UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
___________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
December
13, 2005
Date
of
Report (Date of earliest event reported)
Discovery
Laboratories, Inc.
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
000-26422
|
94-3171943
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
Number)
|
2600
Kelly Road, Suite 100
Warrington,
Pennsylvania 18976
(Address
of principal executive offices)
(215)
488-9300
(Registrant's
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[
] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
1
Item
1.01. Entry
into a Material Definitive Agreement.
On
December 13, 2005, Discovery Laboratories, Inc. (the “Company”) entered into
subscription agreements with selected institutional investors relating to
a
registered direct offering of 3,030,304 shares of the Company’s common stock.
The Company will sell the shares of common stock to the investors at a price
of
$6.60 per share for gross proceeds of approximately $20.0 million. The closing
of the offering is expected to take place on December 19, 2005, subject to
the
satisfaction of customary closing conditions. The Company expects to receive
approximately $18,915,000 in net proceeds, after deducting the placement
agent
fee and other fees and expenses of the offering.
The
common stock will be issued pursuant to a prospectus supplement filed with
the
Securities and Exchange Commission pursuant to Rule 424(b)(5) of the Securities
Act of 1933, as amended. The issuance is a shelf takedown from the Company’s
registration statement on Form S-3 (File No. 333-128929), which was declared
effective by the Securities and Exchange Commission on October 24, 2005.
The
Company also entered into a related Placement Agent Agreement with SG Cowen
& Co., LLC, who is acting as exclusive placement agent for the offering, and
the Company has agreed to pay the placement agent a fee of 4.75% of the gross
proceeds.
The
foregoing description of the offering does not purport to be complete and
is
qualified in its entirety by reference to the form of Subscription Agreement,
which is filed as Exhibit 10.1 to this report and is incorporated herein
by
reference, and the Placement Agent Agreement, which is filed as Exhibit 10.2
to
this report and is incorporated herein by reference. The Placement Agent
Agreement has been filed in order to provide investors and the Company’s
stockholders with information regarding its terms and in accordance with
applicable rules and regulations of the Securities and Exchange Commission.
The
Placement Agent Agreement contains representations and warranties that the
parties made to and solely for the benefit of each other and expressly intended
third party beneficiaries in the context of all of the terms and conditions
of
the agreement and in the context of the specific relationship between the
parties. Accordingly, investors and stockholders should not rely on the
representations and warranties. Furthermore, investors and stockholders should
not rely on the representations and warranties as characterizations of the
actual state of facts, since they were only made as of the date of the Placement
Agent Agreement. Information concerning the subject matter of such
representations and warranties may change after the date of the Placement
Agent
Agreement, which subsequent information may or may not be fully reflected
in the
Company’s reports or other filings with the Securities and Exchange
Commission.
The
press
release, dated December 14, 2005, announcing the offering, is filed as Exhibit
99.1 to this report and is incorporated herein by reference.
2
Item
9.01 Financial
Statements and Exhibits.
| (d) |
Exhibits:
|
|
|
10.1
|
Form
of Subscription Agreement
|
|
10.2
|
Placement
Agent Agreement, dated December 13, 2005, by and between the Company
and
SG Cowen & Co., LLC, as placement
agent
|
|
99.1
|
Press
release, dated December 14, 2005
|
3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| Discovery Laboratories, Inc. | ||
| |
|
|
| By: | /s/ Robert J. Capetola | |
|
Name: Robert J. Capetola, Ph.D. |
||
| Title: President and Chief Executive Officer | ||
Date: December
14, 2005
4
Exhibit
10.1
[Form
of]
SUBSCRIPTION
AGREEMENT
Discovery
Laboratories, Inc.
2600
Kelly Road
Warrington,
Pennsylvania 18976
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 on the signature page hereto 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
3,030,304 shares (the “Shares”)
of its
Common Stock, par value $0.001 per share (the “Common
Stock”),
subject to adjustment by the Company’s Board of Directors, or a committee
thereof, for a purchase price of $6.60 per share (the “Purchase
Price”).
3. The
offering and sale of the Shares (the “Offering”)
are
being made pursuant to (a) an effective Registration Statement on Form S-3,
as
amended (including the Prospectus contained therein (the “Base
Prospectus”),
the
“Registration
Statement”)
filed
by the Company with the Securities and Exchange Commission (the “Commission”),
(b)
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 (the “Time
of Sale Prospectus”),
and
(c) a Prospectus Supplement (the “Prospectus
Supplement”)
containing certain supplemental information regarding the Shares and terms
of
the Offering that will be filed with the Commission and delivered, or otherwise
made available, to the Investor 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 number of shares
of
Common Stock set forth on the signature page hereto for the aggregate purchase
price set forth on the signature page hereto; provided, prior to the execution
of this Agreement by the Company, that the Company shall have the right in
its
absolute discretion to reject this Agreement. 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.
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. NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT
BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
|
|
(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:
|
THE
CITIBANK PRIVATE BANK
153
East
53rd
Street
New
York,
NY 10043
ABA
#
021-000-089
Account
Name: Discovery Laboratories, Inc.
Account
Number: 49492878
-
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 at the Closing directly to the account(s)
at SG Cowen & Co., LLC identified by the Investor and simultaneously
therewith payment shall be made from such account(s) to the Company
through DTC). NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT
BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
|
|
(I)
|
NOTIFY
SG COWEN & CO., LLC OF THE ACCOUNT OR ACCOUNTS AT SG COWEN & CO.,
LLC TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR,
AND
|
|
(II)
|
CONFIRM
THAT THE ACCOUNT OR ACCOUNTS AT SG COWEN &
CO., LLC
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.
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 any of its affiliates and (b) it has no direct or indirect
affiliation or association with any NASD member. Exceptions:
(If
no
exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
2
Number
of
Shares: _______________________________
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: December __, 2005
__________________________
INVESTOR
By:__________________________________
Print
Name:____________________________
Title:_________________________________
Address:______________________________
__________________________
__________________________
Agreed
and Accepted
this
__th
day of December, 2005:
DISCOVERY
LABORATORIES, INC.
By:_______________________________
Name:
Robert J. Capetola, Ph.D.
Title:
President and Chief Executive Officer
3
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 (as defined in Section
3.1),
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
of
Common Stock 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 intends to pay SG Cowen & Co., LLC (the
“Placement
Agent”)
a fee
of four and three quarters percent (4 3/4%) of the gross proceeds (the
“Placement
Fee”)
in
respect of the sale of Shares to the Investors.
2.4 The
Company has entered into a Placement Agent Agreement (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.
A copy
of the Placement Agreement is available upon request.
3. Closings
and Delivery of the Shares and Funds.
3.1 Closing.
The
completion of the purchase and sale of the Shares (the “Closing”)
will
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. At the Closing, (a) the
Company will 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 (a)
Conditions
to the Company’s Obligations.
The
Company’s obligation to issue the Shares being purchased by the Investor to the
Investor will be subject to the receipt by the Company of the purchase price
for
the Shares being purchased hereunder as set forth on the Signature Page and
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
(collectively, the “Company
Closing Conditions”).
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.
4
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 13, 2005, by and among the Company, the Placement Agent and
Brown
Raysman Millstein Felder & Steiner LLP (the “Escrow
Agent”):
THE
CITIBANK PRIVATE BANK
153
East
53rd
Street
New
York,
NY 10043
ABA
#
021-000-089
Account
Name: Discovery Laboratories, Inc.
Account
Number: 49492878
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 the Placement Agent, of the Company Closing Conditions.
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 and the Investor agree 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 the Placement Agent 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).
Investor
acknowledges that the Escrow Agent acts as counsel to the Placement Agent
and
shall have the right to continue to represent the Placement Agent, in any
action, proceeding, claim, litigation, dispute, arbitration or negotiation
in
connection with the Offering, and Investor hereby consents thereto and waives
any objection to the continued representation of the Placement Agent by the
Escrow Agent in connection therewith based upon the services of the Escrow
Agent
under the Escrow Agreement, without waiving any duty or obligation the Escrow
Agent may have to any other person.
(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 SG Cowen & Co., LLC
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.
5
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
purchased by such Investor by means of an electronic book-entry delivery.
Such
DWAC shall indicate the settlement date for the deposit of the Shares being
purchased by such Investor, which date shall be provided to the Investor
by the
Placement Agent. 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 being purchased by such Investor 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 SG Cowen & Co., LLC of the account or accounts at SG
Cowen & Co., LLC to be credited with the Shares being purchased by such
Investor. On the Closing Date, the Company shall deliver the number of Shares
purchased by such Investor to the Investor directly to the account(s) at
SG
Cowen & Co., LLC identified by Investor and simultaneously therewith payment
shall be made from such account(s) to the Company through DTC.
4. Representations,
Warranties and Covenants of the Investor.
4.1 The
Investor represents and warrants to, and covenants with, the Company that
(a)
the Investor 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 being
purchased hereby, including investments in securities issued by the Company
and
investments in comparable companies, and has requested, received, reviewed
and
considered all information it deemed relevant in making an informed decision
to
purchase the Shares being purchased hereby, (b) the Investor has answered
all
questions on the Signature Page 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) the Investor,
in
connection with its decision to purchase the number of shares set forth on
the
Signature Page, relied only upon the Base Prospectus, the Prospectus Supplement,
the Company’s regular reports on Forms 10-K, 10-Q and 8-K as filed by the
Company with the Commission, and the representations and warranties of the
Company contained herein.
4.2 The
Investor acknowledges, represents and agrees that 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. Each Investor outside the United States 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. The
Placement Agent is not authorized to make and has not made any representation
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.
6
4.3 The
Investor further represents and warrants to, and covenants with, the Company
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 the indemnification agreements of the Investors herein may
be
legally unenforceable.
4.4 The
Investor understands that nothing in this Agreement 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 The
Investor represents that the final Base Prospectus, dated October 24, 2005,
which is a part of the Company’s Registration Statement, has been delivered or
otherwise made available to the Investor for its review prior to or in
connection with the receipt of this Agreement. The Investor acknowledges
that,
if applicable, any Time of Sale Prospectus will be delivered, or otherwise
made
available to the Investor before this Agreement will be deemed to be
effective.
4.6 The
Investor represents, warrants and agrees that, since the earlier to occur
of (i)
the date on which the Placement Agent first contacted the Investor about
the
Offering and (ii) the date that is the tenth (10th) trading day prior to
the
date of this Agreement, it has not engaged in any short selling of the Company's
securities, or established or increased any "put equivalent position" as
defined
in Rule 16(a)-1(h) under the Securities Exchange Act of 1934 with respect
to the
Company's securities.
