REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
Execution
Copy
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as
of December 12th, 2008,
is by and between DISCOVERY LABORATORIES, INC. (the “Company”) and
KINGSBRIDGE CAPITAL LIMITED (the “Investor”).
WHEREAS,
the Company and the Investor have entered into that certain Common Stock
Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”),
pursuant to which the Company may issue, from time to time, to the Investor up
to $25 million worth of shares of Common Stock as provided for
therein;
WHEREAS,
pursuant to the terms of, and in partial consideration for the Investor entering
into, the Purchase Agreement, the Company has issued to the Investor a warrant,
exercisable from time to time, in accordance with its terms, within five (5)
years following the six-month anniversary of the date of issuance (the “Warrant”) for the
purchase of an aggregate of up to 675,000 shares of Common Stock at a price
specified in such Warrant;
WHEREAS,
pursuant to the terms of, and in partial consideration for, the Investor’s
agreement to enter into the Purchase Agreement, the Company has agreed to
provide the Investor with certain registration rights with respect to the
Registrable Securities (as defined in the Purchase Agreement) as set forth
herein;
NOW,
THEREFORE, in consideration of the premises, the representations, warranties,
covenants and agreements contained herein, in the Warrant, and in the Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows (capitalized terms used herein and
not defined herein shall have the respective meanings ascribed to them in the
Purchase Agreement):
ARTICLE
I
REGISTRATION
RIGHTS
Section
1.1 Registration
Statement.
(a) Filing of the Registration
Statement. Upon the terms and subject to the conditions set
forth in this Agreement, the Company shall file with the Commission within
ninety (90) calendar days after the Closing Date a registration statement on
Form S-3 under the Securities Act or such other form as deemed appropriate by
counsel to the Company for the registration for the resale by the Investor of
the Registrable Securities (the “Registration
Statement”), provided, however, that the Company’s obligations in this
Article I are subject to any limitations on the Company’s ability to register
the full complement of such Registrable Securities in accordance with Rule 415
under the Securities Act or other regulatory limitations.
(b) Effectiveness of the
Registration Statement. The Company shall use commercially
reasonable efforts (i) to have the Registration Statement declared
effective by the Commission as soon as reasonably practicable, but in any event
no later than one hundred eighty (180) calendar days after the Closing Date and
(ii) to ensure that the Registration Statement remains in effect throughout
the term of this Agreement as set forth in Section 4.2, subject to the
terms and conditions of this Agreement.
(c) Regulatory
Disapproval. The contemplated effective date for the
Registration Statement as described in Section 1.1(b) shall be extended
without default or liquidated damages hereunder or under the Purchase Agreement
in the event that the Company’s failure to obtain the effectiveness of the
Registration Statement on a timely basis results from (i) the failure of the
Investor to timely provide the Company with information requested by the Company
and necessary to complete the Registration Statement in accordance with the
requirements of the Securities Act or (ii) the Commission’s disapproval of the
structure of the transactions contemplated by the Purchase Agreement, or (iii)
events or circumstances that are not in any way attributable to the Company,
including but not limited to delays caused by the Commission. In the
event of clause (ii) above, the parties agree to cooperate with one another in
good faith to arrive at a resolution acceptable to the Commission.
(d) Failure to Maintain
Effectiveness of Registration Statement. In the event the
Company fails to maintain the effectiveness of the Registration Statement (or
the Prospectus) throughout the period set forth in Section 4.2, other than
temporary suspensions as set forth in Section 1.1(e), and the Investor holds any
Registrable Securities at any time during the period of such ineffectiveness (an
“Ineffective Period”), and provided that such failure to maintain effectiveness
was within the reasonable control of the Company, the Company shall pay on
demand to the Investor in immediately available funds into an account designated
by the Investor an amount equal to the product of (i) the total number of
Registrable Securities issued to the Investor under the Purchase Agreement
(which, for the avoidance of doubt, shall not include any Warrant Shares) and
owned by the Investor at any time during such Ineffective Period (and not
otherwise sold, hypothecated or transferred) and (ii) the result, if greater
than zero, obtained by subtracting the VWAP on the Trading Day immediately
following the last day of such Ineffective Period from the VWAP on the Trading
Day immediately preceding the day on which any such Ineffective Period began;
provided, however, that (A) the foregoing payments shall not apply in respect of
Registrable Securities (I) that are otherwise freely tradable by the Investor,
including pursuant to Rule 144 under the Securities Act (as such Rule may be
amended from time to time, "Rule 144") or (II) if the Company offers to
repurchase from the Investor such Registrable Securities for a per share
purchase price equal to the VWAP on the Trading Day immediately preceding the
day on which any such Ineffective Period began and (B) unless otherwise required
by any applicable federal and state securities laws, the Company shall be under
no obligation to supplement the Prospectus to reflect the issuance of any Shares
pursuant to a Draw Down at any time prior to the day following the Settlement
Date with respect to such Shares and that the failure to supplement the
Prospectus prior to such time shall not be deemed a failure to maintain the
effectiveness of the Registration Statement (or Prospectus) for purposes of this
Agreement (including this Section 1.1(d)).
