Document:

Exhibit 4.2

 

 

 

 

 

B.O.S.
Better online solutions ltd.

 

share
PURCHASE AGREEMENT

 

 

Dated as of

 

June 11, 2015

 

 

 

 

 

 

 

    	 

    	 

    

 

share
PURCHASE AGREEMENT

 

This SHARE PURCHASE AGREEMENT (this “Agreement”)
is made and entered into as of June 11, 2015, by and among B.O.S Better Online Solutions Ltd. (the “Company”),
and the person(s) and/or entity(ies) listed in Schedule I attached hereto (each, an "Investor", and, severally
and not jointly, the "Investors").

 

WHEREAS,the Company wishes to
raise capital from the Investors in an aggregate amount of up to US$980,000 (the “Investment Amount”) by means
of the issuance of Ordinary Shares of the Company, nominal value NIS 80.00 each (each, a “Share” and collectively,
the “Shares”) subject to the terms and conditions more fully set forth in this Agreement; and

 

WHEREAS, subject to the terms and
conditions herein, each of the Investors desires to acquire from the Company Shares, in the amount corresponding to its name as
set forth on Schedule I.

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows:

 

1.           
PURCHASE AND SALE OF SHARES.

 

1.1           Subject to the satisfaction of the terms and conditions described in this Agreement, at the Closing (as defined below), the Company
shall sell and issue to each Investor, and each Investor shall, severally and not jointly, purchase from the Company Shares of
the Company at a purchase price per Share equal to $2.406 (the “PPS”), against the payment to the Company by
each Investor of the amount set forth opposite its name in Schedule I the “Applicable Investment Amount”).
The Company undertakes to include the Shares in the next registration statement it shall file with the U.S. Securities and Exchange
Commission (“SEC”).

 

2.             CLOSING. The execution and delivery of this Agreement (and the performance thereof) shall occur on June 11, 2015, upon
delivery by facsimile or e-mail of the pdf version of executed signature pages of this Agreement and all other documents, instruments
and writings required to be delivered pursuant to this Agreement to Amit, Pollak, Matalon & Co., NITSBA Tower, 17 Yitzhak
Sadeh Street, Tel-Aviv 67775 Israel Attn: Shlomo Landress, Adv., Fax: (972) 3 568-9001 (the “Closing”). At the Closing
on June 11, 2015: (i) each Investor shall deliver to the Company its Applicable Investment Amount, via wire transfer of immediately
available funds in accordance with the wire instructions below or bank or cashier’s check; and (ii) the Investors shall
be issued the applicable number of Shares as uncertificated shares registered with the Company's transfer agent, American Stock
Transfer & Trust & Co. ("AST&T"). As soon as possible following Closing, the Company will deliver to each
Investor a printout issued by AST&T reflecting the number of shares purchased by such Investor hereunder.

 

	 	BOS
    Better Online Solutions Ltd.
	 	Bank Leumi Ltd.
	 	11
Moshe Levy St. 

        Rishon Le-Zion Industrial Zone,
        75707

         Israel

	 	Branch#671
	 	Account No. 142900/82
	 	Swift Code: LUMI
    ILIT TLV
	 	IBAN: IL80 0106
    7100 0001 4290 082

 

    	 

    	 

    

 

3.            REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby represents and warrants to each of the Investors
that:

 

3.1           Corporate Organization. The Company is a corporation duly incorporated and validly existing under the laws of Israel, and
has the corporate power to own its property and to carry on its business as now being conducted. The Company’s shares are
traded on the Nasdaq Capital Market.

 

3.2           Due Authorization and Valid Issuance. The Company has the corporate power to enter into this Agreement. The Agreement has
been, or will have been, at the time of its execution and delivery, duly executed and delivered by the Company. Prior to the Closing
of this Agreement, the Company shall have acted to complete all corporate action necessary on its part for the issuance, sale
and delivery of the Shares. The Shares being purchased by the Investor hereunder will, upon issuance and payment therefore pursuant
to the terms hereof, be duly authorized, validly issued, fully-paid and nonassessable.

 

3.3           Binding Agreement. The Agreement constitutes a valid and legally binding obligation of the Company enforceable against
the Company in accordance with its terms, except as (i) such enforceability may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of creditors and contracting parties generally, (ii)
the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefore may be brought, and (iii) rights to indemnity and contribution
may be limited by Israeli or U.S. state or federal securities laws applicable to the Company or by the public policy underlying
such laws.

