
Company is not, and assuming the accuracy of the section entitled “Use of
Proceeds” in the Prospectus Supplement, after receipt of payment for the Shares
will not be, an “investment company” within the meaning of the Investment
Company Act of 1940.
xv. Each
document filed pursuant to the Exchange Act (other than the financial statements
and supporting schedules included therein, as to which no opinion need be
rendered) and incorporated or deemed to be incorporated by reference in the
Prospectus Supplement complied when so filed as to form in all material respects
with the Exchange Act.
In
our
role as special counsel to the Company in connection with the preparation by
the
Company of the Registration Statement, the Prospectus, the Time of Sale
Prospectus and the Prospectus Supplement, we have participated in conferences
with officers and representatives of the Company, and counsel for the Placement
Agent, at which time the contents of the Registration Statement, the Prospectus,
the Time of Sale Prospectus and the Prospectus Supplement, and related matters
were discussed. The purpose of our professional engagement was not to establish
or confirm factual matters set forth in the Registration Statement, the
Prospectus, the Time of Sale Prospectus and/or the Prospectus Supplement. We
have not undertaken any obligation to verify independently any of the factual
matters set forth therein, including the documents incorporated by reference
therein, and any supplements or amendments thereto; moreover, many of the
determinations required to be made in the preparation of the Registration
Statement, the Prospectus, the Time of Sale Prospectus and/or the Prospectus
Supplement involve matters of a non-legal issue. On the basis of the facts
that
we gained in the course of the foregoing and subject to the qualifications
and
limitations set forth herein, we confirm to you that no facts came to our
attention that have caused us to believe that either (a) the Registration
Statement, at the time it became effective (including the information deemed
to
be part of the Registration Statement at the time of effectiveness pursuant
to
Rule 462, Rule 430B or Rule 434, if applicable), contained or incorporated
by
reference any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein not misleading, or (b)
the Prospectus, as of its date (or any amendment thereof or supplement thereto
made prior to the Closing Date as of the date of such amendment or supplement),
the Time of Sale Prospectus, as of 6:00 a.m. on December 7, 2007 (or any
amendment thereof or supplement thereto made prior to the Closing Date as of
the
date of such amendment thereof or supplement thereto), or the Prospectus
Supplement, as of the date it was filed by the Company with the Commission
and
as of the date and time of delivery of this letter, contained or incorporated
by
reference any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made.
A-2
EXHIBIT
B
Opinion
of intellectual property counsel for the Company to be delivered pursuant to
Section 7(d)(ii) of the Placement Agency Agreement.
1. Having
reviewed the information in the 2006 Form 10-K, the 2007 Forms 10-Q and the
2007
Forms 8-K relating to U.S. patent matters under “Licensing Arrangements; Patents
and Proprietary Rights,” we believe that the information contains accurate
summaries of the patents licensed, or under option to license, to the Company
in
all material respects and, to the extent that it constitutes matters of law,
summaries of legal matters or legal proceedings, or legal conclusions, fairly
presents in all material respects the information called for with respect to
such legal matters, documents and proceedings and fairly summarizes in all
material respects the matters referred to therein. We have also reviewed the
information in the Prospectus, the Prospectus Supplement, the 2006 Form 10-K,
the 2007 Forms 10-Q and the 2007 Forms 8-K relating to U.S. patent matters
under
“RISK FACTORS” or “Risks Related to Our Business,” as enumerated above, and to
the extent that the information constitutes matters of law, summaries of legal
matters or legal proceedings, or legal conclusions, we believe it fairly
presents in all material respects the information called for with respect to
such legal matters, documents and proceedings and fairly summarizes in all
material respects the matters referred to therein.
2. Having
reviewed the claims of Company’s Licensed U.S. Patents, Optioned Applications
and Owned Applications: (i) we believe that each of the Licensed U.S. Patents,
Optioned Applications and Owned Applications claims patentable subject matter;
(ii) to our knowledge, without any searches having been conducted or having
been
required to have been conducted and without having made any further
investigation of any kind for the purpose of preparing these statements other
than to confirm our belief with the Company, there are no legal or governmental
proceedings pending (other than normal proceedings relating to the maintenance
of the patents before appropriate government authorities) relating to the
Licensed U.S. Patents, the Optioned Applications or the Owned Applications;
and
(iii) to our knowledge, no such material proceedings are threatened or
contemplated by governmental authorities or others.