2
(e) Deferral or Suspension
During a Blackout Period. Notwithstanding the provisions of
Section 1.1(d), if in the good faith judgment of the Company, following
consultation with legal counsel, it would be detrimental to the Company or its
stockholders for the Registration Statement to be filed or for resales of
Registrable Securities to be made pursuant to the Registration Statement due to
(i) the existence of a material development or potential material
development involving the Company that the Company would be obligated to
disclose or incorporate by reference in the Registration Statement and which the
Company has not disclosed, or which disclosure would be premature or otherwise
inadvisable at such time or would have a Material Adverse Effect on the Company
or its stockholders, or (ii) a filing of a Company-initiated registration
of any class of its equity securities would adversely affect or require
premature disclosure of such filing (the Company’s notice thereof, a “Blackout Notice”),
the Company shall have the right to (A) immediately defer such filing for a
period of not more than sixty (60) days beyond the date by which such
Registration Statement was otherwise required hereunder to be filed or
(B) suspend use of such Registration Statement for a period of not more
than thirty (30) days (any such deferral or suspension period, a “Blackout
Period”). The Investor acknowledges that it would be seriously
detrimental to the Company and its stockholders for such Registration Statement
to be filed (or remain in effect) during a Blackout Period and therefore
essential to defer such filing (or suspend the use thereof) during such Blackout
Period and agrees to cease any disposition of the Registrable Securities during
such Blackout Period. The Company may not utilize any of its rights
under this Section 1.1(e) to defer the filing of a Registration Statement
(or suspend its effectiveness) more than six (6) times in any twelve (12) month
period. In the event that, within fifteen (15) Trading Days following
any Settlement Date, the Company gives a Blackout Notice to the Investor and the
VWAP on the Trading Day immediately preceding such Blackout Period (“Old VWAP”) is greater
than the VWAP on the first Trading Day following such Blackout Period that the
Investor may sell its Registrable Securities pursuant to an effective
Registration Statement (“New VWAP”), then the
Company shall pay to the Investor, by wire transfer of immediately available
funds to an account designated by the Investor, the “Blackout
Amount.” For the purposes of this Agreement, Blackout Amount means a
percentage equal to: (1) seventy-five percent (75%) if such Blackout Notice is
delivered prior to the fifth (5th) Trading Day following such Settlement Date;
(2) fifty percent (50%) if such Blackout Notice is delivered on or after the
fifth (5th) Trading Day following such Settlement Date, but prior to the tenth
(10th) Trading Day following such Settlement Date; (3) twenty-five percent (25%)
if such Blackout Notice is delivered on or after the tenth (10th) Trading Day
following such Settlement Date, but prior to the fifteenth (15th) Trading Day
following such Settlement Date; and (4) zero percent (0%) thereafter of: the
product of (i) the number of Registrable Securities purchased by the Investor
pursuant to the most recent Draw Down and actually held by the Investor (and not
otherwise sold, hypothecated or transferred) immediately prior to the Blackout
Period and (ii) the result, if greater than zero, obtained by subtracting the
New VWAP from the Old VWAP; provided, however, that no Blackout Amount shall be
payable in respect of Registrable Securities (x) that are otherwise freely
tradable by the Investor, including under Rule 144, during the Blackout Period
or (y) if the Company offers to repurchase from the Investor such Registrable
Securities for a per share purchase price equal to the VWAP on the Trading Day
immediately preceding the day on which any such Blackout Period
began. For any Blackout Period in respect of which a Blackout Amount
becomes due and payable, rather than paying the Blackout Amount, the Company may
at is sole discretion, issue to the Investor shares of Common Stock with an
aggregate market value determined as of the first Trading Day following such
Blackout Period equal to the Blackout Amount (“Blackout
Shares”).