 

3.4           Non-Contravention. Neither the execution and delivery of the Agreement, nor the consummation of the transactions or the
performance of the obligations contemplated hereby will result in any violation or breach of Company’s Articles of Association
as currently in effect, board resolutions or shareholders resolutions.

 

3.5           No Consent. To the Company’s best knowledge, and in reliance on the representations of the Investor given in Section
4 hereof, except for reporting obligations and approvals required under applicable securities laws and market regulations in Israel
and the United States and for notices to or approvals by the Office of the Chief Scientist (if required), no consent of any governmental
body or third party is required to be made or obtained by the Company in connection with the execution and delivery of the Agreement
by the Company or the consummation by the Company of the transactions or the performance of the obligations contemplated hereby
by the Company.

 

3.6           Capitalization. The authorized share capital of the Company consists of 4,000,000 Ordinary Shares, nominal value NIS 80.00
per share, of which, as of June 10, 2015, 1,835,687 Ordinary Shares are issued and outstanding. 

 

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3.7           Financial Statements.

 

 The audited consolidated
financial statements of the Company as of December 31, 2014 and the related notes thereto, as filed by the Company with the SEC
under Form 20-F on April 29, 2015, fairly present the financial position of the Company as of their respective dates, and have
been prepared in accordance with the books and records of the Company as at the applicable dates and for the applicable periods.
Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified, except as may be disclosed in the notes to such financial statements, or
as may be permitted by the SEC and except as disclosed in the filings the Company made in connection with such statements, if
any.

 

3.8           
Legal Proceedings. Except as disclosed in the Company’s public filings including schedule 13D filed with the SEC
on November 28, 2014, there is no material legal or governmental proceeding pending or, to the knowledge of the Company, threatened
to which the Company is or may be a party.

 

3.9          
Compliance with Law. To the knowledge of the Company, the business of the Company is conducted in accordance with applicable
laws, except to extent that, individually or in the aggregate, would not have a material adverse effect on the Company.

 

3.10        
Disclosure. The representations and warranties of the Company contained in this Section 3 as of the date hereof and
as of the Closing, and in the Company’s public filings with the SEC do not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they are made,
not misleading. The representations and warranties contained in this Section 3, are the sole representations and warranties made
by the Company with respect to the transaction contemplated by this Agreement, and the Company does not make any other representation
or warranty, express or implied.

 

4.             REPRESENTATIONS OF THE INVESTOR. Each Investor, severally and not jointly, represents and warrants to the Company that:

 

4.1            Enforceability. (i) The Investor is authorized and qualified and has full right and power to become an investor in the
Company, is authorized to purchase the Shares and to perform its obligations pursuant to the provisions hereof, and (ii) the person
signing the Agreement and any other instrument executed and delivered therewith on behalf of the Investor has been duly authorized
by such entity and has full power and authority to do so.

 

4.2           Restrictions on Transferability and Hedging.

 

 4.2.1        
The Investor understands that (i) the Shares have not been registered under the Securities Act of 1933, or under the laws of any
other jurisdiction; (ii) such Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act and, where required, under the laws of other jurisdictions or unless an exemption from registration is
then available; (iii) there is now no registration statement on file with the SEC with respect to the Shares to be purchased by
the Investor.

 

    	- 3 -

    	 

    

 

 4.2.2       
The Investor acknowledges and agrees that the certificates representing the Shares shall bear restrictive legends as counsel to
the Company may determine are necessary or appropriate, including without limitation, legends under applicable securities laws
similar to the following:

 

“The
shares represented by this certificate have not been registered under the Securities Act of 1933. The shares have been acquired
for investment and may not be sold, transferred, assigned or otherwise disposed of in the absence of an effective registration
statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933,
or an opinion of the Company’s counsel that registration under such Act is not required.”

 

 4.2.3      
The Company will not register any transfer of Shares not made pursuant to registration under the Securities Act, or pursuant to
an available exemption from registration.

 

 4.2.4       The Investor agrees not to engage
in hedging transactions with regards to the Shares sold pursuant to this Agreement.

 

4.3           Investment Purposes. The Shares are being acquired for investment purposes. The Shares are not being purchased with a view
to, or for resale in connection with, any distribution or other disposition thereof. The Investor has no present plans to enter
into any contract, undertaking, agreement or arrangement for any such resale, distribution or other disposition and it will not
divide its interest in the Company’s Shares with others, resell or otherwise distribute the Shares in violation of U.S.
federal or state securities laws or the Israeli Securities Law.