3. Having
reviewed the License Agreements, the Assignee Search Results and the
Assignments, without having reviewed the Company’s employment agreements and
without having made any further investigation of any kind for the purpose of
preparing these statements other than to confirm our belief with the Company
that inventors named on the Owned Applications are employees of the Company,
we
believe that (i) the inventions described in the Licensed U.S. Patents, Optioned
Applications and Owned Applications are properly licensed or under option to
license to the company, or are assigned to or under obligation of assignment
to
the Company; and (ii) the Company’s licensors possess record title to the
Licensed U.S. Patents or Optioned Applications, with the following notations.
(1) U.S. Patent 6,492,490 on its face names Ortho Pharmaceutical Corporation
as
assignee. The Assignee Search did not identify a recorded assignment for this
patent, however the patent is stated on its face to be related as a divisional
of U.S. Patent 6,013,619, for which an assignment has been recorded, such that
it is reasonable to infer inclusion of U.S. Patent 6,492,490 in that assignment.
(2) An assignment for Owned Application 61/001,586 has not yet been executed.
(3) All Owned Applications except 61/001,586 are believed to be subject to
a
security interest to Pharmbio Development, Inc., recorded November 2, 2006
at
Reel 018468, Frame 0530.
B-1
4. We
have
no knowledge of any other facts that would preclude the Company from having
valid and enforceable license rights or clear title to the Company's Licensed
U.S. Patents, Optioned Applications and Owned Applications or any foreign
counterparts thereof. In addition, based solely on our review of the licenses
themselves and representations made by the Company, we believe that no interests
have been conveyed to third parties, and that the Company’s licenses to the
Licensed U.S. Patents and Optioned Applications and any foreign counterparts
thereof are exclusive to the Company, and that all assignments of rights in
connection with the Owned Applications, or all obligations to assign rights
in
the Owned Applications, are solely to the Company.
5. We
have
no knowledge that the Company or the Company’s licensors have not complied with
the duty of candor and disclosure requirements with the PTO and all other
similar authorities around the world as appropriate, for each of the Licensed
U.S. Patents, Optioned Applications and Owned Applications, and foreign
counterparts thereof, and to the best of our knowledge, all pending Optioned
Applications and Owned Applications are in good standing, and none has been
finally rejected or abandoned.
6. We
are
not aware of any basis for a finding of unenforceability or invalidity of any
Licensed U.S. Patent, and to the best of our knowledge, without any searches
having been conducted or having been required to have been conducted and without
having made any further investigation of any kind for the purpose of preparing
these statements other than to confirm our belief with the Company, neither
the
Company nor its licensors have received any notice of infringement of or
conflict with rights or claims of others with respect to any Intellectual
Property owned or used by the Company.
7. We
have
no knowledge of any patent rights of others that are or would be infringed
by
specific products or processes referred to in the Prospectus, which
infringement, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse effect on
the
condition, financial or otherwise, or in the earnings, business or operations
of
the Company.
8. Having
reviewed the Patent Language contained in one or more of the Prospectus, the
Prospectus Supplement, the 2006 Form 10-K, the 2007 Forms 10-Q and the 2007
Forms 8-K as listed hereinabove, we have no reason to believe that the Patent
Language, at the time it was filed with the SEC and as of the date hereof,
contained or incorporated by reference any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were
made.
9. We
have
no knowledge that the Company lacks or will be unable to obtain any rights
or
licenses to use all Intellectual Property necessary for the conduct of its
business as now proposed to be conducted by the Company as described in the
Prospectus.
10. We
have
no knowledge of any asserted or unasserted claims of any persons relating to
the
scope or ownership of the Licensed Patents, Optioned Applications or Owned
Applications, nor do we have any knowledge of any liens having been filed
against any of the Licensed Patents, Optioned Applications or Owned
Applications.
B-2
EXHIBIT
C
LIST
OF
PERSONS EXECUTING LOCK-UPS
W.
▇▇▇▇▇▇
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▇▇▇▇▇▇
▇▇▇
▇.
Link
▇▇▇▇▇
▇.
▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇
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C-1
EXHIBIT
D
LOCK-UP
AGREEMENT
December
__, 2007
▇▇▇▇▇▇▇▇▇
& Company, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
RE: Discovery
Laboratories Inc. (the “Company”)
Ladies
& Gentlemen:
The
undersigned is an owner of record or beneficially of certain shares of common
stock, par value $.001 per share, of the Company (“Shares”)
or
securities convertible into or exchangeable or exercisable for Shares. The
Company proposes to carry out a “registered direct” public offering of Shares
(the “Offering”)
for
which Jefferies & Company, Inc. (the “Representative”)
will
act as placement agent. The undersigned recognizes that the Offering will be
of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges
that
the Representative is relying on the representations and agreements of the
undersigned contained in this letter agreement in carrying out its obligations
in connection with the Offering and in entering into a placement agency
agreement with the Company with respect to the Offering.
In
consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not (and will cause any spouse or immediate family member
of
the spouse or the undersigned living in the undersigned’s household not to),
without the prior written consent of the Representative (which consent may
be
withheld in its sole discretion), directly or indirectly, sell, offer, contract
or grant any option to sell (including without limitation any short sale),
pledge, transfer, establish an open “put equivalent position” within the meaning
of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or
otherwise dispose of any Shares, options or warrants to acquire Shares, or
securities exchangeable or exercisable for or convertible into Shares currently
or hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by the undersigned (or
such spouse or family member), or publicly announce an intention to do any
of
the foregoing, for a period commencing on the date hereof and continuing through
the close of trading on the date 60 days after the date of the Prospectus (as
defined in the Placement Agency Agreement relating to the Offering to which
the
Company is a party) (the “Lock-up
Period”);
provided, that if (i) during the last 17 days of the Lock-up Period, the Company
issues an earnings release or material news or a material event relating to
the
Company occurs or (ii) prior to the expiration of the Lock-up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-up Period, then in each case the Lock-up
Period will be extended until the expiration of the 18-day period beginning
on
the date of the issuance of the earnings release or the occurrence of the
material news or material event, as applicable, unless the Representative
waives, in writing, such extension, except that such extension will not apply
if, within three days prior to the expiration of the Lock-up Period, the Company
delivers a certificate, signed by the Chief Financial Officer or Chief Executive
Officer of the Company, certifying on behalf of the Company that the Company’s
Shares are “actively traded securities” (as defined in Regulation M); provided,
further, that the foregoing restrictions shall not apply to:
D-1
(A) the
transfer of any or all of the Shares owned by the undersigned, either during
the
undersigned’s lifetime or upon death, by gift, will or intestate succession to
the immediate family of the undersigned or to a trust the beneficiaries of
which
are exclusively the undersigned and/or a member or members of his immediate
family; provided, however, that in any such case, it shall be a condition to
such transfer that the transferee executes and delivers to the Representative
an
agreement stating that the transferee is receiving and holding the Shares
subject to the provisions of this letter agreement, and there shall be no
further transfer of such Shares, except in accordance with this letter
agreement;
(B) the
sale
of up to an aggregate of 200,000 Shares by the officers and directors of the
Company that have entered into agreements similar to this one on the date
hereof; or
(C) the
entering into, at any time after the closing of the Offering, a 10b5-1 plan
if
then permitted by the Company
so long
as there are no sales of Shares under such plan during the Lock-Up Period (as
may be extended pursuant to the second paragraph hereof).
The
undersigned shall provide at least one business day’s advance written notice to
the Company of any such proposed transaction in order to confirm compliance
with
the foregoing conditions and limitations. The undersigned hereby acknowledges
and agrees that written notice of any extension of the Lock-up Period pursuant
to the preceding sentence will be delivered by the Representative to the Company
and that any such notice properly delivered will be deemed to have been given
to, and received by, the undersigned.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of Shares
or securities convertible into or exchangeable or exercisable for Shares held
by
the undersigned during the Lock-up Period except in compliance with the
foregoing restrictions.
With
respect to the Offering only, the undersigned waives any registration rights
relating to registration under the Securities Act of any Shares owned either
of
record or beneficially by the undersigned, including any rights to receive
notice of the Offering.
This
agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
____________________________
Printed
Name of Holder
By:_________________________
Signature
____________________________
Printed
Name of Person Signing
(and
indicate capacity of person signing if
signing
as custodian, trustee, or on behalf
of
an
entity)
D-2
EXHIBIT
E
Chief
Financial Officer’s Certificate
Pursuant
to Section 7(a) of the Placement Agency Agreement
This
Certificate is delivered to ▇▇▇▇▇▇▇▇▇ & Company, Inc. (“Jefferies”), in its
capacity as the Placement Agent named in the Placement Agency Agreement dated
as
of the date hereof (the “Placement Agency Agreement”), between Discovery
Laboratories, Inc.,
a
Delaware corporation (the “Company”) and Jefferies. I, ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer of the Company, hereby deliver this certificate on behalf
of
the Company in connection with the offering of the Offered Shares (the
“Offering”). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Placement Agency Agreement.