5. Survival
of Representations, Warranties and Agreements. 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 hereby will survive the execution of this Agreement, the
delivery to the Investor of the Shares being purchased by such Investor and
the
payment therefor; provided,
however,
that any
claims made by an Investor pursuant to Section 2.4 hereof in respect of any
breach of the representations, warranties, covenants and agreements of the
Company contained in the Placement Agreement must be made by the Investor
against the Company prior to the date which is thirty (30) days after the
date
that the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2007 is filed with the Commission.
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.
2600
Kelly Road
Warrington,
Pennsylvania 18976
Attention:
Robert J. Capetola, Ph.D.
Phone:
(215) 488-9300
Telecopy:
(215) 488-9301
7
with
copies to:
Dickstein
Shapiro Morin & Oshinsky LLP
1177
Avenue of the Americas, 47th Floor
New
York,
New York 10036-2714
Attention:
Ira L. Kotel, Esq.
Phone:
(212) 835-1466
Telecopy:
(212) 997-9880
(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.
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 any 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. The Company and the Investor acknowledge and agree that
the
Company shall deliver its counterpart to the Investor along with the Prospectus
Supplement.
12. Confirmation
of Sale.
The
Investor acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Agreement shall constitute written confirmation of the
Company’s sale to such Investor of the Shares being purchased
hereby.
13. 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.
The
Company has filed a registration statement (Registration No. 333-128929,
including a base prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the base prospectus
in
that registration statement and other documents the Company has filed with
the
SEC for more complete information about the Company and this offering. You
may
get these documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov. Alternatively, the Company or the placement agent participating
in
the offering will arrange to send you the Base prospectus if you request
it by
calling toll-free 1-800-221-5616.
8
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:
|
_____________________ |
|
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):
|
_____________________ |
|
6. DTC
Participant Number:
|
_____________________ |
|
7. Name
of Account at DTC Participant being credited with the shares:
|
_____________________ |
|
8. Account
Number at DTC Participant being credited with the shares:
|
_____________________ |
Exhibit
10.2
3,030,304
Shares
DISCOVERY
LABORATORIES, INC.
Shares
of Common Stock
($0.001
par value)
PLACEMENT
AGENT AGREEMENT
December
13, 2005
SG
COWEN
& CO., LLC
1221
Avenue of the Americas
New
York,
New York 10020
Dear
Sirs:
Discovery
Laboratories, Inc., a Delaware corporation (the “Company”),
proposes to sell to the Purchasers, pursuant to the terms of this Placement
Agent Agreement (this “Agreement”)
and
the Subscription Agreements in the form of Exhibit
A
attached
hereto (the “Subscription
Agreements”)
entered into with the Purchasers identified therein (each a “Purchaser”
and,
collectively, the “Purchasers”),
an
aggregate of 3,030,304 shares of Common Stock, par value $0.001 per share
(the
“Common
Stock”),
of
the Company. The aggregate of 3,030,304 shares so proposed to be sold is
hereinafter referred to as the “Stock.”
The
Company hereby confirms its agreement with SG Cowen & Co., LLC
(“SG
Cowen”)
as
follows (certain terms used herein are defined in Section
14
hereof):
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 SG Cowen to act as its exclusive agent (in such
capacity, the “Placement
Agent”)
to
solicit offers for the purchase of all or part of the Stock from the Company
in
connection with the proposed offering of the Stock (the “Offering”).
Until
the earlier of the termination of this Agreement or the Closing Date (as
defined
in Section
3
hereof),
the Company shall not, without the prior consent of the Placement Agent,
solicit
or accept offers to purchase Stock otherwise than through the Placement
Agent.
(b)
The
Placement Agent agrees, as agent of the Company, to use its commercially
reasonable efforts to solicit offers to purchase the Stock from the Company
on
the terms and subject to the conditions set forth in the Base Prospectus
(as
defined below) and the Prospectus Supplement (as defined below). The Placement
Agent shall make commercially reasonable efforts to assist the Company in
obtaining performance by each Purchaser whose offer to purchase Stock 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 purchase any Stock
for
its own account and, in soliciting purchases of Stock, 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(c),
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 Stock from
the
Company as principal and any such purchases by the Placement Agent (or its
affiliates) shall be disclosed to the Company (including the identity of
such
purchaser).
(c)
Subject
to the provisions of this Section
1,
offers
for the purchase of Stock 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 Stock received by it as agent
of the
Company. The Company shall have the sole right in its absolute discretion
to
accept offers to purchase the Stock and in its absolute discretion may reject
any such offer, in whole or in part. The Placement Agent shall have the right,
in its discretion reasonably exercised, subject to giving prior notice to
the
Company, to reject any offer to purchase Stock 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
purchases of the Stock by the Purchasers shall be evidenced by the execution
of
the Subscription Agreements by each of the parties thereto.
(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 amount equal to
four
and three quarters percent (4 3/4%) of the gross proceeds received by the
Company from the sale of the Stock on such Closing Date.
(f)
No
Stock
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 Stock
shall have been delivered to the Purchaser thereof against payment by such
Purchaser. If the Company shall default in its obligations to deliver Stock
to a
Purchaser with whom it has entered into a binding Subscription Agreement,
the
Company shall indemnify and hold the Placement Agent harmless against any
loss,
claim or damage arising from or as a result of such default by the
Company.
(g) The
Placement Agent agrees to furnish the Company with a copy of each proposed
free
writing prospectus prepared by or on behalf of the Placement Agent before
its
first use and shall not use any free writing prospectus without the Company’s
prior written consent (which shall not be unreasonably withheld).
2
2. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, the Placement Agent
and the
Purchasers that:
(a) The
Company meets the requirements for use of Form S-3 under the
Securities
Act of 1933, as amended (the “Securities
Act”),
and
has filed with the Securities and Exchange Commission (the “Commission”)
a
registration statement on such form (Registration File No. 333-128929), which
became effective as of October 24, 2005, for the registration under the
Securities Act of the Stock. Such registration statement meets the requirements
set forth in Rule 415(a)(1)(x) under the Securities Act and complies in all
material respects with said Rule. The Company will file with the Commission
pursuant to Rule 424(b) under the Securities Act, and the rules and regulations
(the “Rules
and Regulations”)
of the
Commission promulgated thereunder, a supplement to the form of prospectus
included in such registration statement relating to the placement of the
Stock
and the plan of distribution thereof and has advised the Placement Agent
of all
further information (financial and other) with respect to the Company required
to be set forth therein. Such registration statement, including the exhibits
thereto, as amended at the date of this Agreement, is hereinafter called
the
“Registration
Statement”;
such
prospectus in the form in which it appears in the Registration Statement
is
hereinafter called the “Base
Prospectus”;
and
the supplemented form of prospectus, in the form in which it will be filed
with
the Commission pursuant to Rule 424(b) (including the Base Prospectus as
so
supplemented) is hereinafter called the “Prospectus
Supplement.”
Any
reference herein to the Registration Statement, the Base Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the documents
incorporated by reference therein (the “Incorporated
Documents”)
pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
on or
before the date of this Agreement, or the issue date of the Base Prospectus
or
the Prospectus Supplement, as the case may be; and any reference herein to
the
terms “amend,”“amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed
to
refer to and include the filing of any document under the Exchange Act after
the
date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated therein
by
reference. All references in this Agreement to financial statements and
schedules and other information which is “contained,”“included,”“described,”“set
forth” or “stated” in the Registration Statement, the Base Prospectus or the
Prospectus Supplement (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, the Base Prospectus or the Prospectus Supplement,
as the
case may be. No stop order suspending the effectiveness of the Registration
Statement or the use of the Base Prospectus or the Prospectus Supplement
has
been issued, and no proceeding for any such purpose is pending or has been
initiated or, to the Company's knowledge, is threatened by the Commission.
For
purposes of this Agreement, “free
writing prospectus”
has the
meaning set forth in Rule 405 under the Securities Act and the “Time
of Sale Prospectus”
means
the Base Prospectus, together with the free writing prospectuses, if any,
used
in connection with the Offering, including any documents incorporated by
reference therein. All references in this Agreement to the Registration
Statement, a Base Prospectus, the Time of Sale Prospectus and the Prospectus
Supplement, or any amendments or supplements to any of the foregoing shall
be
deemed to include any copy thereof filed with the Commission pursuant to
its
Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
3
(b) The
Registration Statement (and any further documents to be filed with the
Commission) contains all exhibits and schedules as required by the Securities
Act. Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material respects
with
the Securities Act and the Exchange Act and the applicable Rules and Regulations
and did not and, as amended or supplemented, if applicable, will not, 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. The Base Prospectus, the Time of Sale Prospectus, if any, and
the
Prospectus Supplement, each as of its respective date, comply in all material
respects with the Securities Act and the Exchange Act and the applicable
Rules
and Regulations. Each of the Base Prospectus, the Time of Sale Prospectus,
if
any, and the Prospectus Supplement, as amended or supplemented, did not and
will
not contain as of the date thereof any untrue statement of a material fact
or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The
Incorporated Documents, when they were filed with the Commission, conformed
in
all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, and none of such documents, when they were filed with
the
Commission, contained any untrue statement of a material fact or omitted
to
state a material fact necessary to make the statements therein, in light
of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Base Prospectus,
the
Time of Sale Prospectus, if any, or Prospectus Supplement, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the applicable Rules and Regulations,
as
applicable, and will not contain any untrue statement of a material fact
or omit
to state a material fact necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, the Company makes no representations or warranties as to
information, if any, contained in or omitted from the Time of Sale Prospectus,
if any, or the Prospectus Supplement or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished in
writing
to the Company by or on behalf of the Placement Agent specifically for use
in
the Registration Statement, the Time of Sale Prospectus, if any, or the
Prospectus Supplement, which information the parties hereto agree is limited
to
the Placement Agent’s Information as defined in Section
16.
No
post-effective amendment to the Registration Statement reflecting any facts
or
events arising after the date thereof which represent, individually or in
the
aggregate, a fundamental change in the information set forth therein is required
to be filed with the Commission. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby
that
(x) have not been filed as required pursuant to the Securities Act or (y)
will
not be filed within the requisite time period. There are no contracts or
other
documents required to be described in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits
or
schedules to the Registration Statement, which have not been described or
filed
as required.