 

4.4           Information and Advice.

 

 4.4.1       
The Investor has carefully reviewed and understands the risks of a purchase of the Shares. In connection with the Investor’s
investment in the Company, it has obtained the advice of its own investment advisors, counsel and accountants (the “Advisors”).
The Investor and its Advisors have reviewed the Company’s public filings and have been furnished with all materials relating
to the Company or the offering of the Shares (the “Offering”) that they have requested. The Investor and its Advisors
have been afforded the opportunity to ask questions of the Company concerning the financial and other affairs of the Company and
the conditions of the Offering and to obtain any additional information necessary to verify the accuracy of any representations
or information set forth with respect to the Shares.

 

 4.4.2        
The Company has answered all reasonable inquiries that the Investor and its Advisors have made concerning the Company or any other
matters relating to the creation and operations of the Company and the terms and conditions of the Offering.

 

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4.5          Sophistication and Risk.

 

4.5.1        
It has such knowledge and experience in financial and business matters, that it is capable of evaluating, and has evaluated, the
merits and risks of the Offering. By reason of its business or financial experience, it has the capacity to protect its interests
in connection with an investment in the Company.

 

4.5.2        
It understands that no Israeli or U.S. federal or state agency has passed upon the Shares or made any finding or determination
as to the fairness of the transactions contemplated in the Agreement.

 

4.5.3        
It understands that the Shares are speculative investments, which involve a high degree of risk, including the risk that the Investor
might lose its entire amount invested in the Company.

 

4.5.4        
It understands that any tax benefits that may be available to the Investor, if any, may be lost through adoption of new laws,
amendments to existing laws or regulations, or changes in the interpretation of existing laws and regulations.

 

4.5.5        
It has the financial ability to bear the economic risk of its investment in the Company and has adequate net worth and means of
providing for the Investor’s current needs and contingencies to sustain a complete loss of the Investor’s investment
and has no need for liquidity in the Investor’s investment in the Company.

 

4.5.6        
It is an "Accredited Investor" as such term is defined in Rule 501 of Regulation D under the Securities Act of 1933.

 

4.6          No solicitation. At no time was the Investor presented with or solicited by any leaflet, public promotional meeting, newspaper
or magazine article, radio or television advertisement or any other form of general advertising or general solicitation concerning
the Offering.

 

4.7          Broker-Dealer. The Investor is not a broker-dealer, nor is it an affiliate of any broker-dealer.

 

4.8          Further Indebtedness. The Investor acknowledges that no provision of the Agreement restricts, or shall be construed to
restrict, in any way the ability of the Company to incur indebtedness or to issue share capital or other equity securities (or
securities convertible into equity securities) of the Company or to grant liens on its property and assets.

 

4.9          Voting and/or Investment Control over the Investor. Each Investor which is an entity has made available to the Company
a list of individuals who have or share voting and/or investment control over such Investor. The Investor acknowledges that the
Company may be required to disclose such information in its public filings. Investor shall update such list as may reasonably
be requested by the Company from time to time to comply with the Company's disclosure obligation and/or with a request for such
information from any regulatory body.

 

4.10        
Independent Investment. The Investor is acting independently with respect to its investment in the Shares.

 

4.11        
Holdings. Schedule I attached hereto reflects the holdings of the Company’s shares by the Investor and its
affiliates as of the date hereof, and as of the Closing.

 

    	- 5 -

    	 

    

 

4.12       
Availability of Exemptions.The Investor understands that the Shares are being offered and sold in reliance on a transactional
exemption or exemptions from the registration requirements of Israeli and U.S. federal and state securities laws and the Company
is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the
Investor set forth herein in order to determine the applicability of such exemptions and the suitability of the Investor to acquire
the Shares.

 

4.13       
Disclosure. The representations and warranties of the Investor contained in this Section 4 as of the date hereof and
as of the Closing, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated
herein or necessary to make the statements herein, in light of the circumstances under which they are made, not misleading. The
Investor understands and confirms that the Company will rely on the foregoing representations in effecting the transaction contemplated
in the Agreement and other transactions in securities of the Company.