3
(f) Liquidated Damages; Sole
Remedy. The Company and the Investor hereto acknowledge and
agree that the amounts payable under Sections 1.1(d) and 1.1(e) and the
Blackout Shares deliverable under Section 1.1(e) above shall constitute
liquidated damages and not penalties. The parties further acknowledge
that (i) the amount of loss or damages likely to be incurred by the
Investor is incapable or is difficult to precisely estimate, (ii) the
amounts specified in such subsections bear a reasonable proportion and are not
plainly or grossly disproportionate to the probable loss likely to be incurred
in connection with any failure by the Company to obtain or maintain the
effectiveness of the Registration Statement, (iii) one of the reasons for
the Company and the Investor reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are sophisticated business parties and
have been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm’s length. The Investor agrees that,
so long as the Company makes the payments or deliveries provided for in Sections
1.1(d) or 1.1(e), as applicable, the Company’s failure to maintain the
effectiveness, deferral or suspension of the Registration Statement that
triggered such payments or deliveries shall not constitute a material breach or
default of any obligation of the Company to the Investor and such payments or
deliveries shall constitute the Investor’s sole remedies with respect
thereto.
(g) Additional Registration
Statements. In the event and to the extent that the
Registration Statement fails to register a sufficient amount of Common Stock
necessary for the Company to issue and sell to the Investor and the Investor to
purchase from the Company all of the Registrable Securities to be issued, sold
and purchased under the Purchase Agreement and the Warrant, the Company shall,
upon a timetable mutually agreeable to both the Company and the Investor, use
its commercially reasonable efforts to prepare and file with the Commission an
additional registration statement or statements in order to effectuate the
purpose of this Agreement, the Purchase Agreement, and the Warrant.
ARTICLE
II
REGISTRATION
PROCEDURES
Section
2.1 Filings;
Information. The Company shall effect the registration with
respect to the sale of the Registrable Securities by the Investor in accordance
with the intended methods of disposition thereof. Without limiting
the foregoing, the Company in each such case will do the following as
expeditiously as is commercially reasonable, but in no event later than the
deadline, if any, prescribed therefor in this Agreement:
(a) Subject
to Section 1.1(e), the Company shall (i) prepare and file with the
Commission the Registration Statement; (ii) use commercially reasonable
efforts to cause such filed Registration Statement to become and to remain
effective (pursuant to Rule 415 under the Securities Act or otherwise);
(iii) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the time
period prescribed by Section 4.2 and in order to effectuate the purpose of
this Agreement, the Purchase Agreement, and the Warrant; and (iv) comply in
all material respects with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
Investor set forth in such Registration Statement; provided, however, that the
Company shall be under no obligation to supplement the Prospectus to reflect the
issuance of any Shares pursuant to a Draw Down at any time prior to the Trading
Day following the second Settlement Date with respect to a Draw Down and,
provided further, however, that the Investor shall be responsible for the
delivery of the Prospectus to the Persons to whom the Investor sells the Shares
and the Warrant Shares, and the Investor agrees to dispose of Registrable
Securities in compliance with the plan of distribution described in the
Registration Statement and otherwise in compliance with applicable federal and
state securities laws.
4
(b) The
Company shall deliver to the Investor and its counsel, in accordance with the
notice provisions of Section 4.8, such number of copies of the Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the Prospectus (including each preliminary prospectus) and
such other documents or information as the Investor or counsel may reasonably
request in order to facilitate the disposition of the Registrable Securities,
provided, however, that to the extent reasonably practicable, such delivery may
be accomplished via electronic means.
(c) After
the filing of the Registration Statement, the Company shall promptly notify the
Investor of any stop order issued or, to the Knowledge of the Company,
threatened by the Commission in connection therewith and take all commercially
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(d) The
Company shall use commercially reasonable efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of each jurisdiction in the United States as the Investor may reasonably (in
light of its intended plan of distribution) request, and (ii) cause the
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
customary acts and things that may be reasonably necessary or advisable to
enable the Investor to consummate the disposition of the Registrable Securities;
provided, however, that the Company will not be required to qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 2.1(d), subject itself to taxation in any such
jurisdiction, consent or subject itself to general service of process in any
such jurisdiction, change any existing business practices, benefit plans or
outstanding securities or amend or otherwise modify the Charter or
Bylaws.