4
(c) The
Company is eligible to use free writing prospectuses in connection with the
Offering pursuant to Rules 164 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 and the applicable
rules
and regulations of the Commission thereunder. 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 behalf of or used by the Company
complies or will comply in all material respects with the requirements of
the
Securities Act and the applicable rules and regulations of the Commission
thereunder. The Company will not, without the Placement Agent’s consent,
prepare, use or refer to, any free writing prospectus related to the Offering.
(d) The
Company has delivered, or will as promptly as practicable deliver, to the
Placement Agent complete conformed copies of the Registration Statement and
of
each consent and certificate of experts filed as a part thereof, and conformed
copies of the Registration Statement (without exhibits) and the Base Prospectus,
the Time of Sale Prospectus, if any, and the Prospectus Supplement, as amended
or supplemented, in such quantities and at such places as the Placement Agent
reasonably requests. Neither the Company nor any of its directors and officers
has distributed and none of them will distribute, prior to the completion
of the
distribution of Stock, any offering material in connection with the offering
and
sale of the Stock other than the Base Prospectus, the Time of Sale Prospectus,
if any, the Prospectus Supplement, the Registration Statement, copies of
the
documents incorporated by reference therein and any other materials permitted
by
the Securities Act.
(e) Each
of
the Company and Acute Therapeutics, Inc., a wholly-owned subsidiary of the
Company (the “Subsidiary”),
have
been duly organized and are validly existing as corporations or other legal
entities in good standing (or the equivalent thereof, if any) under the laws
of
their respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing (or the equivalent thereof, if any) as
foreign
corporations in each jurisdiction in which their respective ownership or
lease
of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold
their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified and in good standing or have
such
power or authority would not have, singularly or in the aggregate, a material
adverse effect on the condition (financial or otherwise), results of operations,
business, properties or prospects of the Company and its Subsidiary taken
as a
whole (a “Material
Adverse Effect”).
5
(f) The
Stock
to be issued and sold by the Company hereunder and under the Subscription
Agreements has 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 nonassessable and free of any preemptive or similar rights.
The
Stock conforms to the description thereof contained in the Base Prospectus,
the
Prospectus Supplement and the Time of Sale Prospectus, if any.
(g) The
Company has an authorized capitalization as set forth in the Base Prospectus,
the Prospectus Supplement and the Time of Sale Prospectus, if any, all of
the
issued and outstanding shares of capital stock of the Company have been duly
and
validly authorized and issued, are fully paid and non-assessable, have been
issued in compliance with federal and state securities laws, and conform
to the
description thereof contained in the Base Prospectus, the Prospectus Supplement
and the Time of Sale Prospectus, if any. None of the outstanding shares of
Common Stock 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, except for such rights as may have been fully satisfied or waived.
There are no authorized options or authorized or outstanding 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 its Subsidiary that have been granted
by the
Company other than those accurately described in the Base 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, as described
in the Base Prospectus completely, accurately and fairly present the information
required to be shown with respect to such plans, arrangements, options and
rights.
(h) All
the
outstanding shares of capital stock of the Subsidiary have been duly authorized
and validly issued, are fully paid and nonassessable and, except to the extent
set forth in the Base Prospectus, are owned directly by the Company, free
and
clear of any claim, lien, encumbrance, security interest, defect or restriction
upon voting or transfer or any other claim of any kind (“Liens”).
(i) The
Company has the full right, power and authority to enter into this Agreement
and
each of the Subscription Agreements and to perform and to discharge its
obligations hereunder and thereunder; and each of this Agreement and each
of the
Subscription Agreements has been duly authorized, executed and delivered
by the
Company, and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting creditors’ 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).
6
(j) The
execution, delivery and performance of this Agreement and the Subscription
Agreements by the Company and the consummation of the transactions contemplated
hereby and thereby will not conflict with or result in a breach or violation
of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to
which the Company or its Subsidiary is a party or by which the Company or
its
Subsidiary is bound or to which any of the property or assets of the Company
or
its Subsidiary is subject, nor will such actions result in any violation
of the
provisions of (A) the charter or by-laws of the Company or its Subsidiary
or (B)
any statute, law, rule or regulation or any judgment, order or decree of
any
court or governmental agency or body having jurisdiction over the Company
or its
Subsidiary or any of their properties or assets, except, with respect to
clause
(B), any violation which, singularly or in the aggregate, would not have
a
Material Adverse Effect.
(k) There
is
no franchise, contract, lease, instrument or other document of a character
required by the Securities Act or the Rules and Regulations to be described
in
the Base Prospectus or the Prospectus Supplement, or to be filed as an exhibit
to the Registration Statement, which is not described or filed as required;
and
all statements summarizing any such franchises, contracts, leases, instruments
or other documents or legal matters contained in the Registration Statement
are
accurate and complete in all material respects. Other than as described in
the
Base Prospectus, no such franchise, contract, lease, instrument or other
document has been suspended or terminated for convenience or default by the
Company or any of the other parties thereto, the Company has not sent or
received any communication regarding intent not to renew any such franchise,
contract, lease, instrument or other document, and the Company has not received
notice or any other knowledge of any such pending or threatened suspension,
termination or non-renewal, except for such pending or threatened suspensions,
terminations or non-renewals that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.
(l)
All
existing minute books of the Company and its Subsidiary, including all existing
records of all meetings and actions of the board of directors (including,
Audit,
Compensation, Nomination/Corporate Governance and other board committees)
and
stockholders of the Company through the date of the latest meeting and action
(collectively, the “Corporate
Records”)
have
been made available to the Placement Agent and counsel for the Placement
Agent.
All such Corporate Records are complete and accurately reflect, in all material
respects, all transactions referred to in such Corporate Records. There are
no
material transactions, agreements or other actions of the Company that are
not
properly approved and/or recorded in the Corporate Records.
7
(m) No
consent, approval, authorization, filing with or order of or registration
with,
any court or governmental agency or body is required in connection with the
transactions contemplated herein or in the Subscription Agreements, except
such
as have been obtained or made under the Securities Act or the Exchange Act,
such
as may be required under the securities, or blue sky, laws of any jurisdiction
in connection with the offer and sale of the Stock by the Company in the
manner
contemplated herein and in the Base Prospectus and the Prospectus Supplement,
and the filing with The Nasdaq Stock Market (“Nasdaq”)
of a
Notification Form: Listing of Additional Shares.
(n) Except
as
described in the Base Prospectus, (i) no person has the right, contractual
or
otherwise, to cause the Company to issue or sell to it any shares of Common
Stock or shares of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights, rights
of
first refusal or other rights to purchase any shares of Common Stock or shares
of any other capital stock or other securities of the Company, and (iii)
except
as provided herein, no person has the right to act as an underwriter, placement
agent or financial advisor to the Company in connection with and as a result
of
the offer and sale of the Stock, in the case of each of the foregoing clauses
(i), (ii) and (iii), whether as a result of the filing or effectiveness of
the
Registration Statement or the sale of the Stock as contemplated thereby or
otherwise; no person has the right, contractual or otherwise, to cause the
Company to register under the Securities Act any shares of Common Stock or
shares of any other capital stock or other securities of the Company, or
to
include any such shares or interests in the Registration Statement or the
offering contemplated thereby, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Stock as
contemplated thereby or otherwise, except for persons and entities who have
expressly waived such right or who have been given timely and proper notice
and
have failed to exercise such right within the time or times required under
the
terms and conditions of such right, and the Company is not required to file
any
registration statement for the registration of any securities of any person
or
register any such securities pursuant to any other registration statement
filed
by the Company under the Securities Act for a period of at least 90 days
after
the date hereof.
(o) The
financial statements, together with the related notes and schedules, of the
Company included in the Base Prospectus, the Prospectus Supplement, the
Registration Statement or the Time of Sale Prospectus, if any, or incorporated
by reference therein, as the case may be, present fairly the financial
condition, results of operations and cash flows of the Company and its
consolidated subsidiary as of the dates and for the periods indicated, comply
in
all material respects with the Securities Act and the Rules and Regulations
thereunder, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. No other financial statements or supporting schedules or exhibits
are
required by the Securities Act or the Rules and Regulations thereunder to
be
included in the Base Prospectus, the Prospectus Supplement, the Registration
Statement or the Time of Sale Prospectus, if any, or incorporated by reference
therein, as the case may be. As of November 30, 2005, the Company had cash
and
marketable securities as set forth in that certain representation letter,
dated
as of the date of this Agreement, delivered by the Company to the Placement
Agent.
8
(p) Except
as
set forth in the Base Prospectus, there is no legal or governmental proceeding
pending to which the Company or its Subsidiary is a party or of which any
property or assets of the Company or its Subsidiary is the subject which
is
required to be described in the Base Prospectus and is not described therein,
or
which, singularly or in the aggregate, if determined adversely to the Company
or
its Subsidiary, would be likely to have a Material Adverse Effect or prevent
or
adversely affect the ability of the Company to perform its obligations under
this Agreement; and to the best of the Company’s knowledge, except as set forth
in the Base Prospectus, no such proceedings are threatened or contemplated
by
governmental authorities or threatened by others.
(q) The
Company and its Subsidiary have good and marketable title to all property
(real
and personal) described in the Registration Statement, the Base Prospectus,
the
Prospectus Supplement and the Time of Sale Prospectus, if any, as being owned
by
the Company or its Subsidiary, free and clear of all Liens, except for those
Liens that do not materially interfere with the use made or proposed to be
made
of such property by the Company or its Subsidiary or that would not have
a
Material Adverse Effect; all the property described in the Registration
Statement, the Base Prospectus, the Prospectus Supplement and the Time of
Sale
Prospectus, if any, as being held under lease by the Company or its Subsidiary
is held thereby under valid, subsisting and enforceable leases except where
the
failure to be valid, subsisting or enforceable would not have a Material
Adverse
Effect.
(r) Neither
the Company nor its Subsidiary is (i) in violation of any provision of its
charter or bylaws, (ii) in default in any respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default,
in
the due performance or observance of any term, covenant, or condition of
any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to
which it is a party or by which it is bound or to which any of its property
or
assets is subject, or (iii) in violation in any respect of any statute, law,
rule, regulation, ordinance, judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company, its Subsidiary or any of its properties,
as applicable (including, without limitation, those administered by the Food
and
Drug Administration of the U.S. Department of Health and Human Services (the
“FDA”)
or by
any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA), except, with
respect to clauses (ii) and (iii), any violations or defaults which, singularly
or in the aggregate, would not have a Material Adverse Effect.
