SECURITIES PURCHASE AGREEMENT
EXECUTION
COPY
SECURITIES
PURCHASE AGREEMENT dated as of October 12, 2010 (this “Agreement”), by and
between DISCOVERY LABORATORIES, INC., a Delaware corporation (“Company”), and
PHARMABIO DEVELOPMENT INC., a North Carolina corporation (“Investor”).
The
Investor hereby confirms its agreement with the Company as follows:
1. Offering and sale of the
Units. (a) The
Company has authorized the sale and issuance (the “Unit Purchase”) to
the Investor of 2,380,952 units (the “Units”), at a price
of $0.21 per Unit (the “Unit Price”), with
each Unit consisting of (i) one share (the “Share,” and
collectively, the Shares”) of its
common stock, par value $.001 per share (“Common Stock”), and
(ii) one warrant (the “Warrant,” and
collectively, the “Warrants”) to
purchase one-half of a share of Common Stock in substantially the form attached
hereto as Exhibit A. Each Warrant will represent the right to
purchase one-half of a share of Common Stock at an exercise price of $0.273 per
share of Common Stock (subject to adjustment as set forth in the Warrant). Units
will not be issued or certificated. The Shares and Warrants are immediately
separable and will be issued separately. The shares of Common Stock issuable
upon exercise of the Warrants are referred to herein as the “Warrant Shares” and,
together with the Units, the Shares and the Warrants, are referred to herein as
the “Securities”).
(b) The
offering and sale of the Units (the “Offering”) are being
made pursuant to (a) an effective Registration Statement on Form S-3, No.
333-151654 (the “Registration
Statement”) filed by the Company with the Securities and Exchange
Commission (the “Commission”),
including the Prospectus contained therein and dated June 11, 2010 (the “Base Prospectus”),
(b) if applicable, certain “free writing prospectuses” (as that term is defined
in Rule 405 under the Securities Act of 1933, as amended (the “Act”)), that have
been or will be filed, if required, with the Commission and delivered to the
Investor on or prior to the date hereof (the “Free Writing
Prospectus”), containing certain supplemental information regarding the
Units, the terms of the Offering and the Company and (c) a Prospectus
Supplement (the “Prospectus
Supplement” and, together with the Base Prospectus, the “Prospectus”)
containing only certain supplemental information regarding the Units and terms
of the Offering that will be filed with the Commission and delivered to the
Investor prior to the Closing (or made available to the Investor prior to the
Closing by the filing by the Company of an electronic version thereof with the
Commission).
2. Closing. The
closing of the issuance and sale of the Units (the “Closing”) shall take
place at 10:00 a.m. on October 14, 2010 (the “Closing
Date”). The Closing shall be held at the offices of the
Company, 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx. At the Closing,
(a) the Investor shall cause to be delivered to the Company via wire transfer of
immediately available funds the purchase price of $500,000.00 for the Units (the
“Purchase
Price”) to an account specified to the Investor by the Company at least
one business day prior to the Closing, (b) the Company shall cause the
Company’s transfer agent (the “Transfer Agent”) to
credit the Shares to which the Investor is entitled to the Investor’s balance
account (through Xxxxxxx Xxxxx) with Depositary Trust Corporation through its
Deposit/Withdrawal At Custodian (DWAC) system as indicated on Exhibit B, and
(c) the Company shall cause the executed Warrants to be delivered to the
Investor, registered in the name of the Investor or, if so indicated on Exhibit B, in the
name of a nominee designated by the Investor.
3. Conditions to Closing of the
Company. The
Company’s obligations at the Closing are subject to: (i) the receipt by the
Company of the Purchase Price, and (ii) the accuracy as of the Closing 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.
4. Conditions to Closing of the
Investor. The
Investor’s obligations at the Closing are subject to the accuracy as of the
Closing 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.
5. Representations of
Investor. The
Investor hereby represents, warrants and agrees that:
(a) The
Investor has full power and authority to enter into, execute, deliver and
perform this Agreement and all other agreements and instruments to be executed
by the Investor in connection herewith. All of such actions have been
duly authorized by all necessary corporate action on the part of the Investor
and no further approval or authorization by Investor’s shareholders or any other
persons or entities are necessary to take such actions. This
Agreement constitutes the legal, valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
laws and subject to general principles of equity.
(b) The
Investor has legally available and sufficient funds to pay the Purchase Price at
Closing.
(c) The
execution and delivery of this Agreement, the consummation of the Unit Purchase
and all of the other transactions contemplated hereby will not
result:
(i) in
a breach of any of the terms and provisions of or constitute a default under
Investor’s articles of incorporation or bylaws, or any indenture, mortgage, deed
or trust, or other agreement or instrument to which the Investor is a party;
or
(ii) in
a violation of or default under any state or federal statute or any of the rules
or regulations applicable to the Investor of any court or of any federal and
state regulatory body or administrative agency.