Based
on
an examination of the Company’s financial records and schedules undertaken by me
or members of my staff who are responsible for the Company’s financial and
accounting records, and on our review of the minutes of the Company’s Board of
Directors and the Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee of the Board of Directors, I hereby certify
that
I have reviewed the amounts identified and enumerated on the copies of certain
pages of contained or incorporated by reference in the Registration Statement
and the Time of Sale Prospectus attached hereto as Exhibit
A
and have
verified that such amounts are true and correct. Each such amount has been
derived from information maintained by the Company or otherwise available to
it.
The
Placement Agent is entitled to rely upon this Certificate in conducting and
documenting its investigations of the affairs of the Company in connection
with
the Offering.
[remainder
of page intentionally blank]
E-1
IN
WITNESS WHEREOF, I have hereunto signed my name on this ____ day of December,
2007.
DISCOVERY
LABORATORIES, INC.
By:_______________________________
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Chief Financial Officer
[Signature
Page to CFO’s Certificate]
E-2
EXHIBIT
F
DISCOVERY
LABORATORIES, INC.
Chief
Financial Officer’s Certificate
Pursuant
to Section 7(g) of the Placement Agency Agreement
This
Certificate is delivered to ▇▇▇▇▇▇▇▇▇ & Company, Inc. (“Jefferies”), in its
capacity as the Placement Agent named in the Placement Agency Agreement dated
as
of December 7, 2007 (the “Placement Agency Agreement”), between Discovery
Laboratories, Inc.,
a
Delaware corporation (the “Company”) and, Jefferies.
I, ▇▇▇▇
▇. ▇▇▇▇▇▇, Chief Financial Officer of the Company, hereby deliver this
certificate on behalf of the Company in connection with the offering of the
Offered Shares (the “Offering”). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Placement Agency
Agreement.
Reference
is made to the certificate dated December 7, 2007 (the “December 7
Certificate”) with respect to the procedures carried out by myself or members of
my staff who are responsible for the Company’s financial and accounting records
with respect to certain information contained or incorporated by reference
in
the Registration Statement and the Prospectus. I have reviewed the amounts
identified and enumerated on the copies of certain pages of contained or
incorporated by reference in the Registration Statement and the Prospectus
attached hereto as Exhibit
A
and have
verified that such amounts are true and correct. Each such amount has been
derived from information maintained by the Company or otherwise available to
it.
I
hereby
reaffirm as of the date hereof, and as though made on the date hereof, all
statements made in the December 7 Certificate.
The
Placement Agent is entitled to rely upon this Certificate in conducting and
documenting its investigations of the affairs of the Company in connection
with
the Offering.
F-1
IN
WITNESS WHEREOF, I have hereunto signed my name on this ___ day of December,
2007.
DISCOVERY
LABORATORIES, INC.
By:_______________________________
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Chief Financial Officer
[Signature
Page to CFO’s Bring Down Certificate]
F-2
EXHIBIT
G
SUBSCRIPTION
AGREEMENT
Discovery
Laboratories, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Gentlemen:
The
undersigned (the “Investor”)
hereby
confirms its agreement with you as follows:
1.
This
Subscription Agreement (this “Agreement”)
is
made as of the date set forth below between Discovery
Laboratories, Inc.,
a
Delaware corporation (the “Company”),
and
the Investor.
2.
The
Company has authorized the sale and issuance to certain investors of up to
an
aggregate of 10,000,000 shares (each a “Share,”
and
collectively the “Shares”)
of its
common stock, par value $.001 per share (the “Common
Stock”),
subject to adjustment by the Company’s Board of Directors, or a committee
thereof, for a purchase price of $2.50 per Share (the “Purchase
Price”).
3.
The
offering and sale of the Shares (the “Offering”)
are
being made pursuant to (1) an effective Registration Statement on Form S-3
(including the Prospectus contained therein (the “Base
Prospectus”),
the
“Registration
Statement”)
filed
by the Company with the Securities and Exchange Commission (the “Commission”),
(2)
if applicable, certain “free writing prospectuses” (as that term is defined in
Rule 405 under the Securities Act of 1933, as amended), that have or will be
filed with the Commission and delivered to the Investor on or prior to the
date
hereof and (3) a Prospectus Supplement (the “Prospectus
Supplement”
and
together with the Base Prospectus, the “Prospectus”)
containing certain supplemental information regarding the Shares and terms
of
the Offering that will be filed with the Commission and delivered to the
Investor (or made available to the Investor by the filing by the Company of
an
electronic version thereof with the Commission) along with the Company’s
counterpart to this Agreement.