 

5.             CONDITIONS OF INVESTOR’S OBLIGATION AT THE CLOSING. The obligation of each Investor to purchase Shares is subject
to the fulfillment or waiver by the Investor prior to or on the date of the Closing of the conditions set forth in this Section
5. In the event that any such condition is not satisfied to the satisfaction of the Investor, then the Investor shall not be obligated
to proceed with the purchase of such securities.

 

5.1           Representations and Warranties. The representations and warranties of the Company under this Agreement shall be true in
all material respects as of the Closing, with the same effect as though made on and as of such date.

 

5.2           Compliance with Agreements. The Company shall have performed and complied in all material respects with all agreements
or conditions required by this Agreement to be performed and complied with by it prior to or as of the Closing.

 

5.3           No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any
of the transactions contemplated by this Agreement.

 

5.4           Government Approvals. The Company shall have received all necessary governmental approvals with respect to the transactions
contemplated hereby.

 

6.            CONDITIONS OF THE COMPANY’S OBLIGATION AT THE CLOSING. The obligation of the Company to issue the Shares to each
Investor is subject to the fulfillment or waiver by the Company prior to or on the Closing of the conditions set forth in this
Section 6. In the event that any such condition is not satisfied to the satisfaction of the Company, then the Company shall not
be obligated to proceed with the sale of the securities under this Agreement.

 

6.1           Representations and Warranties. The representations and warranties of the Investor under this Agreement shall be true in
all material respects as of the Closing, with the same effect as though made on and as of such date.

 

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6.2           Compliance with Agreements. The Investor shall have performed and complied in all respects with all agreements or conditions
required by this Agreement to be performed and complied with by it prior to or as of the Closing.

 

6.3           No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any
of the transactions contemplated by this Agreement.

 

6.4           Delivery of Purchase Amount. The Investor shall have delivered to the Company its Purchase Amount for the Shares at the
Closing Date.

 

6.5           Government Approvals. The Company shall have received all necessary governmental approvals with respect to the transactions
contemplated hereby. The Investor shall have executed any confirmations and undertakings required by the Office of Chief Scientist,
if applicable.

 

7.            CONFIDENTIALITY. Any information disclosed to the Investor or its Advisors regarding the transactions contemplated herein,
which has not previously been made available to the general public by the Company, if any, shall be considered Confidential Information.
The Investor acknowledges the confidential nature of the Confidential Information it may have received, and agrees that the Confidential
Information is the valuable property of the Company. The Investor agrees that it and its Advisors shall not reproduce any of the
Confidential Information without the prior written consent of the Company, nor shall they use any Confidential Information for
any purpose except as permitted by and in the performance of this Agreement, or divulge all or any part of the Confidential Information
to any third party. The confidentiality obligations undertaken by the Investor hereunder will remain in full force and effect
regardless of the consummation or termination of this Agreement provided however, that such obligations shall terminate and cease
to apply upon the earliest to occur of: (i) the public disclosure by the Company of the Confidential Information, (ii) the termination
of the transaction contemplated herein, (iii) the entry into a confidentiality agreement as to such Confidential Information,
which supersedes this Agreement, or (iii) twelve (12) months from the date hereof.

 

8.            MISCELLANEOUS.

 

8.1         
Amendments. This Agreement may be modified, supplemented or amended only by a written instrument executed by both parties.

 

8.2         
Notices. Any notice that is required or provided to be given under this Agreement shall be deemed to have been sufficiently
given and received for all purposes, (i) when delivered in writing by hand, upon delivery; (ii) if sent via facsimile or email,
upon transmission (and if transmitted and received on a non-business day, on the first business day following transmission), (iii)
seven (7) business days (and fourteen (14) business days for international mail) after being sent by certified or registered mail,
postage and charges prepaid, return receipt requested, or (iv) three (3) business days after being sent by internationally overnight
delivery providing receipt of delivery, to the following addresses:

 

if to the Company, B.O.S
Better Online Solutions Ltd., 20 Freiman Street, Rishon Lezion, 75101 Israel Attn: Mr. Eyal Cohen, CFO, facsimile: (972) 3 954-1003,
with a copy (that shall not serve as notice) to Amit, Pollak Matalon & Co., NITSBA Tower, 17 Yitzhak Sadeh St., Tel-Aviv 67775
Israel Attn: Shlomo Landress, Adv. Fax: (972) 3 568-9001; or at any other address designated by the Company to the Investor in
writing;

 

if to the Investor, to its
address listed on Schedule I hereto or at any other address designated by the Investor to the Company in writing.