(d) The
Investor has received (or otherwise had made available to it by the filing by
the Company of an electronic version thereof with the Commission) the
Prospectus, which is a part of the Registration Statement, the documents
incorporated by reference therein, and the Free Writing Prospectus
(collectively, the “Disclosure Package”),
prior to or in connection with the execution of this Agreement. The
Investor acknowledges that, prior to the execution of this Agreement, the
Investor has also received certain additional information regarding the Offering
(the “Offering
Information”) by any means permitted under the Act, including the
Prospectus Supplement, a Free Writing Prospectus and oral
communications. In connection with its decision to purchase the
Shares, the Investor has received, and is not relying upon anything other than,
the Disclosure Package and the documents incorporated by reference therein and
the Offering Information.
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(e) The
Investor (i) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in securities
presenting an investment decision like that involved in the purchase of the
Units, including investments in securities issued by the Company and investments
in comparable companies, and (ii) has provided the required information on Exhibit B and such
information is the true and correct as of the date hereof and will be true and
correct as of the Closing Date. The Investor can afford the financial risk of an
investment in the Securities.
(f) Except
as set forth below, (i) the Investor has had no position, office or other
material undisclosed relationship within the past three years with the Company
or persons known to it to be affiliates of the Company, (ii) the Investor is not
a member of the Financial Industry Regulatory Authority, Inc. or an Associated
Person (as such term is defined under the NASD Membership and Registration Rules
Section 1011) as of the Closing, and (iii) 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 Securities,
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.
(g) The
Investor understands that nothing in this Agreement, the Prospectus, the
Disclosure Package, the Offering Information or any other materials presented to
the Investor in connection with the transactions contemplated by this Agreement
constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors and made such investigation as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Securities.
(h) Since
10 days before the date hereof, the Investor has not disclosed any information
regarding the Offering to any third parties (other than its legal, accounting
and other advisors) and has not engaged in any purchases or sales involving the
securities of the Company (including, without limitation, any Short Sales (as
defined below) involving the Company’s securities). The Investor
covenants that it will not engage in any purchases or sales in the securities of
the Company (including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed. The Investor
agrees that it will not 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 of 1934, as amended
(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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6.
Representations of the
Company. The
Company hereby represents, warrants and agrees that:
(a) The
Company has full power and authority to enter into, execute, deliver and perform
this Agreement and all other agreements and instruments to be executed by the
Company in connection herewith. All of such actions have been duly
authorized by all necessary corporate action on the part of the Company and no
further approval or authorization by the Company’s stockholders or any other
persons or entities are necessary to take such actions. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
laws and subject to general principles of equity.
(b) The
execution and delivery of this Agreement, the consummation of the Unit Purchase
and all of the other transactions contemplated hereby will not
result:
(i) in
a breach of any of the terms and provisions of or constitute a default under the
Company’s certificate of incorporation or bylaws;
(ii) in
the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company pursuant to the terms or provisions of, or will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
indenture, mortgage, deed or trust, or other agreement or instrument to which
the Company is a party; or
(iii) in
a violation of or default under any state or federal statute or any of the rules
or regulations applicable to the Company of any court or of any federal and
state regulatory body or administrative agency.
(c) Except
for (i) applicable filings, if any, with the Commission pursuant to the Exchange
Act and the Securities Act, (ii) filings with The Nasdaq Capital Market in
connection with the listing of the Shares, and (iii) filings, if any, under
state securities or “blue sky” laws, no consent, authorization or order of, or
filing or registration with, any governmental authority is required to be
obtained or made by the Company for the execution, delivery and performance of
this Agreement or the consummation of the Unit Purchase and all of the other
transactions contemplated hereby.
(d) The
Shares and the Warrants to be issued and sold by the Company to the Investor
hereunder have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein will be duly and validly issued,
fully paid and non-assessable. The Warrant Shares have been duly and validly
authorized and, when issued and delivered against payment therefor as provided
in the Warrants, will be duly and validly issued, fully paid and non-assessable.
The Company has reserved a reasonably adequate number of authorized but unissued
shares of Common Stock for issuance upon exercise of the Warrants and such
shares shall remain so reserved (subject to reduction from time to time for
Common Stock issued upon the exercise of the Warrants) as long as the Warrants
are exercisable.
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(e) The
Company has complied in all material respects with all applicable Laws,
including securities laws, in connection with the offer, issuance and sale of
the Securities hereunder.
(f) The
Registration Statement has been declared effective by the Commission and there
is no stop order suspending the effectiveness of the Registration
Statement. The Company meets the requirements for the use of Form S-3
under the Act in connection with the offer, issuance and sale of the Securities
hereunder. The Registration Statement in the form in which it became
effective and also in such form as it may be when any post-effective amendment
thereto became effective and the Base Prospectus and any supplement or amendment
thereto, including the Prospectus Supplement relating to the Units, when filed
with the Commission under Rule 424(b) under the Act, complied (or will comply)
as to form with the provisions of the Act and did not (or will not) at any such
times contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. The Commission has not issued any order preventing or
suspending the use of any Prospectus.