4.
The
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor the Shares
set
forth
below for the aggregate purchase price set forth below. The Shares shall be
purchased pursuant to the Terms and Conditions for Purchase of Shares attached
hereto as Annex
I
and
incorporated herein by this reference as if fully set forth herein. The Investor
acknowledges that the Offering is not being underwritten by the placement agent
(the “Placement
Agent”)
named
in the Prospectus Supplement and that there is no minimum offering
amount.
5.
The
manner of settlement of the Shares purchased by the Investor shall be determined
by such Investor as follows (check
one):
|
[____]
|
A.
|
Delivery
by electronic book-entry at The Depository Trust Company (“DTC”),
registered in the Investor’s name and address as set forth below, and
released by Continental Stock Transfer & Trust Company, the Company’s
transfer agent (the “Transfer
Agent”),
to the Investor at the Closing (as defined in Section 3.1 of Annex
I
hereto). NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT
BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
|
G-1
|
(I)
|
DIRECT
THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED
WITH THE
SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN
(“DWAC”)
INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS
WITH THE
SHARES, AND
|
|
(II)
|
REMIT
BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE
PRICE
FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING
ACCOUNT:
|
Deutsche
Bank Trust Company Americas
ABA:
▇▇▇▇▇▇▇▇▇
Account
Name - Trust and Securities Services
Account
Number - ▇▇▇▇▇▇▇▇
F.C.T.
-
Discovery Labs/Jefferies and Co 62793
-
OR
-
|
[____]
|
B.
|
Delivery
versus payment (“DVP”)
through DTC (i.e., the Company shall deliver Shares registered in
the
Investor’s name and address as set forth below and released by the
Transfer Agent to the Investor through DTC at the Closing directly
to the
account(s) at ▇▇▇▇▇▇▇▇▇
& Company, Inc.
(“Jefferies”)
identified by the Investor and simultaneously therewith payment shall
be
made by Jefferies
by
wire transfer to the Company). NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT
BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
|
|
(I)
|
NOTIFY
JEFFERIES
OF THE ACCOUNT OR ACCOUNTS AT JEFFERIES
TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR,
AND
|
|
(II)
|
CONFIRM
THAT THE ACCOUNT OR ACCOUNTS AT JEFFERIES
TO
BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE
A MINIMUM
BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING
PURCHASED BY THE INVESTOR.
|
IT
IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT
DELIVER THE AGGREGATE PURCHASE PRICE FOR THE SHARES OR DOES NOT MAKE PROPER
ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED
AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.
G-2
6. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) it is not
a
NASD member or an Associated Person (as such term is defined under the NASD
Membership and Registration Rules Section 1011) as of the Closing, and (c)
neither the Investor nor any group of Investors (as identified in a public
filing made with the Commission) of which the Investor is a part in connection
with the Offering of the Shares, acquired, or obtained the right to acquire,
20%
or more of the Common Stock (or securities convertible into or exercisable
for
Common Stock) or the voting power of the Company on a post-transaction basis.
Exceptions:
(If
no
exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
7. The
Investor represents that it has received (or otherwise had made available to
it
by the filing by the Company of an electronic version thereof with the
Commission) the Base Prospectus, dated October 11, 2005, which is a part of
the
Company’s Registration Statement, the documents incorporated by reference
therein, and any free writing prospectus (collectively, the “Disclosure
Package”),
prior
to or in connection with the receipt of this Agreement and the Prospectus
Supplement (or the filing by the Company of an electronic version thereof with
the Commission) along with the Company’s counterpart to this
Agreement.
8. No
offer
by the Investor to buy Shares will be accepted and no part of the Purchase
Price
will be delivered to the Company until the Company has accepted such offer
by
countersigning a copy of this Agreement, and any such offer may be withdrawn
or
revoked by the Investor, without obligation or commitment of any kind, at any
time prior to the Company (or the Placement Agent on behalf of the Company)
sending (orally, in writing, or by electronic mail) notice of its acceptance
of
such offer. An indication of interest will involve no obligation or commitment
of any kind until this Agreement is accepted and countersigned by or on behalf
of the Company.
