Exhibit 10.1

 

Cyclacel Pharmaceuticals, Inc.

Up to $8,350,000 of

Shares of Common Stock

(par value $0.001 per share)

 

Controlled Equity OfferingSM

 

Sales Agreement

 

July 10, 2015

 

Cantor Fitzgerald & Co.

499 Park Avenue

New York, NY 10022

 

Ladies and Gentlemen:

 

Cyclacel Pharmaceuticals, Inc., a Delaware corporation (the “Company”), confirms
its agreement (this “Agreement”) with Cantor Fitzgerald & Co. (the “Agent”), as
follows:

 

1.           Issuance and Sale of Shares.  The Company agrees that, from time to
time during the term of this Agreement, on the terms and subject to the
conditions set forth herein, it may issue and sell through the Agent, up to
$8,350,000 shares of common stock (the shares to be offered and sold hereunder
being referred to as the “Placement Shares”) of the Company, par value $0.001
per share (the “Common Stock”); provided, however, that in no event shall the
Company issue or sell through the Agent such number or dollar amount of
Placement Shares that would (a) exceed the number or dollar amount of shares of
Common Stock registered on the effective Registration Statement (defined below)
pursuant to which the offering is being made, (b) exceed the number of
authorized but unissued shares of Common Stock, (c) exceed the number or dollar
amount of shares of Common Stock permitted to be sold under Form S-3 (including
General Instruction I.B.6 thereof, if applicable) or (d) exceed the number or
dollar amount of Common Stock for which the Company has filed a Prospectus
Supplement (defined below) (the lesser of (a), (b), (c) and (d), the “Maximum
Amount”). Notwithstanding anything to the contrary contained herein, the parties
hereto agree that compliance with the limitations set forth in this Section 1 on
the amount of Placement Shares issued and sold under this Agreement shall be the
sole responsibility of the Company and that Agent shall have no obligation in
connection with such compliance. The issuance and sale of Placement Shares
through Agent will be effected pursuant to the Registration Statement (as
defined below) filed by the Company and declared effective by the Securities and
Exchange Commission (the “Commission”) on April 22, 2013, although nothing in
this Agreement shall be construed as requiring the Company to use the
Registration Statement to issue Placement Shares.

 

The Company has filed, in accordance with the provisions of the Securities Act
of 1933, as amended and the rules and regulations thereunder (the “Securities
Act”), with the Commission a registration statement on Form S-3 (File No.
333-187801), including a base prospectus, relating to certain securities,
including the Placement Shares to be issued from time to time by the Company,
and which incorporates by reference documents that the Company has filed or will
file in accordance with the provisions of the Securities Exchange Act of 1934,
as

 

 

 

 

amended (the “Exchange Act”), and the rules and regulations thereunder. The
Company has prepared a prospectus supplement to the base prospectus included as
part of the registration statement, which prospectus supplement relates to the
Placement Shares to be issued from time to time by the Company (the “Prospectus
Supplement”). The Company will furnish to the Agent, for use by the Agent,
copies of the base prospectus included as part of such registration statement,
as supplemented by the Prospectus Supplement, relating to the Placement Shares
to be issued from time to time by the Company. The Company may file one or more
additional registration statements from time to time that will contain a base
prospectus and related prospectus or prospectus supplement, if applicable (which
shall be a Prospectus Supplement), with respect to the Placement Shares. Except
where the context otherwise requires, such registration statement(s), including
all documents filed as part thereof or incorporated by reference therein, and
including any information contained in a Prospectus (as defined below)
subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act or deemed to be a part of such registration statement(s) pursuant
to Rule 430B of the Securities Act, is herein called the “Registration
Statement.” The base prospectus or base prospectuses, including all documents
incorporated therein by reference, included in the Registration Statement, as it
may be supplemented by the Prospectus Supplement, in the form in which such
prospectus or prospectuses and/or Prospectus Supplement have most recently been
filed by the Company with the Commission pursuant to Rule 424(b) under the
Securities Act, together with the then issued Issuer Free Writing Prospectus(es)
(defined below), is herein called the “Prospectus.”