9
(s) The
contracts described in the Company’s regular reports on Forms 10-Q, 10-K, and
8-K as filed by the Company since March 16, 2005 with the Commission or
incorporated by reference therein that are material to the Company are in
full
force and effect on the date hereof, and neither the Company nor, to the
Company's knowledge, any other party to such contracts is in breach of or
default under any of such contracts which would have a Material Adverse
Effect.
(t) No
labor
problem or dispute with the employees of the Company exists or, to the Company’s
knowledge, is threatened or imminent, which might be expected to have a Material
Adverse Effect. The Company is not aware that any key employee or significant
group of employees of the Company plans to terminate employment with the
Company.
(u) The
Company has fulfilled its obligations, if any, under the minimum funding
standards of Section 302 of the United States Employee Retirement Income
Security Act of 1974 (“ERISA”)
and
the regulations and published interpretations thereunder with respect to
each
“plan”
(as
defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company are eligible to participate
and each such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. No “prohibited
transaction”
(as
defined in Section 406 of ERISA, or Section 4975 of the Internal Revenue
Code of
1986, as amended from time to time (the “Code”))
has
occurred with respect to any employee benefit plan which could have a Material
Adverse Effect. The Company has not incurred any unpaid liability to the
Pension
Benefit Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA. Each “pension
plan”
(as
defined in ERISA) for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified
in all
material respects and nothing has occurred, whether by action or by failure
to
act, which could cause the loss of such qualification.
(v) The
Company maintains insurance in such amounts and covering such risks as the
Company reasonably considers adequate for the conduct of its business and
the
value of its properties, all of which insurance is in full force and effect,
except where the failure to maintain such insurance could not reasonably
be
expected to have a Material Adverse Effect.
(w) Each
of
the Company and its Subsidiary has made all filings, applications and
submissions required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate federal, state
or
foreign regulatory authorities (including, without limitation, the FDA, and
any
other foreign, federal, state or local government or regulatory authorities
performing functions similar to those performed by the FDA) necessary to
conduct
its businesses (collectively, “Permits”),
except for such Permits which the failure to obtain or comply with could
not
reasonably be expected to have a Material Adverse Effect, and is in compliance
with the terms and conditions of all such Permits; all of such Permits held
by
each of the Company and
its
Subsidiary are
valid
and in full force and effect except as could not have a Material Adverse
Effect;
there is no pending or threatened action, suit, claim or proceeding which
may
cause any such Permit to be limited, revoked, cancelled, suspended, modified
or
not renewed and each of the Company and
its
Subsidiary has
not
received any notice of proceedings relating to the limitation, revocation,
cancellation, suspension, modification or non-renewal of any such Permit
which,
singularly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or
contemplated by the Base Prospectus or the Prospectus Supplement.
10
(x)
Ernst
& Young LLP, who has certified certain financial statements of the Company
and delivered its report with respect to the audited consolidated financial
statements and schedules included in the Base Prospectus, the Prospectus
Supplement, the Time of Sale Prospectus, if any, or the Registration Statement,
or incorporated by reference therein, as the case may be, is an independent
public accountant with respect to the Company within the meaning of the
Securities Act and the Rules and Regulations.
(y) Each
of
the Company and its Subsidiary has filed all foreign, federal, state and
local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect, except as set forth in the Base Prospectus) and has paid
all
taxes required to be paid by it and any other assessment, fine or penalty
levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested
in
good faith or as would not have a Material Adverse Effect, except as set
forth
in the Base Prospectus.
(z)
The
principal executive officer and principal financial officer of the Company
have
made all certifications required by the Sarbanes-Oxley Act of 2002 and the
rules
and regulations promulgated in connection therewith (the “Sarbanes-Oxley
Act”),
and
the statements contained in any such certification are complete and correct.
The
Company maintains “disclosure controls and procedures” (as defined in Rule
13a-14(c) under the Exchange Act), and such controls and procedures are designed
(i) to ensure that information required to be disclosed by the Company in
the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms and (ii) to ensure that information required to be disclosed
by
the Company in the reports that it files or submits under the Exchange Act
is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate
to
allow timely decisions regarding required disclosure. There has been no fraud,
whether or not material, that involves management or other employees who
have a
significant role in the Company's internal controls. The Company is otherwise
in
compliance in all respects with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated by the Commission
(and intends to comply with all applicable provisions that are not yet effective
upon effectiveness).
11
(aa) The
Company maintains a system of internal accounting controls sufficient to
provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with
generally accepted accounting principles and to maintain accountability of
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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(bb) Each
of
the Company and its Subsidiary (i) is in compliance in all material respects
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental
Laws”),
(ii)
has received and is in compliance with all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its business
and
(iii) has not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated by the Base Prospectus (exclusive of any supplement thereto).
To
the best of its knowledge, the Company has not been named as a “potentially
responsible party”
under
the Comprehensive Environmental Response, Compensation, and Liability Act
of
1980, as amended.
(cc) In
the
ordinary course of its business, the Company periodically reviews the effect
of
Environmental Laws on the business, operations and properties of each of
the
Company and its Subsidiary, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any capital
or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singularly
or in
the aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated by the Base Prospectus.
12
(dd) Each
of
the Company and its Subsidiary own, possess, license or have other rights
to use
all foreign and domestic patents, patent applications, trade and service
marks,
trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and
other
intellectual property (collectively, the “Intellectual
Property”)
necessary for the conduct of the Company’s business as now conducted or as
proposed in the Base Prospectus, the Time of Sale Prospectus, if any, or
the
Prospectus Supplement, to be conducted. Except as set forth in the Base
Prospectus (a) there are no rights of third parties to any such
Intellectual Property; (b) to the Company’s knowledge, there is no infringement
by third parties of any such Intellectual Property; (c) there is no pending
or,
to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging each of the Company’s and its Subsidiary’s rights in or to
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (d) there is no pending
or, to
the best of the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property; (e) there is no pending or, to the best of the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company and
its
Subsidiary infringe or otherwise violate any patent, trademark, copyright,
trade
secret or other proprietary rights of others, and the Company is unaware
of any
other fact which would form a reasonable basis for any such claim; (f) to
the
Company’s knowledge, there is no third-party U.S. patent or published U.S.
patent application which contains claims for which an Interference Proceeding
could be commenced against any patent or patent application that is described
in
the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement as being owned by or licensed the Company, except for Interference
Proceedings based on claims under any such patents or published patent
applications as could not have a Material Adverse Effect; (g) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others claiming the ownership of and interest in the Intellectual
Property; and (h) each of the Company and its Subsidiary have taken all steps
necessary to perfect its ownership of and interest in the Intellectual
Property.
(ee) The
clinical, pre-clinical and other studies and tests conducted by or on behalf
of
or sponsored by the Company and its Subsidiary were and, if still pending,
are
being conducted in accordance with all material statutes, laws, rules and
regulations, as applicable (including, without limitation, those administered
by
the FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA). The
descriptions of the results of such studies and tests included or incorporated
by reference in the Registration Statement, the Base Prospectus, the Time
of
Sale Prospectus and the Prospectus Supplement are accurate and complete in
all
material respects and fairly present the published data derived from such
studies and tests, and the Company has no knowledge of other studies or tests
the results of which are materially inconsistent with or otherwise call into
question in any material respect the results described or referred to in
the
Base Prospectus. Neither the Company nor its Subsidiary has received any
notices
or other correspondence from the FDA or any other foreign, federal, state
or
local governmental or regulatory authority performing functions similar to
those
performed by the FDA with respect to any ongoing clinical or pre-clinical
studies or tests requiring the termination, suspension or modification of
such
studies or tests.
13
(ff) Neither
the Company nor its Subsidiary has failed to file with the applicable regulatory
authorities (including, without limitation, the FDA or any foreign, federal,
state or local governmental or regulatory authority performing functions
similar
to those performed by the FDA) any material filing, declaration, listing,
registration, report or submission; all such filings, declarations, listings,
registrations, reports or submissions were in compliance with applicable
laws
when filed, except where the failure to be in compliance did not, singularly
or
in the aggregate, have a Material Adverse Effect, and, except as described
in
the Base Prospectus, the Company has not been notified that any material
deficiencies have been asserted by any applicable regulatory authority
(including, without limitation, the FDA or any foreign, federal, state or
local
governmental or regulatory authority performing functions similar to those
performed by the FDA) with respect to any such filings, declarations, listings,
registrations, reports or submissions.
(gg) No
relationship, direct or indirect, exists between or among the Company on
the one
hand and the directors, officers, stockholders, customers or suppliers of
the
Company on the other hand which is required to be described in the Base
Prospectus and the Prospectus Supplement and which is not so
described.
(hh) Neither
the Company nor any other person associated with or acting on behalf of the
Company including, without limitation, any director, officer, agent or employee
of the Company or its Subsidiary, has, directly or indirectly, while acting
on
behalf of the Company or its Subsidiary (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses,
or
received or retained any funds, relating to political activity; (ii) made
any
unlawful payment from corporate funds to, or received or retained any unlawful
funds from, foreign or domestic government officials or employees or to or
from
foreign or domestic political parties or campaigns; (iii) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
other
unlawful payment or received or retained any other unlawful funds.
(ii) Neither
the Company nor its Subsidiary is or, after giving effect to the offering
and
sale of the Stock and the application of the proceeds thereof as described
in
the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, will become an “investment
company”
as
defined in the Investment Company Act of 1940, as amended.
(jj) Other
than as contemplated by this Agreement, neither the Company nor its Subsidiary
is a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or the Placement Agent
for
a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Stock.
14
(kk) Neither
the Company nor its Subsidiary has sustained, since the date of the latest
audited financial statements included in the Base Prospectus or the Registration
Statement, or incorporated by reference therein, as the case may be, any
material loss or interference with its business from fire, explosion, flood,
terrorist act or other calamity, whether or not covered by insurance, or
from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in or contemplated by the Base Prospectus.