(g) As
of the Closing Date, the Registration Statement as supplemented by any
post-effective amendment thereto and any prospectus supplements, including the
Prospectus Supplement relating to the Units, 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 statements therein, in light of the
circumstances under which they were made, not misleading.
7. Survival. Notwithstanding
any investigation made by any party to this Agreement, all agreements,
representations and warranties made by the Company and the Investor herein will
survive the execution of this Agreement and the delivery to the Investor of the
Shares and the Warrants.
8. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. The exchange of copies of this Agreement or amendments thereto and
of signature pages by facsimile transmission or by email transmission in
portable document format, or similar format, shall constitute effective
execution and delivery of such instrument(s) as to the parties and may be used
in lieu of the original Agreement or amendment for all
purposes. Signatures of the parties transmitted by facsimile or by
email transmission in portable document format, or similar format, shall be
deemed to be original signatures for all purposes.
9. 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 mail, 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 (c) 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 electronic confirmation of receipt and
will be delivered and addressed as follows (or to such other address or
addresses as may have been furnished by notice to the other
party):
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if to the
Company, to:
Discovery
Laboratories, Inc.
0000
Xxxxx Xxxx
Xxxxxxxxxx,
XX 00000
Attention: Legal
Department
Facsimile: 000-000-0000
with copies
to:
SNR
Xxxxxx US LLP
Two World
Financial Center
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000-0000
Attention: Xxx
X. Xxxxx, Esq.
Fax:
000-000-0000
if to the
Investor, to:
PharmaBio
Development Inc.
c/o
Quintiles Transnational Corp.
0000
Xxxxxxx Xxxx
Xxxxxx,
XX 00000
Attn: President
Facsimile: (000)
000-0000
with copies
to:
Smith,
Anderson, Blount, Dorsett,
Xxxxxxxx
& Xxxxxxxx, L.L.P.
0000
Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxxxxx X. Xxxxx
Facsimile:
(000) 000-0000.
10. Applicable
Law. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of Delaware, as applied to contracts made and to be performed
entirely within such State, without giving effect to the principles of conflicts
of law that would require the application of the laws of any other
jurisdiction.
11. No Implied Rights or
Remedies. Except
as otherwise expressly provided herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any person, other than
the Company and the Investor, any rights or remedies under or by reason of this
Agreement.
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12. No Waiver. No
failure on the part of any of the parties to this Agreement to exercise, no
delay in exercising and no course of dealing with respect to, any right or
remedy under this Agreement will operate as a waiver thereof. No
single or partial exercise of any right or remedy under this Agreement will
preclude any other further exercise thereof or the exercise of any other right
or remedy.
13. Headings. The
headings in this Agreement are inserted for convenience of reference only and
shall not be a part of or control or affect the meaning of this
Agreement.
14. Successors and
Assigns. This
Agreement may not be assigned without the written consent of all of its parties;
provided, however, that Investor may at any time following the Closing assign or
transfer any of its rights or obligations under this Agreement to an
affiliate. This Agreement and all of its provisions shall be binding
upon and inure to the benefit of the parties and their respective successors,
permitted assigns, heirs and legal representatives.
15. Severability. If
any provision of this Agreement shall be invalid or unenforceable, the other
provisions of this Agreement shall continue in full force, and the validity and
enforceability of such other provisions shall not be adversely
affected.
16. Press
Release. The
Company and the Investor agree that the Company shall, prior to the opening of
the financial markets in New York City on the business day immediately after the
date hereof, (i) issue a press release announcing the Offering, and (ii) file a
Current Report on Form 8-K with the Commission, including a form of this
Agreement.
[Remainder
of page intentionally blank]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
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PHARMABIO
DEVELOPMENT INC.
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By:
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/s/ Xxxx X. Xxxxxxx, Xx.
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Name:
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Xxxx
X. Xxxxxxx, Xx.
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Title:
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Vice
President
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DISCOVERY
LABORATORIES, INC.
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By:
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/s/ Xxxx X. Xxxxxx
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Name:
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Xxxx
X. Xxxxxx
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Title:
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President
and Chief Financial
Officer
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[Signature
Page to Securities Purchase Agreement]
Exhibit
A
Form of
Warrant
See
Exhibit 4.1 to Form 8-K
Exhibit
B
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1.
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The
exact name that your Shares and Warrants are to be registered
in. You may use a nominee name if appropriate:
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PharmaBio
Development Inc.
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2.
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The
relationship between the Investor and the registered holder listed in
response to item 1 above:
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Same
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3.
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The
mailing address of the registered holder listed in response to item 1
above:
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c/o
Quintiles Transnational Corp.
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0000
Xxxxxxx Xxxx
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Xxxxxx,
XX 00000
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4.
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The
Tax Identification Number of the registered holder listed in the response
to item 1 above:
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00-0000000
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5.
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Name
of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):
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Xxxxxxx
Xxxxx
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6.
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DTC
Participant Number:
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5198
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7.
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Name
of Account at DTC Participant being credited with the
Shares:
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PharmaBio
Development Inc.
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8.
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Account
Number at DTC Participant being credited with the Shares:
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8PW-07056
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