 

Any reference herein to the Registration Statement, any Prospectus Supplement,
Prospectus or any Issuer Free Writing Prospectus shall be deemed to refer to and
include the documents, if any, incorporated by reference therein (the
“Incorporated Documents”), including, unless the context otherwise requires, the
documents, if any, filed as exhibits to such Incorporated Documents. Any
reference herein to the terms “amend,” “amendment” or “supplement” with respect
to the Registration Statement, any Prospectus Supplement, the Prospectus or any
Issuer Free Writing Prospectus shall be deemed to refer to and include the
filing of any document under the Exchange Act on or after the most-recent
effective date of the Registration Statement, or the date of the Prospectus
Supplement, Prospectus or such Issuer Free Writing Prospectus, as the case may
be, and incorporated therein by reference. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or to any amendment or
supplement thereto shall be deemed to include the most recent copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System, or if applicable, the Interactive Data Electronic Application system
when used by the Commission (collectively, “EDGAR”).

 

2.           Placements.   Each time that the Company wishes to issue and sell
Placement Shares hereunder (each, a “Placement”), it will notify the Agent by
email notice (or other method mutually agreed to in writing by the parties) of
the number of Placement Shares to be issued, the time period during which sales
are requested to be made, any limitation on the number of Placement Shares that
may be sold in any one day and any minimum price below which sales may not be
made (a “Placement Notice”), the form of which is attached hereto as Schedule 1.
The Placement Notice shall originate from any of the individuals from the
Company set forth on Schedule 3 (with a copy to each of the other individuals
from the Company listed on such schedule), and shall be addressed to each of the
individuals from the Agent set forth on

 

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Schedule 3, as such Schedule 3 may be amended from time to time. The Placement
Notice shall be effective unless and until (i) the Agent declines in writing to
accept the terms contained therein for any reason, in its sole discretion,
within two (2) Business Days (as defined below) of receipt, (ii) the entire
amount of the Placement Shares thereunder have been sold, (iii) the Company, in
its sole discretion, suspends or terminates the Placement Notice or (iv) this
Agreement has been terminated under the provisions of Section 12. The amount of
any discount, commission or other compensation to be paid by the Company to
Agent in connection with the sale of the Placement Shares shall be calculated in
accordance with the terms set forth in Schedule 2. It is expressly acknowledged
and agreed that neither the Company nor the Agent will have any obligation
whatsoever with respect to a Placement or any Placement Shares unless and until
the Company delivers a Placement Notice to the Agent and the Agent does not
decline such Placement Notice pursuant to the terms set forth above, and then
only upon the terms specified therein and herein. In the event of a conflict
between the terms of this Agreement and the terms of a Placement Notice, the
terms of the Placement Notice will control.

 

3.           Sale of Placement Shares by Agent.  Subject to the provisions of
Section 5(a), the Agent, for the period specified in the Placement Notice, will
use its commercially reasonable efforts consistent with its normal trading and
sales practices and applicable state and federal laws, rules and regulations and
the rules of the NASDAQ Global Market (the “Exchange”), to sell the Placement
Shares up to the amount specified, and otherwise in accordance with the terms of
such Placement Notice. The Agent will provide written confirmation to the
Company no later than the opening of the Trading Day (as defined below)
immediately following the Trading Day on which it has made sales of Placement
Shares hereunder setting forth the number of Placement Shares sold on such day,
the compensation payable by the Company to the Agent pursuant to Section 2 with
respect to such sales, and the Net Proceeds (as defined below) payable to the
Company, with an itemization of the deductions made by the Agent (as set forth
in Section 5(b)) from the gross proceeds that it receives from such sales.
Subject to the terms of the Placement Notice, the Agent may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415 of the Securities Act, including without limitation sales
made directly on the Exchange, on any other existing trading market for the
Common Stock or to or through a market maker. Subject to the terms of a
Placement Notice, the Agent may also sell Placement Shares by any other method
permitted by law, including, but not limited to, in privately negotiated
transactions. Notwithstanding the foregoing, no sale may be made in a privately
negotiated transaction without the prior consent of the Company. “Trading Day”
means any day on which Common Stock is traded on the Exchange.