(ll) Except
as
set forth in or as otherwise contemplated by the Registration Statement and
the
Base Prospectus, subsequent to the respective dates as of which information
is
given in the Registration Statement and the Base Prospectus, there has not
been
(i) any material adverse change, or any development that would reasonably
be
expected to result in a material adverse change, in the business, properties,
management, financial condition or results of operations of the Company taken
as
a whole, (ii) any transaction which is material to the Company taken as a
whole,
(iii) any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company outside the ordinary course of business,
which is material to the Company taken as a whole, (iv) any change in the
capital stock (other than the issuance of shares of Common Stock upon exercise
of stock options and warrants disclosed as outstanding in the Registration
Statement and the Base Prospectus and the grant of options in the ordinary
course of business consistent with past practice or under existing stock
option
plans described in the Registration Statement and the Base Prospectus) or
outstanding indebtedness of the Company or (v) any dividend or distribution
of
any kind declared, paid or made on the capital stock of the
Company.
(mm) Any
statistical and market-related data included in the Registration Statement,
the
Base Prospectus, the Time of Sale Prospectus, if any, or the Prospectus
Supplement are based on or derived from sources that the Company believes
to be
reliable and accurate.
(nn) The
Stock
is registered under the Exchange Act and is duly listed and admitted and
authorized for trading, subject to official notice of issuance, on the Nasdaq
National Market and the Company has taken no action designed to terminate,
or
likely to have the effect of terminating the registration of the Common Stock
under the Exchange Act or delisting or suspending from trading the Common
Stock
on the Nasdaq National Market, nor has the Company received any information
from
the Commission or Nasdaq suggesting that it is contemplating terminating
or
suspending such registration or listing.
(oo) The
Company has not taken and will not take, and will cause its affiliates (within
the meaning of Rule 144 promulgated under the Securities Act) not to take,
directly or indirectly, any action which constitutes or is designed to cause
or
result in, or which could reasonably be expected to constitute, cause or
result
in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Stock in violation of Regulation M under the Exchange
Act.
15
(pp) There
are
no affiliations with Nasdaq among the Company’s officers, directors or, to the
best of the knowledge of the Company, any five percent or greater stockholder
of
the Company, except as set forth in the Base Prospectus and the Registration
Statement or otherwise disclosed in writing to the Placement Agent.
(qq) The
Company satisfies the pre-1992 eligibility requirements for the use of a
registration statement on Form S-3 in connection with the Offering contemplated
thereby (the pre-1992 eligibility requirements for the use of the registration
statement on Form S-3 include (i) having a non-affiliate, public common equity
float of at least $150 million or a non-affiliate, public common equity float
of
at least $100 million and annual trading volume of at least three million
shares
and (ii) having been subject to the Exchange Act reporting requirements for
a
period of 36 months).
(rr) The
Company has taken all necessary actions to ensure that it will be in compliance
with all applicable corporate governance requirements set forth in the Nasdaq
Marketplace Rules that are then in effect and is actively taking steps to
ensure
that it will be in compliance with other applicable corporate governance
requirements set forth in the Nasdaq Marketplace Rules not currently in effect
upon and all times after the effectiveness of such requirements.
(ss) No
approval of the shareholders of the Company under the rules and regulations
of
any trading market (including Rule 4350 of the Nasdaq Marketplace Rules)
is
required for the Company to issue and deliver the Stock to the Purchasers.
Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or counsel for the Placement Agent in connection with the offering
of the
Stock shall be deemed a representation and warranty by the Company and its
Subsidiary, as to the matters covered thereby, to the Placement Agent and
the
Purchasers.
3. THE
CLOSING.
The
time and date of closing and delivery of the documents required to be delivered
to the Placement Agent pursuant to Section
6
hereof
shall be at 10:00 A.M., local time, on December 19, 2005 (the “Closing
Date”)
at the
office of Dickstein Shapiro Morin & Oshinsky LLP, 1177 Avenue of the
Americas, 47th Floor, New York, New York.
4. FURTHER
AGREEMENTS OF THE COMPANY.
The
Company agrees with the Placement Agent and the Purchasers:
16
(a)
(i)
to make no further amendment or supplement prior to the Closing Date to the
Registration Statement or any amendment or supplement to the Prospectus
Supplement, without the consent of the Placement Agent, which consent shall
not
be unreasonably withheld; (ii) for so long as the delivery of a prospectus
is
required in connection with the offering or sale of the Stock, to advise
the
Placement Agent promptly after it receives notice thereof, of the time when
any
amendment to the Registration Statement has been filed or becomes effective
or
any supplement to the Prospectus Supplement or any amended Prospectus Supplement
has been filed and to furnish the Placement Agent with copies thereof;
(iii)
subsequent to the date of the Prospectus Supplement and for so long as the
delivery of a prospectus is required in connection with the offering or sale
of
the Stock, to use its reasonable best efforts, to file promptly all reports
and
any definitive proxy or information statements required to be filed by the
Company with the Commission and Nasdaq pursuant to Section 13(a), 15 or 15(d)
of
the Exchange Act subsequent to the date of the Prospectus Supplement;
(iv)
subsequent to the date of any Time of Sale Prospectus and for so long as
the
delivery of a prospectus is required in connection with the offering or sale
of
the Stock, to use its reasonable best efforts, to file promptly all reports
and
any definitive proxy or information statements required to be filed by the
Company with the Commission and Nasdaq pursuant to Section 13(a), 15 or 15(d)
of
the Exchange Act subsequent to the date of the Prospectus Supplement; (iv)
to
advise the Placement Agent, promptly after it receives notices thereof, (x)
of
any request by the Commission to amend the Registration Statement or to amend
or
supplement the Prospectus Supplement or for additional information and (y)
of
the issuance by the Commission, of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto or
any
order directed at any Incorporated Document or any amendment or supplement
thereto or any order preventing or suspending the use of the Base Prospectus
or
the Prospectus Supplement or any amendment or supplement thereto, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the institution or threatening of any proceeding for any
such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus Supplement or for additional
information; and, (v) in the event of the issuance of any stop order or of
any
order preventing or suspending the use of the Base Prospectus or Prospectus
Supplement or suspending any such qualification, promptly to use its reasonable
best efforts to obtain the withdrawal of such order.
(b) To
comply
with the Securities Act and the Exchange Act, and the Rules and Regulations
thereunder, so as to permit the completion of the distribution of the Stock
as
contemplated in this Agreement and the Prospectus Supplement. If during the
period in which a prospectus is required by law to be delivered by a Placement
Agent or a dealer in connection with the distribution of Stock contemplated
by
the Prospectus Supplement, any event shall occur as a result of which, in
the
judgment of the Company or in the reasonable opinion of the Placement Agent
or
counsel for the Placement Agent, it becomes necessary to amend or supplement
the
Prospectus Supplement in order to make the statements therein, in the light
of
the circumstances existing at the time the Prospectus Supplement is delivered
to
a purchaser, not misleading, or, if it is necessary at any time to amend
or
supplement the Prospectus Supplement to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at its own
expense to the Placement Agent and to dealers, an appropriate amendment to
the
Registration Statement or supplement to the Prospectus Supplement so that
the
Prospectus Supplement as so amended or supplemented will not, in the light
of
the circumstances when it is so delivered, be misleading, or so that the
Prospectus Supplement will comply with such law. Before amending the
Registration Statement or supplementing the Base Prospectus in connection
with
the Offering, the Company will furnish the Placement Agent with a copy of
such
proposed amendment or supplement and will not file such amendment or supplement
to which the Placement Agent reasonably objects.
17
(c) Upon
request, to furnish promptly to the Placement Agent and to counsel for the
Placement Agent a copy of the Registration Statement as originally filed
with
the Commission, and each amendment thereto filed with the Commission, including
all consents and exhibits filed therewith.
(d) To
deliver promptly to the Placement Agent such number of the following documents
as the Placement Agent shall reasonably request: (i) conformed copies of
the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) the Base Prospectus,
(iii) the Prospectus Supplement (not later than 3:00 P.M., New York time,
on the
Business Day following the execution and delivery of this Agreement) and
any
amendment or supplement thereto (not later than 3:00 P.M., New York City
time,
on the Business Day following the date of such amendment or supplement);
(iv) the Time of Sale Prospectus, if any, and (v) any document incorporated
by reference in the Base Prospectus, the Time of Sale Prospectus, if any,
or the
Prospectus Supplement. The Company will pay the expenses of printing or other
production of all documents relating to the Offering.
(e) To
the
extent not available on EDGAR, to make generally available to its stockholders
as soon as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company (which need
not
be audited) complying with Section 11(a) of the Securities Act and the Rules
and
Regulations (including, at the option of the Company, Rule 158).
(f) To
promptly take from time to time such actions as the Placement Agent may
reasonably request to qualify the Stock for offering and sale under the
securities, or blue sky, laws of such jurisdictions (including without
limitation any post-filing requirements) as the Placement Agent may designate
and to continue such qualifications in effect for so long as required for
the
distribution of the Stock, and the Company will pay the fee of Nasdaq in
connection with its review of the Offering, if applicable. The Company shall
not
be obligated to qualify as a foreign corporation in any jurisdiction in which
it
is not so qualified or to file a general consent to service of process in
any
jurisdiction.
18
(g) Not
to
directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell,
or otherwise dispose of any shares of Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock for a period of 90 days
from the date of the Prospectus Supplement without the prior written consent
of
SG Cowen, other than the Company’s sale of the Stock and shares or options to
purchase shares in connection with or pursuant to joint ventures, collaborative
arrangements, strategic alliances or similar transactions with unaffiliated
third parties, stock option plans, currently outstanding equity facilities,
options, warrants or rights, and the issuance of Common Stock, stock options,
stock appreciation rights or other securities or rights pursuant to the
Company's currently existing employee benefit or equity compensation plans
or as
initial or inducement grants to new employees, directors or consultants in
the
ordinary course consistent with past practice. The Company will cause each
of
its executive officers and directors to furnish to the Placement Agent, prior
to
the Closing Date, a letter, substantially in the form of Exhibit
B
attached
hereto, pursuant to which each such person shall agree not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock for a period of 90 days from
the
date of the Prospectus Supplement, without the prior written consent of SG
Cowen.
If
(i)
the Company issues an earnings release or material news or a material event
relating to the Company occurs during the last 17 days of the lock-up period,
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, the restrictions imposed by this Section
4(g)
shall
continue to apply until the expiration of the 18-day period beginning on
the
issuance of the earnings release or the occurrence of the material news or
material event; provided, however, that this paragraph shall not apply if,
at
the time an event listed in clause (i) or (ii) above occurs, the Company
has
“actively traded securities” as defined in Rule 101(c)(1) of Regulation M of the
Exchange Act.