G-3
Number
of
Share:_________________________________
Purchase
Price Per Share: $__________________________
Aggregate
Purchase Price: $_________________________
Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose.
Dated
as
of: _____________ __, 2007
__________________________
INVESTOR
By:___________________________
Print
Name:_____________________
Title:__________________________
Address:_______________________
______________________________
Agreed
and Accepted
this
___
day of _________________, 2007:
DISCOVERY
LABORATORIES, INC.
By:___________________________
Print
Name
Title:
G-4
ANNEX
I
TERMS
AND CONDITIONS FOR PURCHASE OF SHARES
1. Authorization
and Sale of the Shares. Subject
to the terms and conditions of this Agreement, the Company has authorized the
sale of the Shares.
2. Agreement
to Sell and Purchase the Shares; Placement Agent.
2.1 At
the
Closing, the Company will sell to the Investor, and the Investor will purchase
from the Company, upon the terms and conditions set forth herein, the number
of
Shares set forth on the last page of the Agreement to which these Terms and
Conditions for Purchase of Shares are attached as Annex
I
(the
“Signature
Page”)
for
the aggregate purchase price therefor set forth on the Signature
Page.
2.2 The
Company proposes to enter into substantially this same form of Subscription
Agreement with certain other investors (the “Other
Investors”)
and
expects to complete sales of Shares to them. The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the
“Investors,”
and
this Agreement and the Subscription Agreements executed by the Other Investors
are hereinafter sometimes collectively referred to as the “Agreements.”
2.3 Investor
acknowledges that the Company has agreed to pay Jefferies
& Company, Inc. (the
“Placement
Agent”)
a fee
(the “Placement
Fee”)
in
respect of the sale of Shares to the Investor.
2.4 The
Company has entered into a Placement Agency Agreement, dated December 7, 2007
(the “Placement
Agreement”),
with
the Placement Agent that contains certain representations, warranties, covenants
and agreements of the Company that may be relied upon by the Investor, which
shall be a third party beneficiary thereof.
3. Closings
and Delivery of the Shares and Funds.
3.1 Closing.
The
completion of the purchase and sale of the Shares (the “Closing”)
shall
occur at a place and time (the “Closing
Date”)
to be
specified by the Company and the Placement Agent, and of which the Investors
will be notified in advance by the Placement Agent, in accordance with Rule
15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
At
the Closing, (a) the Company shall cause the Transfer Agent to deliver to the
Investor the number of Shares set forth on the Signature Page registered in
the
name of the Investor or, if so indicated on the Investor Questionnaire attached
hereto as Exhibit
A,
in the
name of a nominee designated by the Investor and (b) the aggregate purchase
price for the Shares being purchased by the Investor will be delivered by or
on
behalf of the Investor to the Company.
3.2 Conditions
to the Company’s Obligations.
(a)
The
Company’s obligation to issue and sell the Shares to the Investor shall be
subject to: (i) the receipt by the Company of the purchase price for the Shares
being purchased hereunder as set forth on the Signature Page and (ii) the
accuracy of the representations and warranties made by the Investor and the
fulfillment of those undertakings of the Investor to be fulfilled prior to
the
Closing Date.
(b) Conditions
to the Investor’s Obligations.
The
Investor’s obligation to purchase the Shares will be subject to the accuracy of
the representations and warranties made by the Company and the fulfillment
of
those undertakings of the Company to be fulfilled prior to the Closing Date,
including without limitation, those contained in the Placement Agreement, and
to
the condition that the Placement Agent shall not have: (a) terminated the
Placement Agreement pursuant to the terms thereof or (b) determined that the
conditions to the closing in the Placement Agreement have not been satisfied.
The Investor’s obligations are expressly not conditioned on the purchase by any
or all of the Other Investors of the Shares that they have agreed to purchase
from the Company.
3.3 Delivery
of Funds.
(a) Delivery
by Electronic Book-Entry at The Depository Trust Company.
If the
Investor elects to settle the Shares purchased by such Investor through delivery
by electronic book-entry at DTC, no
later than one (1) business day after the execution of this Agreement by the
Investor and the Company,
the
Investor shall remit by wire transfer the amount of funds equal to the aggregate
purchase price for the Shares being purchased by the Investor to the following
account designated by the Company and the Placement Agent pursuant to the terms
of that certain Escrow Agreement (the “Escrow
Agreement”)
dated
as of December 7, 2007, by and among the Company, the Placement Agent and
Deutsche Bank Trust Company Americas (the “Escrow
Agent”):
Deutsche
Bank Trust Company Americas
ABA:
▇▇▇▇▇▇▇▇▇
Account
Name - Trust and Securities Services
Account
Number - ▇▇▇▇▇▇▇▇
F.C.T.
