be prepaid in whole or in part without penalty at any time. The principal amount of the loan is payable in three equal annual installments on the fourth, fifth and sixth anniversaries of the facility agreement, except that, if Discovery Labs achieves certain revenue or market capitalization targets, the principal payments due on the fourth and fifth anniversaries could be deferred for one year. Accordingly, if the milestones are achieved, payment of the principal amount could be deferred until the maturity date of the loan in 2019. The outstanding principal amount of the loan at any time will accrue interest at a rate of 8.75% per annum, payable quarterly in cash. The facility agreement contains customary terms and conditions but does not require Discovery Labs to meet minimum financial and revenue performance covenants. In connection with each advance, Deerfield
will receive a transaction fee equal to 1.5% of the amount disbursed. In connection with the initial advance, Deerfield
will receive warrants to purchase 2.3 million shares of common stock, par value $.001 per share (Common Stock), at an exercise price of $2.81 per share, which represents a premium of 24% over the closing price of the Company's common stock preceding the execution of the facility agreement. Upon disbursement of the $20 million advance, Deerfield
will receive warrants to purchase an additional 4.7 million shares of Common Stock at the same exercise price per share of Common Stock. All of the warrants will expire on the sixth anniversary date of the facility agreement.
Additional information about the facility and the terms of the related agreements is included in a Current Report on Form 8-K that is expected to be filed today with the Securities and Exchange Commission.
This press release is neither an offer to sell nor a solicitation of an offer to bu
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