(h) Prior
to
the Closing Date, to furnish to the Placement Agent, as soon as they have
been
prepared, copies of any unaudited interim consolidated financial statements
of
the Company for any periods subsequent to the periods covered by the financial
statements appearing or incorporated by reference in the Base Prospectus,
the
Prospectus Supplement, the Time of Sale Prospectus, if any, or the Registration
Statement.
(i) Prior
to
the Closing Date, not to issue any press release or other communication directly
or indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company
and of
which the Placement Agent is notified), without the prior written consent
of the
Placement Agent, unless in the judgment of the Company and its counsel, and
after notification to the Placement Agent, such press release or communication
is required by law. In such event, the Company shall consult with the Placement
Agent as to the contents of such press release.
19
(j) To
apply
the net proceeds from the sale of the Stock as set forth in the Prospectus
Supplement under the heading “Use
of Proceeds.”
(k)
To
comply
in all material respects with all applicable securities and other applicable
laws, rules and regulations, including, without limitation, the Sarbanes-Oxley
Act, and use its best efforts to cause the Company’s directors and officers, in
their capacities as such, to comply with such laws, rules and regulations,
including, without limitation, the provisions of the Sarbanes-Oxley
Act.
(l) To
engage
and maintain, at its expense, a registrar and transfer agent for the
Stock.
(m) To
not
take any action prior to the Closing Date which would require the Prospectus
Supplement to be amended or supplemented pursuant to Section
4(b).
(n) To
supply
the Placement Agent with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration
of the Stock under the Securities Act.
(o) The
Company will use its best efforts to ensure that the Stock is quoted on the
Nasdaq National Market at the Closing Date.
(p) To
furnish to the Placement Agent a copy of each proposed free writing prospectus
related to the Offering to be prepared by or on behalf of, used by, or referred
to by the Company and not use or refer to any such free writing prospectus
to
which the Placement Agent reasonably objects.
(q) 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.
(r) If
the
Time of Sale Prospectus, if any, is being used 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 in writing in order to make the statements therein,
not
misleading, or if in the reasonable opinion of counsel to the Placement Agent,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Placement Agent 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, in light of the
circumstances when the Time of Sale Prospectus is delivered to a prospective
purchaser, be misleading or so that the Time of Sale Prospectus, as amended
or
supplemented, will comply with law.
20
5. PAYMENT
OF EXPENSES.
The
Company agrees with the Placement Agent to pay (a) the costs incident to
the
authorization, issuance, sale, preparation and delivery of the Stock to the
Purchasers and any taxes payable in that connection; (b) the costs incident
to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement,
Base Prospectus, the Time of Sale Prospectus, if any, and Prospectus Supplement
and any amendments and exhibits thereto or any document incorporated by
reference therein, and the costs of printing, reproducing and distributing,
this
Agreement by mail, telex or other means of communication; (d) the fees and
expenses (including related reasonable fees and expenses of counsel for the
Placement Agent) incurred in connection with filings, if any, made with Nasdaq,
if applicable; (e) any applicable listing or other fees; (f) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section
4(f)
and of
preparing, printing and distributing Blue Sky Memoranda (including related
reasonable fees and expenses of counsel to the Placement Agent, which fees
and
disbursements shall not exceed $5,000 without the prior written consent of
the
Company); (g) all fees and expenses of the registrar and transfer agent of
the
Stock; (h) the reasonable fees and expenses of counsel for the Placement
Agent
in an amount not to exceed $30,000 in the aggregate; and (i) all other costs
and
expenses incident to the performance of the obligations of the Company under
this Agreement (including, without limitation, the fees and expenses of the
Company’s counsel and the Company’s independent accountants and the travel and
other expenses incurred by Company personnel in connection with any “roadshow”
including, without limitation, any expenses advanced by the Placement Agent
on
the Company’s behalf (which will be promptly reimbursed)); provided
that,
except as otherwise provided in this Section
5
and in
Sections
7
and
9,
the
Placement Agent shall pay its own costs and expenses, including the fees
and
expenses of its counsel.
6. Conditions
to the Obligations of the Placement Agent and the Purchasers, and the Sale
of
the Stock.
The
respective obligations of the Placement Agent and the Purchasers, and the
closing of the sale of the Stock hereunder are subject to the accuracy, when
made and on the Closing Date, of the representations and warranties of the
Company contained herein, to the accuracy of the statements of the Company
and
its Subsidiary made in any certificates pursuant to the provisions hereof,
to
the performance by the Company and its Subsidiary of their obligations
hereunder, and to each of the following additional terms and
conditions:
(a) No
stop
order suspending the effectiveness of the Registration Statement shall have
been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, and any request for additional information
on the
part of the Commission (to be included in the Registration Statement, the
Base
Prospectus, the Time of Sale Prospectus, if any, or the Prospectus Supplement
or
otherwise) shall have been complied with to the reasonable satisfaction of
the
Placement Agent. Any filings required to be made by the Company in accordance
with Section
4(a)
shall
have been timely filed with the Commission.
21
(b) The
Placement Agent shall not have discovered and disclosed to the Company on
or
prior to the Closing Date that the Registration Statement, the Base Prospectus,
the Time of Sale Prospectus, if any, or the Prospectus Supplement or any
amendment or supplement thereto contains an untrue statement of a fact which,
in
the reasonable opinion of counsel for the Placement Agent, is material or
omits
to state any fact which, in the reasonable opinion of such counsel, is material
and is required to be stated therein or is necessary to make the statements
therein (in the case of the Base Prospectus, the Time of Sale Prospectus,
if
any, and the Prospectus Supplement in light of the circumstances under which
they were made) not misleading.
(c) All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery and validity of each of this Agreement, the Stock,
the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus,
if
any, and the Prospectus Supplement and all other legal matters relating to
this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement Agent,
and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such
matters.
(d) The
Placement Agent shall have received from each of (i) Dickstein Shapiro Morin
& Oshinsky LLP, corporate counsel for the Company and (ii) Woodcock Washburn
LLP, intellectual property counsel for the Company, such counsel’s written
opinion, addressed to the Placement Agent and the Purchasers and dated as
of the
Closing Date, in form and substance reasonably satisfactory to the Placement
Agent as set forth in Exhibits
C-1
and
C-2
attached
hereto, respectively.
Dickstein
Shapiro Morin & Oshinsky LLP shall also have furnished to the Placement
Agent a written statement, addressed to the Placement Agent and the Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory
to the
Placement Agent as set forth in Exhibit
D
attached
hereto.
(e) The
Placement Agent shall have received from Brown Raysman Millstein Felder &
Steiner LLP, such opinion or opinions, dated the Closing Date and addressed
to
the Placement Agent, with respect to the issuance and sale of the Stock,
the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus,
if
any, the Prospectus Supplement (together with any supplement thereto) and
other
related matters as the Placement Agent may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
22
(f) The
Company shall have furnished to the Placement Agent and the Purchasers a
certificate, dated as of the Closing Date, executed by its Chief Executive
Officer and its Chief Financial Officer stating that (i) such officers have
carefully examined the Registration Statement, the Base Prospectus, the Time
of
Sale Prospectus, if any, and the Prospectus Supplement and, in their opinion,
each of the Registration Statement (including the Base Prospectus) as of
its
effective date, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as of each such effective date, did not include any untrue statement
of a material fact and did not omit to state a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
the
Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement in light of the circumstances under which they were made) not
misleading, (ii) since the effective date of the Registration Statement no
event
has occurred which should have been set forth in a supplement or amendment
to
the Registration Statement, the Base Prospectus or the Prospectus Supplement,
(iii) to the best of their knowledge after reasonable investigation, as of
the
Closing Date, the representations and warranties of the Company and its
Subsidiary in this Agreement are true and correct and the Company and its
Subsidiary have complied with all agreements and covenants contained in this
Agreement and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, (iv) subsequent to the date of
the
most recent financial statements included or incorporated by reference in
the
Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, there has been no change in the financial position or results
of
operation of the Company and its Subsidiary that could have a Material Adverse
Effect, or any change, or any development including a prospective change,
in or
affecting the condition (financial or otherwise), results of operations,
business or prospects of the Company and its Subsidiary taken as a whole,
except
as set forth in the Base Prospectus, and (v) the Registration Statement became
effective on October 24, 2005, and to their knowledge, as of the Closing
Date
(I) no stop order suspending the effectiveness of the Registration Statement
has
been issued and no proceedings for that purpose have been commenced or are
pending before or are contemplated by the Commission and (II) no action has
been
taken by any governmental agency, body or official, and no injunction,
restraining order or order of any nature by any federal or state court has
been
issued, which would prevent the issuance of the Stock.
(g) At
the
Execution Time, the Placement Agent shall have received from Ernst & Young
LLP a letter, addressed to the Placement Agent and dated such date, in form
and
substance satisfactory to the Placement Agent (i) confirming that they are
independent certified public accountants with respect to the Company within
the
meaning of the Securities Act and the Rules and Regulations and (ii) stating
the
conclusions and findings of such firm with respect to the financial statements
and certain financial information contained or incorporated by reference
in the
Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement.
(h) On
the
Closing Date, the Placement Agent shall have received a letter (the
“bring-down
letter”)
from
Ernst & Young LLP addressed to the Placement Agent and dated the Closing
Date confirming, as of the date of the bring-down letter (or, with respect
to
matters involving changes or developments since the respective dates as of
which
specified financial information is given in the Base Prospectus and the
Prospectus Supplement as of a date not more than three Business Days prior
to
the date of the bring-down letter), the conclusions and findings of such
firm
with respect to the financial information and other matters covered by its
letter delivered to the Placement Agent concurrently with the execution of
this
Agreement pursuant to Section
6(g).
23
(i) (i)
Neither the Company nor its Subsidiary shall have sustained since the date
of
the latest audited financial statements included or incorporated by reference
in
the Base Prospectus any loss or interference with its business from fire,
explosion, flood, terrorist act or other calamity, whether or not covered
by
insurance, or from any labor dispute or court or governmental action, order
or
decree, otherwise than as set forth in or contemplated by the Base Prospectus,
and (ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or its Subsidiary or any change, or
any
development involving a prospective change, in or affecting the business,
general affairs, management, financial position, stockholders’ equity, results
of operations or prospects of the Company and its Subsidiary, otherwise than
as
set forth in or contemplated by the Base Prospectus, the effect of which,
in any
such case described in clause (i) or (ii), is, in the judgment of the Placement
Agent, so material and adverse as to make it impracticable or inadvisable
to
proceed with the sale or delivery of the Stock on the terms and in the manner
contemplated by the Base Prospectus, the Time of Sale Prospectus, if any,
and
the Prospectus Supplement.