 

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8.3          Survival of Representations and Warranties. All representations and warranties contained herein or in any certificate or
document delivered hereunder shall survive after the execution and delivery of this Agreement or such certificate or document,
as the case may be, for a period of 24 months from the date hereof. All covenants and agreements in the Agreement shall survive
in accordance with their terms. This Section shall survive the termination of this Agreement for any reason.

 

8.4         Delays or Omissions; Waiver. Except as expressly provided herein, no delay or omission to exercise any right, power or
remedy accruing to any party under this Agreement shall impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any breach or default, or an acquiescence thereto, or of a similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.

 

8.5         Other Remedies. Any and all remedies herein expressly conferred upon a party shall be deemed cumulative with, and not exclusive
of, any other remedy conferred hereby or by law on such party, and the exercise of any one remedy shall not preclude the exercise
of any other.

 

8.6         Entire
Agreement. This Agreement and the exhibits and schedules hereto, constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with
respect hereto and thereto.

 

8.7         Headings. All section headings herein are inserted for convenience only and shall not modify or affect the construction
or interpretation of any provision of this Agreement.

 

8.8         Severability. Should any one or more of the provisions of this Agreement (including its exhibits and schedules) be determined
to be illegal or unenforceable, all other provisions of this Agreement shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be affected thereby. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision, which will achieve, to the extent possible,
the economic, business and other purposes of the void or unenforceable provision.

 

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8.9        Assignment. This Agreement may not be assigned in whole or in part by the Investor without the prior written consent of
the Company.

 

8.10      Governing Law and Venue. This Agreement shall be construed in accordance with and governed by the internal laws of the
State of Israel, without regard to conflict of laws provisions. Any dispute arising under or in relation to this Agreement shall
be adjudicated in the competent court of Tel Aviv-Jaffa district only, and each of the parties hereby submits irrevocably to the
exclusive jurisdiction of such court.

 

8.11      Counterparts. This Agreement may be executed concurrently in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

 

8.12      Further Actions. At any time and from time to time, each party agrees, without further consideration, to take such actions
and to execute and deliver such documents as may be reasonably necessary to effectuate the purposes of this Agreement.

 

(Remainder of page intentionally
left blank.)

 

    	- 9 -

    	 

    

 

IN WITNESS WHEREOF, the undersigned have executed
and delivered this Agreement as of the date first set forth above.

 

COMPANY:

 

	B.O.S. BETTER ONLINE SOLUTIONS LTD.	 	 
	 	 	 	 	 
	By:
    	/s/ Yuval Viner	 	By:
    	/s/ Eyal Cohen
	Name:
    	Yuval Viner	 	Name:
    	Eyal Cohen
	Title:
    	CEO	 	Title:
    	CFO

 

INVESTORS:

 

YA Global Master SPV, Ltd.

By: Yorkville Advisors Global, LP

Its:  Investment Manager

 

By: Yorkville Advisors Global, LLC

Its:  General Partner

 

/s/ Mark Angelo

Name: Mark Angelo

 

    	- 10 -

    	 

    

 

Schedule I

 

	 	 	 	PRECLOSING
    HOLDING	POST
    HOLDING
	INVESTOR'S
    NAME AND ADDRESS	PURCHASE
    AMOUNT	NO.
    OF SHARES PURCHASED	AMOUNT	PERCENT*	AMOUNT	PERCENT
	YA
    Global Master SPV Ltd.	250,000	103,890.0	65,158.0	3.55%	169,048.0	8.18%

 

* Calculated on the basis of 1,835,687 shares issued as of June
10, 2015.

  

 

- 11 -Exhibit 10.1

 

FIRST AMENDMENT TO FACILITY AGREEMENT

FIRST AMENDMENT TO FACILITY AGREEMENT (this “Amendment”), dated as of July 9, 2015, by and among DISCOVERY LABORATORIES, INC., a Delaware corporation (“Borrower”), DEERFIELD PRIVATE DESIGN FUND II, L.P., DEERFIELD PRIVATE DESIGN INTERNATIONAL II, L.P. and DEERFIELD SPECIAL SITUATIONS FUND, L.P. (collectively referred to as the “Lenders” and together with the Borrower, the “Parties”).

RECITALS:

A.           Borrower and Lenders have entered into that certain Facility Agreement dated as of February 13, 2013 (as the same may be amended, modified, restated or otherwise supplemented from time to time, the “Facility Agreement”).