 

4.           Suspension of Sales.  The Company or the Agent may, upon notice to
the other party in writing (including by email correspondence to each of the
individuals of the other party set forth on Schedule 3, if receipt of such
correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable facsimile transmission or email correspondence to each
of the individuals of the other party set forth on Schedule 3), suspend any sale
of Placement Shares (a “Suspension”); provided, however, that such suspension
shall not affect or impair any party’s obligations with respect to any Placement
Shares sold hereunder prior to the receipt of such notice. While a Suspension is
in effect any obligation under Sections 7(l), 7(m), and 7(n) with respect to the
delivery of certificates, opinions, or comfort letters to the Agent, shall be
waived, provided, however, that such waiver shall not apply for the
Representation Date (defined below)

 

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occurring on the date that the Company files its annual report on Form 10-K.
Each of the parties agrees that no such notice under this Section 4 shall be
effective against any other party unless it is made to one of the individuals
named on Schedule 3 hereto, as such Schedule may be amended from time to time.

 

5.           Sale and Delivery to the Agent; Settlement.

 

(a)          Sale of Placement Shares.   On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, upon the Agent’s acceptance of the terms of a Placement Notice, and
unless the sale of the Placement Shares described therein has been declined,
suspended, or otherwise terminated in accordance with the terms of this
Agreement, the Agent, for the period specified in the Placement Notice, will use
its commercially reasonable efforts consistent with its normal trading and sales
practices and applicable law and regulations to sell such Placement Shares up to
the amount specified, and otherwise in accordance with the terms of such
Placement Notice. The Company acknowledges and agrees that (i) there can be no
assurance that the Agent will be successful in selling Placement Shares, (ii)
the Agent will incur no liability or obligation to the Company or any other
person or entity if it does not sell Placement Shares for any reason other than
a failure by the Agent to use its commercially reasonable efforts consistent
with its normal trading and sales practices and applicable law and regulations
to sell such Placement Shares as required under this Agreement and (iii) the
Agent shall be under no obligation to purchase Placement Shares on a principal
basis pursuant to this Agreement, except as otherwise agreed by the Agent and
the Company.

 

(b)          Settlement of Placement Shares.   Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the third (3rd) Trading Day (or such earlier day as is industry practice for
regular-way trading) following the date on which such sales are made (each, a
“Settlement Date”). The Agent shall notify the Company of each sale of Placement
Shares on the date of such sale. The amount of proceeds to be delivered to the
Company on a Settlement Date against receipt of the Placement Shares sold (the
“Net Proceeds”) will be equal to the aggregate sales price received by the
Agent, after deduction for (i) the Agent’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2 hereof,
and (ii) any transaction fees imposed by any governmental or self-regulatory
organization in respect of such sales.

 

(c)          Delivery of Placement Shares.   On or before each Settlement Date,
the Company will, or will cause its transfer agent to, electronically transfer
the Placement Shares being sold by crediting the Agent’s or its designee’s
account (provided the Agent shall have given the Company written notice of such
designee at least one Trading Day prior to the Settlement Date) at The
Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the parties
hereto which in all cases shall be freely tradable, transferable, registered
shares in good deliverable form. On each Settlement Date, the Agent will deliver
the related Net Proceeds in same day funds to an account designated by the
Company on, or prior to, the Settlement Date. The Company agrees that if the
Company, or its transfer agent (if applicable), defaults in its obligation to
deliver Placement Shares on a Settlement Date, the Company agrees that in
addition to and in no way limiting the rights and obligations set forth in
Section 10(a) hereto, it will (i) hold the Agent harmless against any loss,
claim, damage, or expense (including

 

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reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company or its transfer agent (if
applicable) and (ii) pay to the Agent any commission, discount, or other
compensation to which it would otherwise have been entitled absent such default.

 

(d)          Denominations; Registration.   Certificates for the Placement
Shares, if any, shall be in such denominations and registered in such names as
the Agent may request in writing at least one full Business Day (as defined
below) before the Settlement Date. The certificates for the Placement Shares, if
any, will be made available by the Company for examination and packaging by the
Agent in The City of New York not later than noon (New York time) on the
Business Day prior to the Settlement Date.

 

(e)          Limitations on Offering Size.   Under no circumstances shall the
Company cause or request the offer or sale of any Placement Shares if, after
giving effect to the sale of such Placement Shares, the aggregate gross sales
proceeds of Placement Shares sold pursuant to this Agreement would exceed the
lesser of (A) together with all sales of Placement Shares under this Agreement,
the Maximum Amount, (B) the amount available for offer and sale under the
currently effective Registration Statement and (C) the amount authorized from
time to time to be issued and sold under this Agreement by the Company’s board
of directors, a duly authorized committee thereof or a duly authorized executive
committee, and notified to the Agent in writing. Under no circumstances shall
the Company cause or request the offer or sale of any Placement Shares pursuant
to this Agreement at a price lower than the minimum price authorized from time
to time by the Company’s board of directors, a duly authorized committee thereof
or a duly authorized executive committee, and notified to the Agent in writing.
Further, under no circumstances shall the Company cause or permit the aggregate
offering amount of Placement Shares sold pursuant to this Agreement to exceed
the Maximum Amount.