(j) The
Stock
is registered under the Exchange Act and, as of the Closing Date, the Stock
shall be listed and admitted and authorized for trading, subject to notice
of
issuance, on the Nasdaq National Market, and satisfactory evidence of such
actions shall have been provided to the Placement Agent. The Company shall
have
taken no action designed to, or likely to have the effect of terminating
the
registration of the Stock under the Exchange Act or delisting or suspending
from
trading the Stock on the Nasdaq National Market, nor has the Company received
any information suggesting that the Commission or Nasdaq is contemplating
terminating such registration or listing.
(k) At
the
Execution Time, the Company shall have furnished to the Placement Agent a
letter
substantially in the form of Exhibit
B
hereto
from each executive officer and director of the Company.
(l) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York
Stock
Exchange, the Nasdaq National Market or the American Stock Exchange or in
the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
minimum
or maximum prices or maximum ranges for prices shall have been established
on
any such exchange or such market by the Commission, by such exchange or by
any
other regulatory body or governmental authority having jurisdiction, (ii)
a
banking moratorium shall have been declared by Federal or state authorities
or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States shall
have
become engaged in hostilities, or the subject of an act of terrorism, there
shall have been an escalation in hostilities in which it is not already engaged
involving the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred any
other calamity or crisis or any change in general economic, political or
financial conditions in the United States or elsewhere, if the effect of
any
such event in clause (iii) or (iv) makes it, in the sole judgment of the
Placement Agent, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated by the
Base
Prospectus and the Prospectus Supplement.
24
(m) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any governmental agency or body which would,
as of
the Closing Date, prevent the issuance or sale of the Stock; and no injunction,
restraining order or order of any other nature by any federal or state court
of
competent jurisdiction shall have been issued as of the Closing Date which
would
prevent the issuance or sale of the Stock.
(n) The
Company shall have prepared and filed with the Commission a Current Report
on
Form 8-K with respect to the Offering, including as an exhibit thereto this
Agreement and any other documents relating thereto.
(o) The
Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
(p) Prior
to
the Closing Date, the Company shall have furnished to SG Cowen such further
information, certificates and documents as SG Cowen may reasonably
request.
All
opinions, letters, evidence and certificates mentioned above or elsewhere
in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel
for
the Placement Agent.
7. Indemnification
and Contribution.
25
(a) The
Company shall indemnify and hold harmless the Placement Agent, its officers,
employees, representatives and agents and each person, if any, who controls
the
Placement Agent within the meaning of the Securities Act (collectively
the
“Placement
Agent Indemnified Parties” and
each
a “Placement
Agent Indemnified Party”)
against any loss, claim, damage or liability, joint or several, or any
action in
respect thereof, to which that Placement Agent Indemnified Party may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Base
Prospectus, the Registration Statement, the Time of Sale Prospectus, if
any, or
the Prospectus Supplement or in any amendment or supplement thereto, (ii)
the
omission or alleged omission to state in the Base Prospectus, the Registration
Statement, the Time of Sale Prospectus, if any, or the Prospectus Supplement
or
in any amendment or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
(iii) any
breach of the representations and warranties of the Company contained herein,
and shall reimburse each Placement Agent Indemnified Party promptly upon
demand
for any legal or other expenses reasonably incurred by that Placement Agent
Indemnified Party in connection with investigating or preparing to defend
or
defending against or appearing as a third party witness in connection with
any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however,
that the
Company shall not be liable in any such case to the extent that any such
loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from
the Base Prospectus, the Registration Statement, the Time of Sale Prospectus,
if
any, or the Prospectus Supplement or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Placement Agent specifically for use therein,
which information the parties hereto agree is limited to the Placement
Agent’s
Information (as defined in Section
15).
This
indemnity agreement is not exclusive and will be in addition to any liability,
which the Company might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to each Placement
Agent Indemnified Party.
(b) The
Placement Agent shall indemnify and hold harmless the Company its officers,
employees, representatives and agents, each of its directors and each person,
if
any, who controls the Company within the meaning of the Securities Act
(collectively the “Company
Indemnified Parties”
and
each a “Company
Indemnified Party”)
against any loss, claim, damage or liability, joint or several, or any action
in
respect thereof, to which the Company Indemnified Parties may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue statement
or
alleged untrue statement of a material fact contained in the Base Prospectus,
the Registration Statement, the Time of Sale Prospectus, if any, or the
Prospectus Supplement or in any amendment or supplement thereto or (ii) 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,
but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of
the Placement Agent specifically for use therein, and shall reimburse the
Company Indemnified Parties for any legal or other expenses reasonably incurred
by such parties in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection with
any
such loss, claim, damage, liability or action as such expenses are incurred;
provided
that the
parties hereto hereby agree that such written information provided by the
Placement Agent consists solely of the Placement Agent’s Information. This
indemnity agreement is not exclusive and will be in addition to any liability,
which the Placement Agent and the Purchasers might otherwise have and shall
not
limit any rights or remedies which may otherwise be available at law or in
equity to the Company Indemnified Parties. Notwithstanding the provisions
of
this Section
7(b),
in no
event shall any indemnity by the Placement Agent under this Section
7(b)
exceed
the total compensation received by such Placement Agent in accordance with
Section
1(e).
26
(c) Promptly
after receipt by an indemnified party under this Section
7
of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section
7,
notify
the indemnifying party in writing of the claim or the commencement of that
action; provided, however,
that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section
7
except
to the extent it has been materially prejudiced by such failure; and,
provided, further,
that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section
7.
If any
such claim or action shall be brought against an indemnified party, and it
shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to
the indemnified party under this Section
7
for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however,
that any
indemnified party shall have the right to employ separate counsel in any
such
action and to participate in the defense thereof but the fees and expenses
of
such counsel shall be at the expense of such indemnified party unless (i)
the
employment thereof has been specifically authorized by the indemnifying party
in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified
party
to employ separate counsel or (iii) the indemnifying party has failed to
assume
the defense of such action in accordance with the terms hereof and employ
counsel reasonably satisfactory to the indemnified party, in which case,
if such
indemnified party notifies the indemnifying party in writing that it elects
to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
at any
time for all such indemnified parties, which firm shall be designated in
writing
by the Placement Agent, if the indemnified parties under this Section
7
consist
of any Placement Agent Indemnified Party, or by the Company if the indemnified
parties under this Section
7
consist
of any Company Indemnified Parties. Each indemnified party, as a condition
of
the indemnity agreements contained in Sections
7(a)
and
7(b)
shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. Subject to the provisions of Section
7(d)
below,
no indemnifying party shall be liable for any settlement, compromise or consent
to the entry of judgment in connection with any such action effected without
its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action (other than a judgment entered with the consent
of
such indemnified party), the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability by
reason
of such settlement or judgment.
27
(d) If
at any
time an indemnified party shall have requested that an indemnifying party
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by this Section
7
effected
without its written consent if (i) such settlement is entered into more than
45
days after receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified
party
in accordance with such request prior to the date of such
settlement.
(e) If
the
indemnification provided for in this Section
7
is
unavailable or insufficient to hold harmless an indemnified party under
Section
7(a)
or
7(b),
then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i)
in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent on the other
from the offering of the Stock 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 with respect to the statements or omissions which resulted in
such
loss, claim, damage or liability, or action in respect thereof, 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 with respect
to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Company bears to the total compensation
received by the Placement Agent with respect to the Stock purchased under
this
Agreement. The relative fault shall be determined by reference to, among
other
things, whether the untrue or alleged untrue statement of a material fact
or the
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,
the
intent of the parties and their relative knowledge, access to information
and
opportunity to correct or prevent such untrue statement or omission;
provided
that the
parties hereto agree that the written information furnished to the Company
by
the Placement Agent for use in the Prospectus Supplement consists solely
of the
Placement Agent’s Information. The Company and the Placement Agent agree that it
would not be just and equitable if contributions pursuant to this Section
7(e)
were to
be determined by pro rata allocation or by any other method of allocation
which
does not take into account the equitable considerations referred to herein.
The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section
7(e)
shall be
deemed to include, for purposes of this Section
7(e),
any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section
7(e),
the
Placement Agent shall not be required to contribute any amount in excess
of the
total compensation received by such Placement Agent in accordance with
Section
1(e)
less the
amount of any damages which such Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or
alleged omission. No person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
28
8. Termination.
The
obligations of the Placement Agent and the Purchasers hereunder and under
the
Subscription Agreements may be terminated by the Placement Agent, in its
absolute discretion by notice given to the Company prior to delivery (including
electronic delivery) of and payment for the Stock if, prior to that time,
any of
the events described in Sections
6(i)
or
6(l)
have
occurred or if the Purchasers shall decline to purchase the Stock for any
reason
permitted under this Agreement or the Subscription Agreements.
9. Reimbursement
of Placement Agent’s Expenses. If
the
sale of the Stock provided for herein is not consummated because any condition
to the obligations of the Placement Agent and the Purchasers set forth in
Section
6
hereof
is not satisfied, because of any termination pursuant to Section
8
hereof
or because of any refusal, inability or failure on the part of the Company
to
perform any agreement herein or comply with any provision hereof other than
by
reason of a default by the Placement Agent, the Company will reimburse the
Placement Agent upon demand for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel and any expenses advanced by
the
Placement Agent on the Company’s behalf) that shall have been incurred by the
Placement Agent in connection with this Agreement and the proposed purchase
and
sale of the Stock and, upon demand, the Company shall pay the full amount
thereof to SG Cowen.
29
10. Successors;
Persons Entitled to Benefit of Agreement.
This
Agreement shall inure to the benefit of and be binding upon the Placement
Agent,
the Purchasers, the Company, and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give
any
person other than the persons mentioned in the preceding sentence any legal
or
equitable right, remedy or claim under or in respect of this Agreement, or
any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit
of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained
in
this Agreement shall also be for the benefit of the Placement Agent Indemnified
Parties, and the indemnities of the Placement Agent shall also be for the
benefit of the Company Indemnified Parties. It is understood that the Placement
Agent’s responsibilities to the Company are solely contractual in nature and the
Placement Agent does not owe the Company, or any other party, any fiduciary
duty
as a result of this Agreement.
11.