 

B.            Borrower has requested Lenders amend the Facility Agreement to, among other things, provide for extension of the dates for required repayment of the Loan and Lenders are willing to amend the Facility Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Parties agree as follows:

1.             Defined Terms.  Capitalized terms used herein which are defined in the Facility Agreement or other Transaction Documents, unless otherwise defined herein, shall have the meanings ascribed to them in the Facility Agreement and the other Transaction Documents.  The Recitals to this Amendment are incorporated herein in their entirety by this reference thereto.

2.             Amendments to Facility Agreement.  Upon the satisfaction of the conditions set forth in Section 3 of this Amendment, the Facility Agreement is hereby amended as follows:

a.             Section 1.1 of the Facility Agreement is hereby amended to add the following additional defined terms:

“Stock” means all shares of capital stock (whether denominated as Common Stock or preferred stock), or other equity interest (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

 

“Stock Equivalents” means all securities, including debt securities, convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.

 

“Strategic Transaction” shall mean a transaction or series of transactions, each of which may take the form of a strategic partnership, collaboration arrangement or similar transaction or a public offering of Stock or Stock Equivalents or other equity financing, that results in the infusion to Borrower of sufficient capital such that Borrower reasonably believes that it will have available sufficient cash to support the AEROSURF® clinical program, satisfy Borrower’s debt service obligations and fund Borrower’s business operations through at least the third fiscal quarter of 2016.

 

1.

b.             Borrower shall on the date of this Amendment, prepay the outstanding principal amount of the Notes in the amount of $2,500,000, which shall be applied pro rata to the principal installments due under the Notes in the order of their maturity, subject to reapplication by the Lenders to the principal installments due under the Notes in the inverse order of their maturity if  notice of a Strategic Transaction occurring on or before December 31, 2015 is not received by Lenders as provided below.

 

c.             Borrower shall provide Lenders with written notice of the occurrence of any Strategic Transaction occurring on or prior to December 31, 2015 within one Business Day of the occurrence thereof.  Borrower may, within five Business Days of a Strategic Transaction occurring on or prior to December 31, 2015, prepay the outstanding principal amount of the Notes, in an amount of $2,500,000, which payment shall be applied pro rata to the principal installments due under the Notes in the order of their maturity.  Upon such prepayment, subject to the provisions of Section 2.3(a) of the Facility Agreement with respect to the deferral of the principal amount of the Notes due on the Fifth Anniversary if the Fifth Anniversary Deferral Criteria is satisfied, the then outstanding principal amount of the Notes shall be repayable as follows:

(i)    On February 13, 2018 the Borrower shall repay $12,500,000 of the outstanding principal amount of the Notes; and

 

(ii)    On the earliest of  (1) February 13, 2019, (2) such earlier date  the principal amount of the Notes is declared to be or automatically becomes due and payable following an Event of Default or (3) as provided in Section 5.3 of the Facility Agreement, the Borrower shall repay the remaining outstanding principal amount of the Notes.

3.             Conditions Precedent.  The effectiveness of this Amendment is subject to the following conditions precedent:

a.             Amendment.  The Borrower and the Lenders shall have each executed this Amendment and Lenders shall have received the prepayment referred to in Section 2(b) of this Amendment.

 

b.             Performance; No Default.  The Borrower shall have performed and complied with all agreements and conditions contained in the Facility Agreement and the other Transaction Documents to be performed by or complied with by the Borrower prior to the date hereof.

 

c.            Reimbursement of Expenses.  The Borrower shall have reimbursed Lenders for all out-of-pocket fees and expenses, including reasonable legal fees and expenses not to exceed $15,000, incurred by Lenders in connection with the negotiation, documentation and closing of this Amendment.

 

2.