 

6.           Representations and Warranties of the Company.   The Company
represents and warrants to, and agrees with Agent that as of the date of this
Agreement and as of each Applicable Time (as defined below), except as set forth
below:

 

(a)          Registration Statement and Prospectus.    The Company and the
transactions contemplated by this Agreement meet the requirements for and comply
with the applicable conditions set forth in Form S-3 (including General
Instruction I.A and I.B) under the Securities Act. The Registration Statement
has been filed with the Commission and has been declared effective by the
Commission under the Securities Act prior to the issuance of any Placement
Notices by the Company. The Prospectus Supplement will name the Agent as the
agent in the section entitled “Plan of Distribution.” The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. The Registration Statement and the offer and sale
of Placement Shares as contemplated hereby meet the requirements of Rule 415
under the Securities Act and comply in all material respects with said Rule. Any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement have been or will be so described or
filed. Copies of the Registration Statement, the Prospectus, and any amendments
or supplements thereto and all Incorporated Documents that were filed with the
Commission on or prior to the date of this Agreement have been delivered, or are
available through EDGAR, to the Agent and its counsel. The Company has not
distributed and, prior to

 

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the later to occur of each Settlement Date and completion of the distribution of
the Placement Shares, will not distribute any offering material in connection
with the offering or sale of the Placement Shares other than the Registration
Statement and the Prospectus and any Issuer Free Writing Prospectus (as defined
below) to which the Agent has consented (such consent not to be unreasonably
withheld or delayed). The Common Stock is registered pursuant to Section 12(b)
of the Exchange Act and is currently listed on the Exchange under the trading
symbol “CYCC.” The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Exchange, nor has the
Company received any notification that the Commission or the Exchange is
contemplating terminating such registration or listing (except as set forth in
the Registration Statement and the Prospectus). Except as set forth in the
Registration Statement and the Prospectus, to the Company’s knowledge, it is in
material compliance with all applicable listing requirements of the Exchange.
The Company has no reason to believe that it will not in the foreseeable future
continue to be in material compliance with all such listing and maintenance
requirements, subject to changes in the market price of the Common Stock, which
may from time to time be lower than the minimum allowed under the rules of the
Exchange, subject to appropriate corrective action to be taken by the Company.

 

(b)          No Misstatement or Omission.    The Registration Statement, when it
became effective, did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendment and
supplement thereto, on the date thereof and at each Applicable Time (defined
below), did not or will not include an 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. The
Incorporated Documents did not, and any further Incorporated Documents filed
after the date of this Agreement will not, when filed with the Commission,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated in such document or necessary to make the statements in
such document, in light of the circumstances under which they were made, not
misleading. The foregoing shall not apply to statements in, or omissions from,
any such document made in reliance upon, and in conformity with, information
furnished to the Company by Agent specifically for use in the preparation
thereof.

 

(c)          Conformity with Securities Act and Exchange Act.    The
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or
any amendment or supplement thereto, and the Incorporated Documents, when such
documents were or are filed with the Commission under the Securities Act or the
Exchange Act or became or become effective under the Securities Act, as the case
may be, conformed or will conform in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable. At each Settlement
Date, the Registration Statement and the Prospectus, as of such date, will
conform in all material respects with the requirements of the Securities Act.