-
Discovery Labs/Jefferies and Co 62793
Such
funds shall be held in escrow until the Closing and delivered by the Escrow
Agent on behalf of the Investors to the Company upon the satisfaction, in the
sole judgment of Jefferies, of the conditions set forth in Section
3.2(b)
hereof.
The Placement Agent shall have no rights in or to any of the escrowed funds,
unless the Placement Agent and the Escrow Agent are notified in writing by
the
Company in connection with the Closing that a portion of the escrowed funds
shall be applied to the Placement Fee. The
Company agrees to indemnify and hold the Escrow Agent harmless from and against
any and all losses, costs, damages, expenses and claims (including, without
limitation, court costs and reasonable attorneys fees) (“Losses”)
arising under this Section
3.3
or
otherwise with respect to the funds held in escrow pursuant hereto or arising
under the Escrow Agreement, unless it is finally determined that such Losses
resulted directly from the willful misconduct or gross negligence of the Escrow
Agent. Anything in this Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for any special, indirect or consequential
loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action.
Investor
shall also furnish to Jefferies a completed W-9 form (or, in the case of an
Investor who is not a United States citizen or resident, a W-8
form).
(b) Delivery
Versus Payment through The Depository Trust Company.
If the
Investor elects to settle the Shares purchased by such Investor by delivery
versus payment through DTC, no
later than one (1) business day after the execution of this Agreement by the
Investor and the Company,
the
Investor shall confirm that the account or accounts at Jefferies
to be
credited with the Shares being purchased by the Investor have a minimum balance
equal to the aggregate purchase price for the Shares being purchased by the
Investor.
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3.4 Delivery
of Shares.
(a) Delivery
by Electronic Book-Entry at The Depository Trust Company.
If the
Investor elects to settle the Shares purchased by such Investor through delivery
by electronic book-entry at DTC, no
later than one (1) business day after the execution of this Agreement by the
Investor and the Company,
the
Investor shall direct the broker-dealer at which the account or accounts to
be
credited with the Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a Deposit/Withdrawal at
Custodian (“DWAC”)
instructing Continental Stock Transfer & Trust Company, the Company’s
transfer agent, to credit such account or accounts with the Shares by means
of
an electronic book-entry delivery. Such DWAC shall indicate the settlement
date
for the deposit of the Shares, which date shall be provided to the Investor
by
Jefferies. Simultaneously with the delivery to the Company by the Escrow Agent
of the funds held in escrow pursuant to Section
3.3
above,
the Company shall direct its transfer agent to credit the Investor’s account or
accounts with the Shares pursuant to the information contained in the DWAC.
(b) Delivery
Versus Payment through The Depository Trust Company.
If the
Investor elects to settle the Shares purchased by such Investor by delivery
versus payment through DTC, no
later than one (1) business day after the execution of this Agreement by the
Investor and the Company,
the
Investor shall notify Jefferies
of the
account or accounts at Jefferies to be credited with the Shares being purchased
by such Investor. On the Closing Date, the Company shall deliver the Shares
to
the Investor through DTC directly to the account or accounts at Jefferies
identified by Investor and simultaneously therewith payment shall be made by
Jefferies by wire transfer to the Company.
4. Representations,
Warranties and Covenants of the Investor.
The
Investor represents and warrants to, and agrees with, the Company and the
Placement Agent that:
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4.1 The
Investor (a) is knowledgeable, sophisticated and experienced in making, and
is
qualified to make decisions with respect to, investments in shares presenting
an
investment decision like that involved in the purchase of the Shares, including
investments in securities issued by the Company and investments in comparable
companies, (b) has answered all questions on the Signature Page and the Investor
Questionnaire for use in preparation of the Prospectus Supplement and the
answers thereto are true and correct as of the date hereof and will be true
and
correct as of the Closing Date and (c) in connection with its decision to
purchase the number of Shares set forth on the Signature Page, has received
and
is relying solely upon the Disclosure Package and the documents incorporated
by
reference therein.