4.             Representations and Warranties.  The Borrower hereby represents and warrants to Lenders as follows:

a.             As of the date hereof, except as expressly modified by the amendments in Section 2 above, the representations and warranties of Borrower contained in the Transaction Documents are (i) in the case of representations and warranties qualified by “materiality,” “Material Adverse Effect” or similar language, true and correct in all respects and (ii) in the case of all other representations and warranties, true and correct in all material respects, in each case on and as of the date hereof as if made as of the date of this Amendment, except to the extent that any such representation or warranty relates to a specific date, in which case such representation and warranty shall be true and correct in all respects or all material respects, as applicable, as of such earlier date;

 

b.             No Event of Default exists; and

 

c.             The Borrower has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Amendment and each of the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.  The Borrower’s execution and delivery of each of this Amendment and the other Transaction Documents to which it is a party and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Borrower, and no further corporate action is required by the Borrower, its Board of Directors or its stockholders in connection therewith other than in connection with the Required Approvals (as defined below).  Each of the Amendment and the other Transaction Documents to which it is a party has been (or upon delivery will have been) duly executed by the Borrower and is, or when delivered in accordance with the terms hereof, will constitute the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.  The execution, delivery and performance of this Amendment by the Borrower and the consummation of the transactions therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than Permitted Liens) upon any assets of the Borrower pursuant to, any agreement to which the Borrower is a party or by which the Borrower is bound or to which any of the assets of the Borrower is subject, (B) result in any violation of or conflict with the provisions of the Organizational Documents, (C) result in the violation of any Applicable Law or (D) result in the violation of any judgment, order, rule, regulation or decree of any Governmental Authority.  No consent, approval, authorization or order of, or registration or filing with any Governmental Authority is required for the execution, delivery and performance of any of the Amendment and the other Transaction Documents or for the consummation by the Borrower of the transactions contemplated thereby except for those that have been made or obtained prior to the date of this Agreement (the “Required Approvals”).

 

3.

5.             No Further Amendments; Ratification of Liability.  Except as amended hereby, the Facility Agreement and each of the other Transaction Documents shall remain unchanged and in full force and effect in accordance with their respective terms.  Borrower as a debtor, grantor, pledgor, guarantor or assignor, or in any similar capacity in which it has granted Liens or acted as an accommodation party or guarantor, as the case may be, hereby ratifies, confirms and reaffirms its liabilities, its payment and performance obligations (contingent or otherwise) and its agreements under the Facility Agreement and the other Transaction Documents, all as amended by this Amendment and the liens and security interests granted, created and perfected thereby.  The Lenders’ agreement to the terms of this Amendment or any other amendment of the Facility Agreement or any other Transaction Document shall not be deemed to establish or create a custom or course of dealing among Borrower and Lenders.  This Amendment, together with the other Transaction Documents, contains the entire agreement among Borrower and Lenders contemplated by this Amendment.

6.             Incorporation by Reference.  The provisions of Article 6 of the Facility Agreement are incorporated herein by reference mutatis mutandis.

[Remainder of Page Intentionally Left Blank, signature page follows]

 

4.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth above.

 

	 	
BORROWER:

	 
	 	 	 	 
	 	
DISCOVERY LABORATORIES, INC.

	 
	 	 	 	 
	 	
By:

	
/s/ John Tattory

	 
	 	
Name:

	
John Tattory

	 
	 	
Title:

	
Senior Vice President and

	 
	 		
Chief Financial Officer

	
	 	
 

 

	 	 
	 	
LENDERS:

	 
	 	 	 	 
	 	
DEERFIELD PRIVATE DESIGN FUND II, L.P.

	 	 	 	 
	 	
By:

	
Deerfield Mgmt., L.P., its General Partner

	 
	 	
By:

	
J.E. Flynn Capital, LLC, its General Partner

	 
	 	
 

 

	 	 
	 	
By:

	/s/ David J. Clark	 
	 	
Name:

	
David J. Clark

	 
	 	
Title:

	
Authorized Signatory

	 
	 	
 

 

	 	 
	 	
DEERFIELD PRIVATE DESIGN INTERNATIONAL II, L.P.

	 	 	 	 
	 	
By:

	
Deerfield Mgmt., L.P., its General Partner

	 
	 	
By:

	
J.E. Flynn Capital, LLC, its General Partner

	 
	 	
 

 

	 	 
	 	
By:

	/s/ David J. Clark	 
	 	
Name:

	
David J. Clark

	 
	 	
Title:

	
Authorized Signatory

	 
	 	
 

 

	 	 
	 	
DEERFIELD SPECIAL SITUATIONS FUND, L.P.

	 	 	 	 
	 	
By:

	
Deerfield Mgmt., L.P., its General Partner

	 
	 	
By:

	
J.E. Flynn Capital, LLC, its General Partner

	 
	 	
 

 

	 	 
	 	
By:

	
/s/ David J. Clark

	 
	 	
Name:

	
David J. Clark

	 
	 	
Title:

	
Authorized Signatory

	 

 

 

5.

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