 

(d)          Financial Information.    The consolidated financial statements of
the Company included or incorporated by reference in the Registration Statement,
the Prospectus and the Issuer Free Writing Prospectuses, if any, together with
the related notes and schedules, comply in all material respects with the
requirements of the Securities Act and the Exchange Act and present fairly, in
all material respects, the consolidated financial position of the Company

 

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and its Subsidiaries (as defined below) as of the dates indicated and the
consolidated statements of operations, statements of changes in stockholders’
equity, and statements of cash flows of the Company for the periods specified
(subject to normal year end audit adjustments for interim financial statements)
and have been prepared in conformity with GAAP (as defined below) applied on a
consistent basis during the periods involved (except as otherwise noted
therein); the summary and selected financial data with respect to the Company
and the Subsidiaries (as defined below) contained or incorporated by reference
in the Registration Statement, the Prospectus and the Issuer Free Writing
Prospectuses, if any, fairly present in all material respects the information
shown therein as at the respective dates and for the respective periods
specified and are derived from the consolidated financial statements and the
books and records of the Company. There are no financial statements (historical
or pro forma) that are required to be included or incorporated by reference in
the Registration Statement, or the Prospectus that are not included or
incorporated by reference as required. The Company and the Subsidiaries (as
defined below) do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), that are required to
be described in the Registration Statement (excluding the exhibits thereto) and
the Prospectus; and all disclosures contained or incorporated by reference in
the Registration Statement, the Prospectus and the Issuer Free Writing
Prospectuses, if any, regarding “non-GAAP financial measures” (as such term is
defined by the rules and regulations of the Commission) comply, in all material
respects, with Regulation G of the Exchange Act and Item 10 of Regulation S-K
under the Securities Act, to the extent applicable.

 

(e)          Conformity with EDGAR Filing.   The Prospectus delivered to the
Agent for use in connection with the sale of the Placement Shares pursuant to
this Agreement will be identical to the versions of the Prospectus created to be
transmitted to the Commission for filing via EDGAR, except to the extent
permitted by Regulation S-T.

 

(f)           Organization.   The Company and each of its Subsidiaries (as
defined below) has been duly organized and is validly existing as a corporation
or other entity in good standing under the laws of their respective
jurisdictions of organization, with corporate power and authority to own its
properties and conduct its business as currently being conducted and as
described in the Registration Statement and the Prospectus, and is duly
qualified as a foreign corporation or other entity for the transaction of
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification, except where the failure to be so qualified in any such
jurisdiction would not reasonably be expected to, individually or in the
aggregate, have a material adverse effect on the assets, business, operations,
financial condition, stockholders’ equity or results of operations of the
Company and the Subsidiaries (as defined below) taken as a whole (a “Material
Adverse Effect”).

 

(g)          Subsidiaries.   The subsidiaries set forth on Schedule 4
(collectively, the “Subsidiaries”) are the Company’s only significant
subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated
by the Commission). Except as set forth in the Registration Statement and in the
Prospectus, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any other corporation
or have any equity interest in any other corporation, partnership, joint
venture, association, trust or other entity. No Subsidiary is currently
prohibited, directly or indirectly, from paying any dividends to the

 

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Company, from making any other distribution on such Subsidiary’s capital stock,
from repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary’s property or assets to the
Company or any other Subsidiary of the Company that would, individually or in
the aggregate, have a Material Adverse Effect.

 

(h)          No Violation or Default.   Neither the Company nor any of its
Subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, 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 contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries are subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of each of clauses (ii) and (iii) above, for any such
violation or default that would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. To the Company’s
knowledge, no other party under any material contract or other agreement to
which it or any of its Subsidiaries is a party is in default in any respect
thereunder where such default would have a Material Adverse Effect.

 

(i)           No Material Adverse Change.   Subsequent to the respective dates
as of which information is given in the Registration Statement, the Prospectus
and the Free Writing Prospectuses, if any (including any Incorporated Document),
there has not been (i) any Material Adverse Effect, (ii) other than as
contemplated by this Agreement, any transaction which is material to the Company
and the Subsidiaries taken as a whole, (iii) any obligation or liability, direct
or contingent (including any off-balance sheet obligations), incurred by the
Company or any Subsidiary, which is material to the Company and the Subsidiaries
taken as a whole and would be required to be described in the Registration
Statement and the Prospectus, (iv) any material change in the capital stock
(other than as a result of the sale of Placement Shares) or outstanding
long-term indebtedness of the Company or any of its Subsidiaries or (v) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company or any Subsidiary, other than in each case above in the ordinary
course of business or as otherwise disclosed in the Registration Statement or
Prospectus (including any Incorporated Document).