(e) The
Company shall make available to the Investor (and will deliver to Investor’s
counsel), (i) subject to restrictions imposed by the United States federal
government or any agency or instrumentality thereof, copies of all public
correspondence between the Commission and the Company concerning the
Registration Statement and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the “Inspectors”),
(ii) upon reasonable advance notice during normal business hours all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”) as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement; provided, however, that (x) the Company shall not be
obligated to disclose any portion of the Records consisting of either (A)
material non-public information or (B) confidential information of a third party
and (y) any such Inspectors must agree in writing for the benefit of the Company
not to use or disclose any such Records except as provided in this
Section 2.1(e). Records that the Company determines, in good
faith, to be confidential and that it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other judicial or governmental
process; provided, however, that prior to any disclosure or release pursuant to
the immediately preceding clause, the Inspectors shall provide the Company with
prompt notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors’ obligation not to
disclose such Records; and, provided, further, that if failing the entry of a
protective order or the waiver by the Company permitting the disclosure or
release of such Records, the Inspectors, upon advice of counsel, are compelled
to disclose such Records, the Inspectors may disclose that portion of the
Records that counsel has advised the Inspectors that the Inspectors are
compelled to disclose; provided, however, that upon any such required
disclosure, such Inspector shall use his or her best efforts to obtain
reasonable assurances that confidential treatment will be afforded such
information. The Investor agrees that information obtained by it
solely as a result of such inspections (not including any information obtained
from a third party who, insofar as is known to the Investor after reasonable
inquiry, is not prohibited from providing such information by a contractual,
legal or fiduciary obligation to the Company) shall be deemed confidential and
shall not be used for any purposes other than as indicated above or by it as the
basis for any market transactions in the securities of the Company or its
affiliates unless and until such information is made generally available to the
public. The Investor further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed
confidential.
5
(f)
The Company shall otherwise comply in all material
respects with all applicable rules and regulations of the Commission, including,
without limitation, compliance with applicable reporting requirements under the
Exchange Act.
(g) The
Company shall appoint (or shall have appointed) a transfer agent and registrar
for all of the Registrable Securities covered by such Registration Statement not
later than the effective date of such Registration Statement.
(h) The
Investor shall cooperate with the Company, as reasonably requested by the
Company, in connection with the preparation and filing of any Registration
Statement hereunder. The Company may require the Investor to promptly
furnish in writing to the Company such information as may be required in
connection with such registration including, without limitation, all such
information as may be requested by the Commission, the NASDAQ Stock Market or
FINRA or any state securities commission and all such information regarding the
Investor, the Registrable Securities held by the Investor and the intended
method of disposition of the Registrable Securities. The Investor
agrees to provide such information requested in connection with such
registration within five (5) business days after receiving such written request
and the Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of the Registration Statement caused by the
Investor’s failure to timely provide such information.
(i)
Upon receipt of a Blackout Notice from the Company, the Investor shall
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until (i) the
Company advises the Investor that the Blackout Period has terminated and
(ii) the Investor receives copies of a supplemented or amended prospectus,
if necessary. If so directed by the Company, the Investor will
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in the Investor’s
possession (other than a limited number of file copies) of the prospectus
covering such Registrable Securities that is current at the time of receipt of
such notice.
6
Section
2.2
Registration
Expenses. Except as set forth in Section 10.1 of the
Purchase Agreement, the Company shall pay all registration expenses incurred in
connection with the Registration Statement (the “Registration
Expenses”), including, without limitation: (a) all registration,
filing, securities exchange listing and fees required by the NASDAQ Stock
Market, (b) all registration, filing, qualification and other fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), (c) all of the Company’s word processing,
duplicating, printing, messenger and delivery expenses, (d) the Company’s
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (e) the
fees and expenses incurred by the Company in connection with the listing of the
Registrable Securities, (f) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s), (g)
the fees and expenses of any special experts retained by the Company in
connection with such registration and amendments and supplements to the
Registration Statement and Prospectus, and (h) premiums and other costs of the
Company for policies of insurance against liabilities of the Company arising out
of any public offering of the Registrable Securities being registered, to the
extent that the Company, in its discretion, elects to obtain and maintain such
insurance. Any fees and disbursements of underwriters, broker-dealers
or investment bankers, including without limitation underwriting fees,
discounts, transfer taxes or commissions, and any other fees or expenses
(including legal fees and expenses) if any, attributable to the sale of
Registrable Securities, shall be payable by each holder of Registrable
Securities pro rata on the basis of the number of Registrable Securities of each
such holder that are included in a registration under this
Agreement.