Absence
Of Fiduciary Relationship.
The
Company acknowledges and agrees that:
(a) the
Placement Agent's responsibility to the Company is solely contractual in
nature,
the Placement Agent has been retained solely to act as placement agent in
connection with the sale of the Stock and no fiduciary or advisory relationship
between the Company and the Placement Agent has been created in respect of
any
of the transactions contemplated by this Agreement, irrespective of whether
the
Placement Agent has advised or is advising the Company on other matters;
(b) the
price
of the Stock to be sold in the Offering was established by the Company following
discussions and arm’s-length negotiations with the Purchasers, and the Company
is capable of evaluating and understanding, and understands and accepts,
the
terms, risks and conditions of the transactions contemplated by this Agreement;
(c) the
Company has been advised that the Placement Agent and its affiliates are
engaged
in a broad range of transactions which may involve interests that differ
from
those of the Company and that the Placement Agent has no obligation to disclose
such interests and transactions to the Company by virtue of any fiduciary,
advisory or agency relationship; and
(d) the
Company waives, to the fullest extent permitted by law, any claims it may
have
against the Placement Agent for breach of fiduciary duty or alleged breach
of
fiduciary duty and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary
duty
claim.
12. Survival
of Indemnities, Representations, Warranties, etc.
The
respective indemnities, covenants, agreements, representations, warranties
and
other statements of the Company and the Placement Agent, as set forth in
this
Agreement or made by them respectively, pursuant to this Agreement, shall
remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent, the Company, the Purchasers or any person controlling
any of them and shall survive delivery of and payment for the
Stock.
30
13. Notices.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the
Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission to SG Cowen & Co., LLC, 1221 Avenue of the Americas, New York,
New York 10020, Attention: Michelle Bowe (Fax: 212-278-7995), with a copy
to:
Brown Raysman Millstein Felder & Steiner LLP, 900 Third Avenue, New York,
New York 10022, Attention: Stuart Bressman, Esq. (Fax:
212-895-2900).
(b) if
to the
Company shall be delivered or sent by mail, telex or facsimile transmission
to
Discovery Laboratories, Inc., 2600 Kelly Road, Warrington, Pennsylvania 18976,
Attention: John G. Cooper (Fax: 215-488-9301), with a copy to: Dickstein
Shapiro
Morin & Oshinsky LLP, 1177 Avenue of the Americas, 47th Floor, New York, New
York 10036-2714, Attention: Ira L. Kotel, Esq. (Fax: 212-997-9880).
14. Definitions
of Certain Terms. The
terms
which follow, when used in this Agreement, shall have the meanings
indicated.
“Business
Day”
shall
mean any day other than a Saturday, a Sunday, a legal holiday, a day on which
banking institutions or trust companies are authorized or obligated by law
to
close in New York City or any day on which the Nasdaq National Market is
not
open for trading.
“Effective
Date”
shall
mean each date and time that the Registration Statement (and any post-effective
amendment or amendments thereto) became or becomes effective.
“Execution
Time”
shall
mean the date and time that this Agreement is executed and delivered by the
parties hereto.
“Interference
Proceeding”
shall
have the meaning set forth in 35 U.S.C. § 135.
“To
the Company’s knowledge”
and
words of similar import shall mean that which the Company knows or should
have
known using the exercise of reasonable due diligence.
15. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York.
31
16. Placement
Agent’s Information.
The
parties hereto acknowledge and agree that, for all purposes of this Agreement,
the Placement Agent’s Information consists solely of the statements concerning
the Placement Agent contained in the third paragraph under the heading “Plan of
Distribution” in the Prospectus Supplement.
17. 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.
18. General.
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.
In
this Agreement, the masculine, feminine and neuter genders and the singular
and
the plural include one another. The section headings in this Agreement are
for
the convenience of the parties only and will not affect the construction
or
interpretation of this Agreement. This Agreement may be amended or modified,
and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and the Placement Agent.
19. Counterparts.
This
Agreement may be signed in any number of counterparts, each of which shall
be an
original, with the same effect as if the signatures thereto and hereto were
upon
the same instrument.
32
If
the
foregoing is in accordance with your understanding of the agreement between
the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.
| Very truly yours, | ||
| DISCOVERY LABORATORIES, INC. | ||
| |
|
|
| By: | /s/ John G. Cooper | |
|
Name: John G. Cooper |
||
| Title: EVP/CFO | ||
|
Accepted
as of
the
date first above written:
SG
COWEN & CO., LLC
|
|||
|
By: /s/ Richard
E. Gormley
|
|||
|
Name:
Richard E. Gormley
Title:
Managing Director
|
|||
|
|
33
Exhibit
A
Form
of Subscription Agreement
34
Exhibit
B
Form
of Lock-Up Agreement
35
Exhibit
C-1
Legal
Opinion of Dickstein Shapiro Morin & Oshinsky LLP
36
Exhibit
C-2
Legal
Opinion of Woodcock Washburn LLP
37
Exhibit
D
Written
Statement of Dickstein Shapiro Morin & Oshinsky LLP
38
Exhibit
99.1
Discovery
Labs to Raise $20.0 Million in Registered Direct Offering
Warrington,
PA — December 14, 2005 —Discovery
Laboratories, Inc. (Nasdaq: DSCO), has obtained commitments to purchase
approximately $20.0 million of its common stock in a registered direct offering.
Under the terms of the transaction, Discovery Labs will sell approximately
3.0
million shares of its common stock to a select group of institutional investors.
The closing of the offering is expected to take place on December 19, 2005,
subject to the satisfaction of customary closing conditions. All of the shares
of common stock are being offered by Discovery Labs pursuant to an effective
registration statement previously filed with the Securities and Exchange
Commission. SG Cowen & Co., LLC acted as exclusive placement agent for the
transaction.
This
press release shall not constitute an offer to sell or the solicitation of
an
offer to buy nor shall there be any sale of the securities in any state or
jurisdiction in which such offer, solicitation or sale would be unlawful
prior
to registration or qualification under the securities laws of any such state
or
jurisdiction. The shares of common stock may only be offered by means of
a
prospectus. Copies of the final prospectus supplement and accompanying base
prospectus can be obtained from SG Cowen & Co., LLC, 1221 Avenue of the
Americas, New York, NY 10020 (646-562-1000).
About
Discovery Labs
Discovery
Laboratories, Inc. is a biotechnology company developing its proprietary
surfactant technology as Surfactant Replacement Therapies (SRT) for respiratory
diseases. Surfactants are produced naturally in the lungs and are essential
for
breathing. Discovery Lab’s technology produces a precision-engineered surfactant
that is designed to closely mimic the essential properties of natural human
lung
surfactant. Discovery Labs believes that through its technology, pulmonary
surfactants have the potential, for the first time, to address respiratory
diseases where there are few or no approved therapies available.
Discovery
Lab’s SRT pipeline is initially focused on the most significant respiratory
conditions prevalent in the neonatal intensive care unit. The Company’s lead
product, Surfaxin®,
for the
prevention of Respiratory Distress Syndrome (RDS) in premature infants, has
received an Approvable Letter from the FDA and is under review for approval
in
Europe by the EMEA. Surfaxin is also being developed for the prevention and
treatment of Chronic Lung Disease (CLD) in premature infants. Discovery Labs
is
preparing to conduct multiple Phase 2 pilot studies with Aerosurf™, aerosolized
SRT administered through nasal continuous positive airway pressure (nCPAP),
for
the treatment of neonatal respiratory failure.
To
address the various respiratory conditions affecting pediatric, young adult
and
adult patients in the critical care and other hospital settings, Discovery
Labs
is conducting a Phase 2 clinical trial to address Acute Respiratory Distress
Syndrome (ARDS) in adults, and is also developing aerosol formulations of
SRT to
address Acute Lung Injury (ALI), asthma, COPD, and other respiratory
conditions.
For
more
information, please visit our corporate website at www.Discoverylabs.com.
To
the extent that statements in this press release are not strictly historical,
including statements as to business strategy, outlook, objectives, future
milestones, plans, intentions, goals, future financial conditions, future
collaboration agreements, the success of Discovery’s product development, events
conditioned on stockholder or other approval, or otherwise as to future events,
all such statements are forward-looking, and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These
forward-looking statements are subject to certain risks and uncertainties
that
could cause actual results to differ materially from the statements made.
Among
the factors which could affect Discovery’s actual results and could cause
results to differ from those contained in these forward-looking statements
are
the risk that financial conditions may change, risks relating to the progress
of
Discovery’s research and development, the risk that Discovery will not be able
to raise additional capital or enter into additional collaboration agreements
(including strategic alliances for aerosol and Surfactant Replacement
Therapies), risk that Discovery will not be able to develop a successful
sales
and marketing organization in a timely manner, if at all, risk that Discovery’s
internal sales and marketing organization will not succeed in developing
market
awareness of Discovery’s products, risk that Discovery’s internal sales and
marketing organization will not be able to attract or maintain qualified
personnel, risk of delay in the FDA’s or other health regulatory authorities’
approval of any applications filed by Discovery, risks that any such regulatory
authority will not approve the marketing and sale of a drug product even
after
acceptance of an application filed by Discovery for any such drug product,
risks
relating to the ability of Discovery’s third party contract manufacturers and
development partners to provide Discovery with adequate supplies of drug
substance, drug products and expertise for completion of any of Discovery’s
clinical studies, other risks relating to the lack of adequate supplies of
drug
substance and drug product for completion of any of Discovery’s clinical
studies, risks relating to the ability of the Company and its collaborators
to
develop and successfully commercialize products that will combine our drug
products with innovative aerosolization technologies, risks relating to the
significant, time-consuming and costly research, development, pre-clinical
studies, clinical testing and regulatory approval for any products that we
may
develop independently or in connection with our collaboration arrangements,
and
risks relating to the development of competing therapies and/or technologies
by
other companies. Companies in the pharmaceutical and biotechnology industries
have suffered significant setbacks in advanced clinical trials, even after
obtaining promising earlier trial results. Data obtained from tests are
susceptible to varying interpretations, which may delay, limit or prevent
regulatory approval. Those associated risks and others are further described
in
Discovery’s filings with the Securities and Exchange Commission including the
most recent reports on Forms 10-K, 10-Q and 8-K, and any amendments
thereto.
Company
Contacts:
John
G.
Cooper, EVP and CFO
215-488-9490
Lisa
Caperelli, Manager, Investor Relations
215-488-9413