 

(j)           Capitalization.   The issued and outstanding shares of capital
stock of the Company have been validly issued, are fully paid and nonassessable
and, other than as disclosed in the Registration Statement or the Prospectus,
are not subject to any preemptive rights, rights of first refusal or similar
rights pursuant to the Company’s charter, bylaws or any agreement or other
instrument to which the Company is a party or by which the Company is bound. The
Company has an authorized, issued and outstanding capitalization as set forth in
the Registration Statement and the Prospectus as of the dates referred to
therein (other than the grant of additional options under the Company’s existing
stock option plans, or changes in the number of outstanding shares of Common
Stock of the Company due to the issuance of shares upon the exercise or
conversion of securities exercisable for, or convertible into, Common Stock
outstanding on the date hereof) and such authorized capital stock conforms in
all material respects to the description thereof set forth in the Registration
Statement and the Prospectus. The

 

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description of the securities of the Company in the Registration Statement and
the Prospectus is complete and accurate in all material respects. Except as
disclosed in the Registration Statement or the Prospectus, as of the date
referred to therein, the Company does not have outstanding any options to
purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or exchangeable for, any contracts or commitments
to issue or sell, any shares of capital stock or other securities.

 

(k)          Authorization; Enforceability.   The Company has full corporate
power and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, except as rights to
indemnification or contribution hereunder may be limited by federal or state
securities laws or public policy considerations and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles.

 

(l)           Authorization of Placement Shares.   The Placement Shares, when
issued and delivered pursuant to the terms approved by the board of directors of
the Company or a duly authorized committee thereof, or a duly authorized
executive committee, against payment therefor as provided herein, will be duly
authorized and validly issued and fully paid and nonassessable and free and
clear of any pledge, lien, encumbrance, security interest or other claim,
including any statutory or contractual preemptive rights, resale rights, rights
of first refusal or other similar rights, and will be registered pursuant to
Section 12 of the Exchange Act. The Placement Shares, when issued, will conform
in all material respects to the description thereof set forth in or incorporated
into the Prospectus.

 

(m)         No Consents Required.   No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement or the issuance and sale by the Company of the
Placement Shares, except for (i) the registration of the Placement Shares under
the Securities Act; (ii) application(s) to the Exchange for the listing of the
Placement Shares for trading thereon in the time and manner required thereby;
and (iii) such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities laws or by
the by-laws and rules of the Financial Industry Regulatory Authority (“FINRA”)
or the Exchange in connection with the sale of the Placement Shares by the
Agent.

 

(n)          No Preferential Rights.   Except as set forth in the Registration
Statement and the Prospectus, (i) no person, as such term is defined in Rule
1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”),
has the right, contractual or otherwise, to cause the Company to issue or sell
to such Person any Common Stock or shares of any other capital stock or other
securities of the Company (other than upon the exercise of options or warrants
to purchase Common Stock or upon the exercise of options or vesting of
restricted stock units or other awards that may be granted from time to time
under the Company’s equity incentive plans), (ii) no Person has any preemptive
rights, resale rights, rights of first refusal, or any other rights (whether
pursuant to a “poison pill” provision or otherwise) to purchase any Common Stock
or shares of any other capital stock or other securities of the Company, (iii) 
no

 

-9-

 

 

Person has the right to act as an underwriter or as a financial advisor to the
Company in connection with the offer and sale of the Placement Shares, and
(iv) no Person has the right, contractual or otherwise, to require the Company
to register under the Securities Act any Common Stock or shares of any other
capital stock or other securities of the Company, or to include any such shares
or other securities 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 Placement Shares as contemplated thereby or
otherwise.

 

(o)          Independent Public Accounting Firm.    McGladrey LLP (the
“Accountant”), whose report on the consolidated financial statements of the
Company is filed with the Commission as part of the Company’s most recent Annual
Report on Form 10-K filed with the Commission and incorporated by reference into
the Registration Statement and the Prospectus, are and, during the periods
covered by their report, were an independent registered public accounting firm
within the meaning of the Securities Act and the Public Company Accounting
Oversight Board (United States). To the Company’s knowledge the Accountant is
not in violation of the auditor independence requirements of the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company.

 

(p)          Enforceability of Agreements.   To the Company’s knowledge, all
agreements between the Company and third parties expressly referenced in the
Prospectus are, except as would not have a Material Adverse Effect, legal, valid
and binding obligations of the Company enforceable in accordance with their
respective terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited by federal or
state securities laws or public policy considerations in respect thereof.