7
ARTICLE
III
INDEMNIFICATION
Section
3.1 Indemnification. The
Company agrees to indemnify and hold harmless the Investor, its partners,
affiliates, officers, directors, employees and duly authorized agents, and each
Person or entity, if any, who controls the Investor within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the partners, affiliates, officers, directors, employees and duly
authorized agents of such controlling Person or entity (collectively, the “Controlling
Persons”),(each of the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, and the Investor’s Controlling Persons, an “Investor
Indemnified Person”), from and against any loss, claim, damage,
liability, costs and expenses (including, without limitation, reasonable
attorneys’ fees and disbursements and costs and expenses of investigating and
defending any such claim) (collectively, “Damages”), joint or several, and any
action or proceeding in respect thereof to which an Indemnified Investor Person may become subject
under the Securities Act or otherwise, as incurred, insofar as such Damages (or
actions or proceedings in respect thereof) arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein under the circumstances not misleading, and shall
reimburse such Investor Indemnified Person
for any legal and other expenses reasonably incurred by the Investor, its
partners, affiliates, officers, directors, employees and duly authorized agents,
or any such Controlling Person, as incurred, in investigating or defending or
preparing to defend against any such Damages or actions or proceedings;
provided, however, that the Company shall not be liable to the extent that any
such Damages arise out of the Investor’s (or any other Investor indemnified
Person’s) (i) failure to send or give a copy of the final prospectus or
supplement (as then amended or supplemented) to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus or
supplement or (ii) written confirmation of the sale of Registrable Securities
purchased in any specific Draw Down prior to the filing of a supplement to the
Prospectus to reflect such Draw Down (provided, that the Company is in
compliance with its covenants with respect to the filing of such supplement);
provided, further, that the Company shall not be liable to the extent that any
such Damages arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, or any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Investor or
any other person who participates as an underwriter in the offering or sale of
such securities, in either case, specifically stating that it is for use in the
preparation thereof. In connection with any Registration Statement
with respect to which the Investor is participating, the Investor will indemnify
and hold harmless, to the same extent and in the same manner as set forth in the
preceding paragraph, the Company, each of its partners, affiliates, officers,
directors, employees and duly authorized agents and each of the
Company’s Controlling Persons (each a "Company Indemnified
Person") against any Damages to which any Company Indemnified Person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Damages arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, or in any preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement relating to the Registrable Securities or
arise out of, or are based upon, any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein under the circumstances not misleading to the extent that
such violation occurs in reliance upon and in conformity with written
information furnished to the Company by the Investor or on behalf of the
Investor expressly for use in connection with such Registration Statement, or
(b) any failure by the Investor to comply with prospectus delivery
requirements of the Securities Act, the Exchange Act or any other law or legal
requirement applicable to sales under the Registration Statement, or (c) a
written confirmation of the sale of Registrable Securities purchased by such
Investor in any specific Draw Down prior to the filing of a supplement to the
Prospectus to reflect such Draw Down (provided the Company is in compliance with
its covenants with respect to the filing of such supplement).
8
Section
3.2 Conduct of Indemnification
Proceedings. All claims for indemnification under
Section 3.1 shall be asserted and resolved in accordance with the
provisions of Section 9.2 and 9.3 of the Purchase Agreement.
Section
3.3 Additional
Indemnification. Indemnification similar to that specified in
the preceding paragraphs of this Article III (with appropriate modifications)
shall be given by the Company and the Investor with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities
Act. The provisions of this Article III shall be in addition to any
other rights to indemnification, contribution or other remedies which an Investor Indemnified Person or a Company Indemnified Person may have
pursuant to law, equity, contract or otherwise.
To the
extent that any indemnification provided for herein is prohibited or limited by
law, the indemnifying party will make the maximum contribution with respect to
any amounts for which it would otherwise be liable under this Article III to the
fullest extent permitted by law. However, (a) no contribution
will be made under circumstances where the maker of such contribution would not
have been required to indemnify the indemnified party under the fault standards
set forth in this Article III, (b) if the Investor is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act), no Investor Indemnified Person will be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any indemnification
obligations under this Agreement) by the Investor will be limited in amount to
the proceeds received by the Investor from sales of Registrable
Securities.
ARTICLE
IV
MISCELLANEOUS
Section
4.1 No Outstanding Registration
Rights. Except as otherwise disclosed in accordance with the
Purchase Agreement or in the Commission Documents, the Company represents and
warrants to the Investor that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any
jurisdiction.