4.2 The
Investor acknowledges that (a) no action has been or will be taken in any
jurisdiction outside the United States by the Company or the Placement Agent
that would permit an offering of the Shares, or possession or distribution
of
offering materials in connection with the issue of the Shares in any
jurisdiction outside the United States where action for that purpose is
required, (b) if the Investor is outside the United States, it will comply
with
all applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense and (c)
the
Placement Agent is not authorized to make and has not made any representation,
disclosure or use of any information in connection with the issue, placement,
purchase and sale of the Shares, except as set forth or incorporated by
reference in the Base Prospectus or the Prospectus Supplement.
4.3 The
Investor acknowledges that (a)
the
Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (b) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except
as
to the enforceability of any rights to indemnification or contribution that
may
be violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or
regulation).
4.4 The
Investor understands that nothing in this Agreement, the Prospectus or any
other
materials presented to the Investor in connection with the purchase and sale
of
the Shares constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of
Shares.
4.5 Since
the
date on which the Placement Agent first contacted such Investor about the
Offering, the Investor has not engaged in any transactions in the securities
of
the Company (including, without limitation, any Short Sales (as defined below)
involving the Company’s securities). Each Investor covenants that it will not
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed. Each Investor agrees that it will not use any of the
Shares acquired pursuant to this Agreement to cover any short position in the
Common Stock if doing so would be in violation of applicable securities laws.
For purposes hereof, “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sales contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis),
and
sales and other transactions through non-US broker dealers or foreign regulated
brokers.
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5. Survival
of Representations, Warranties and Agreements; Third Party Beneficiary.
Notwithstanding
any investigation made by any party to this Agreement or by the Placement Agent,
all covenants, agreements, representations and warranties made by the Company
and the Investor herein will survive the execution of this Agreement, the
delivery to the Investor of the Shares being purchased and the payment therefor.
The Placement Agent shall be a third party beneficiary with respect to the
representations, warranties and agreements of the Investor in Section
4
hereof.
6. Notices.
All
notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or (b) if delivered from outside
the
United States, by International Federal Express or facsimile, and will be deemed
given (i) if delivered by first-class registered or certified mail domestic,
three business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express, two business days after so mailed and (iv) if
delivered by facsimile, upon electric confirmation of receipt and will be
delivered and addressed as follows:
| (a) |
if
to the Company, to:
Discovery
Laboratories, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
copies to:
▇▇▇▇▇▇▇
Procter, LLP
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
(b)
if
to the
Investor, at its address on the Signature Page hereto, or at such other address
or addresses as may have been furnished to the Company in writing.
7. Changes.
This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
8. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this
Agreement.
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9. Severability.
In
case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein will not in any way be affected or
impaired thereby.
10. Governing
Law. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.
11. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute
but one instrument, and will become effective when one or more counterparts
have
been signed by each party hereto and delivered to the other parties. The Company
and the Investor acknowledge and agree that the Company shall deliver its
counterpart to the Investor along with the Prospectus Supplement (or the filing
by the Company of an electronic version thereof with the Commission).
12. Confirmation
of Sale.
The
Investor acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Agreement, together with the Prospectus Supplement (or
the
filing by the Company of an electronic version thereof with the Commission),
shall constitute written confirmation of the Company’s sale of Shares to such
Investor.
13. Press
Release.
The
Company and the Investor agree that the Company shall issue a press release
disclosing the material terms of the Offering prior to the opening of the
financial markets in New York City on the business day immediately after the
date hereof.
14. Termination.
In the
event that the Placement Agreement is terminated by the Placement Agent pursuant
to the terms thereof, this Agreement shall terminate without any further action
on the part of the parties hereto.
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Exhibit
A
DISCOVERY
LABORATORIES,
INC.
INVESTOR
QUESTIONNAIRE
Pursuant
to Section
3
of
Annex
I
to the
Agreement, please provide us with the following information:
|
1. The
exact name that your Shares are to be registered in. You may use
a nominee
name if appropriate:
|
||
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2. The
relationship between the Investor and the registered holder listed
in
response to item 1 above:
|
||
|
3. The
mailing address of the registered holder listed in response to item
1
above:
|
||
|
4. The
Social Security Number or Tax Identification Number of the registered
holder listed in the response to item 1 above:
|
||
|
5. Name
of DTC Participant (broker-dealer at which the account or accounts
to be
credited with the Shares are maintained):
|
||
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6. DTC
Participant Number:
|
||
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7. Name
of Account at DTC Participant being credited with the
Shares:
|
||
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8. Account
Number at DTC Participant being credited with the Shares:
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