 

(q)          No Litigation.    Except as set forth in the Registration Statement
or the Prospectus, there are no legal, governmental or regulatory actions, suits
or proceedings pending, nor, to the Company’s knowledge, any legal, governmental
or regulatory audits or investigations, to which the Company or a Subsidiary is
a party or to which any property of the Company or any of its Subsidiaries is
the subject that, individually or in the aggregate, if determined adversely to
the Company or any of its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement; to the Company’s
knowledge, no such actions, suits or proceedings are threatened or contemplated
by any governmental or regulatory authority or threatened by others; and
(i) there are no current or pending legal, governmental or regulatory audits or
investigations, actions, suits or proceedings that are required under the
Securities Act to be described in the Prospectus that are not so described; and
(ii) there are no contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement that are
not so filed.

 

(r)           Consents and Permits.   Except as disclosed in the Registration
Statement and the Prospectus, the Company and its Subsidiaries have made all
filings, applications and submissions required by, possesses and is operating in
compliance with, all approvals, licenses, certificates, certifications,
clearances, consents, grants, exemptions, marks, notifications, orders, permits
and other authorizations issued by, the appropriate federal, state or foreign
governmental or regulatory authorities (including, without limitation, the
United States Food and Drug

 

-10-

 

 

Administration (the “FDA”), the United States Drug Enforcement Administration or
any other foreign, federal, state, provincial, court or local government or
regulatory authorities engaged in the regulation of clinical trials,
pharmaceuticals, biologics or biohazardous substances or materials) necessary
for the ownership or lease of their respective properties or to conduct its
businesses as described in the Registration Statement and the Prospectus
(collectively, “Permits”), except for such Permits the failure of which to
possess, obtain or make the same would not reasonably be expected to have a
Material Adverse Effect; the Company and its Subsidiaries are in compliance with
the terms and conditions of all such Permits, except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse Effect;
all of the Permits are valid and in full force and effect, except where any
invalidity, individually or in the aggregate, would not be reasonably expected
to have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any written notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or non-renewal of
any such Permit which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would be reasonably expected to have a
Material Adverse Effect, or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course
to the extent required. To the extent required by applicable laws and
regulations of the FDA, the Company or the applicable Subsidiary has submitted
to the FDA an Investigational New Drug Application or amendment or supplement
thereto for each clinical trial it has conducted or sponsored or is conducting
or sponsoring; to the Company’s knowledge, all such submissions were in material
compliance with applicable laws and rules and regulations when submitted and no
material deficiencies have been asserted by the FDA with respect to any such
submissions. To the Company’s knowledge, the preclinical studies and clinical
trials conducted or sponsored by the Company and described in the Prospectus
were, and, if still pending, are being, conducted in all material respects in
accordance with the experimental protocols, procedures and controls pursuant to,
where applicable, accepted professional and scientific standards for products or
product candidates comparable to those being developed by the Company; the
descriptions of such studies and trials, and the results thereof, contained in
the Prospectus are accurate and complete in all material respects; the Company
is not aware of any studies or trials not described in the Prospectus, the
results of which reasonably call into question the results of the studies and
trials described in the Prospectus; and the Company has not received any written
notice or correspondence from the FDA or any foreign, state or local
governmental body exercising comparable authority requiring the termination,
suspension, clinical hold or material modification of any studies or trials.

 

(s)          Regulatory Filings.   Except as disclosed in the Registration
Statement and the Prospectus, neither the Company nor any of its Subsidiaries
has failed to file with the applicable regulatory authorities (including,
without limitation, the FDA, or any foreign, federal, state, provincial or local
governmental or regulatory authority performing functions similar to those
performed by the FDA) any required filing, declaration, listing, registration,
report or submission, except for such failures that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
except as disclosed in the Registration Statement and the Prospectus, all such
filings, declarations, listings, registrations, reports or submissions were in
compliance with applicable laws when filed and no deficiencies have been
asserted by any applicable regulatory authority with respect to any such
filings, declarations, listings, registrations, reports or submissions, except
for any deficiencies that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Company

 

-11-

 