Section
4.2 Term. The
registration rights provided to the holders of Registrable Securities hereunder,
and the Company’s obligation to keep the Registration Statement effective, shall
terminate at the earlier of (a) such time that is one year following the
termination of the Purchase Agreement, (b) such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities, or
(c) upon the consummation of an “Excluded Merger or
Sale” as defined in the Warrant or an event described in the
last sentence of Section 6(d) or Section 6(e) of the
Warrant. Notwithstanding the foregoing, Section 1.1(d), Article
III, Section 4.7, Section 4.8, Section 4.9, Section 4.10,
Section 4.11 and Section 4.13 shall survive the termination
of this Agreement.
Section
4.3 Rule 144. The
Company will, at its expense, promptly take such action as holders of
Registrable Securities may reasonably request to enable such holders of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act (“Rule 144”), as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission;
provided, that such holders of Registrable Securities may not make any such
request more than once in any calendar quarter during the term of this
Agreement. If at any time the Company is not required to file
such reports, it will, at its expense, forthwith upon the written request of any
holder of Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of
Rule 144(c)(2) or such other information as necessary to permit sales
pursuant to Rule 144. Upon the request of the Investor, the
Company will deliver to the Investor a written statement, signed by the
Company’s principal financial officer, as to whether it has complied with such
requirements.
9
Section
4.4 Certificate. The
Company will, at its expense, forthwith upon the request of any holder of
Registrable Securities, deliver to such holder a certificate, signed by the
Company’s principal financial officer, stating (a) the Company’s name,
address and telephone number (including area code), (b) the Company’s
Internal Revenue Service identification number, (c) the Company’s
Commission file number, (d) the number of shares of each class of capital
stock outstanding as shown by the most recent report or statement published by
the Company, and (e) whether the Company has filed the reports required to be
filed under the Exchange Act for a period of at least ninety (90) days prior to
the date of such certificate and in addition has filed the most recent annual
report required to be filed thereunder.
Section
4.5 Amendment and
Modification. Any provision of this Agreement may be waived,
provided that such waiver is set forth in a writing executed by the Company and
the holder(s) of the majority of then-outstanding Registrable
Securities. The provisions of this Agreement, including the
provisions of this sentence, may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given, with
the written consent of the Company and the holder(s) of the majority of
then-outstanding Registrable Securities. No course of dealing between
or among any Person having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any person under or by reason of this Agreement.
Section
4.6 Successors and Assigns;
Entire Agreement. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. The Company may
assign this Agreement at any time in connection with a sale or acquisition of
the Company, whether by merger, consolidation, sale of all or substantially all
of the Company’s assets, or similar transaction, without the consent of the
Investor, provided that the successor or acquiring Person or entity agrees in
writing to assume all of the Company’s rights and obligations under this
Agreement. Investor may assign its rights and obligations under this
Agreement only with the prior written consent of the Company, and any purported
assignment by the Investor absent the Company’s consent shall be null and
void. This Agreement, together with the Purchase Agreement and the
Warrant sets forth the entire agreement and understanding between the parties as
to the subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
Section
4.7 Severability. If
any provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision; provided that, if the severance
of such provision materially changes the economic benefits of this Agreement to
either party as such benefits are anticipated as of the date hereof, then such
party may terminate this Agreement on five (5) business days prior written
notice to the other party. In such event, the Purchase Agreement will
terminate simultaneously with the termination of this Agreement.
10
Section
4.8 Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be given in accordance with
Section 10.4 of the Purchase Agreement.
Section
4.9 Governing Law; Dispute
Resolution. This Agreement shall be construed under the laws
of the State of New York.
Section
4.10 Headings. The
headings in this Agreement are for convenience of reference only and shall not
constitute a part of this Agreement, nor shall they affect their meaning,
construction or effect.
Section
4.11 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed to be an original instrument and all of which together shall constitute
one and the same instrument.
Section
4.12 Further
Assurances. Each party shall cooperate and take such action as
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section
4.13 Absence of
Presumption. This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party drafting or causing any instrument to be drafted.
11
Execution
Copy
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
the undersigned, thereunto duly authorized, as of the date first set forth
above.
|
KINGSBRIDGE
CAPITAL LIMITED
|
|||
|
By:
|
|||
|
Xxxxx
X'Xxxxxxx
|
|||
|
Director
|
|||
|
Discovery
Laboratories, Inc.
|
|||
|
By:
|
|||
|
Name:
Xxxx X. Xxxxxx,
|
|||
|
Title: Executive
Vice President and
Chief
Financial Officer
|
|||