 

has operated and currently is, in all material respects, in compliance with the
United States Federal Food, Drug, and Cosmetic Act, all applicable rules and
regulations of the FDA and other federal, state, local and foreign governmental
bodies exercising comparable authority. The Company has not received any FDA
Form 483, notice of adverse finding, warning letter, or other correspondence or
notice from the FDA or any other governmental authority alleging or asserting
noncompliance with any Applicable Laws or any licenses, certificates, approvals,
clearances, authorizations, permits and supplements or amendments thereto
required by any such Applicable Laws, except for such failure of which to
possess, obtain or make the same would not reasonably be expected to have a
Material Adverse Effect. Additionally, neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company, any of their respective
employees, officers, directors, agents or contractors has been excluded,
suspended or debarred from participation in any federal health care program or,
to the knowledge of Company and its Subsidiaries, is subject to an inquiry,
investigation, proceeding, or other similar matter that could subject the
Company, any of its Subsidiaries, or any of their respective employees,
officers, directors, agents or contractors to exclusion, suspension or
debarment.

 

(t)           Intellectual Property.   Except as disclosed in the Registration
Statement and the Prospectus, the Company and its Subsidiaries 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 their respective
businesses as now conducted except to the extent that the failure to own,
possess, license or otherwise hold adequate rights to use such Intellectual
Property would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in the Registration
Statement and the Prospectus (i) there are no rights of third parties to any
such Intellectual Property owned by the Company and its Subsidiaries; (ii) to
the Company’s knowledge, there is no infringement by third parties of any such
Intellectual Property; (iii) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
and its Subsidiaries’ rights in or to any such Intellectual Property, and the
Company is unaware of any facts which could form a reasonable basis for any such
action, suit, proceeding or claim; (iv) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property; (v) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others that the Company and its Subsidiaries infringe or otherwise violate any
patent, trademark, copyright, trade secret or other proprietary rights of
others; (vi) 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 (as defined in 35 U.S.C. § 135) has been commenced
against any patent or patent application described in the Prospectus as being
owned by or licensed to the Company; and (vii) the Company and its Subsidiaries
have complied with the terms of each agreement pursuant to which Intellectual
Property has been licensed to the Company or such Subsidiary, and all such
agreements are in full force and effect, except, in the case of any of clauses
(i)-(vii) above, for any such infringement by third parties or any such pending
or threatened suit, action, proceeding or claim as would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
and (y) in the case of clause (vii) above, for any non-compliance as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

-12-

 

 

(u)          Reserved.

 

(v)          Market Capitalization.   At the time the Registration Statement was
or will be declared effective, and at the time the Company’s most recent Annual
Report on Form 10-K was filed with the Commission, the Company met or will meet
the then applicable requirements for the use of Form S-3 under the Securities
Act, including, but not limited to, General Instruction I.B.6 of Form S-3. The
aggregate market value of the outstanding voting and non-voting common equity
(as defined in Securities Act Rule 405) of the Company held by persons other
than affiliates of the Company (pursuant to Securities Act Rule 144, those that
directly, or indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with, the Company) (the
“Non-Affiliate Shares”), was greater than $30 million (calculated by multiplying
(x) the highest price at which the common equity of the Company closed on the
Exchange within 60 days of the date of this Agreement times (y) the number of
Non-Affiliate Shares). The Company is not a shell company (as defined in Rule
405 under the Securities Act) and has not been a shell company for at least 12
calendar months previously and if it has been a shell company at any time
previously, has filed current Form 10 information (as defined in General
Instruction I.B.6 of Form S-3) with the Commission at least 12 calendar months
previously reflecting its status as an entity that is not a shell company.

 

(w)         No Material Defaults.   Neither the Company nor any of the
Subsidiaries is in default on any installment on indebtedness for borrowed money
or on any rental on one or more long-term leases, which defaults, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect. The Company has not filed a report pursuant to Section 13(a) or 15(d) of
the Exchange Act since the filing of its last Annual Report on Form 10-K,
indicating that it (i) has failed to pay any dividend or sinking fund
installment on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long-term
leases, which defaults, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.

 

(x)           Certain Market Activities.   Neither the Company, nor any of the
Subsidiaries, nor, to the Company’s knowledge, any of their respective
directors, officers or controlling persons has taken, directly or indirectly,
any unlawful action designed, or that has constituted or might reasonably be
expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.

 

(y)          Broker/Dealer Relationships.   Neither the Company nor any of the
Subsidiaries or any related entities (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act or
(ii) directly or indirectly through one or more intermediaries, controls or is a
“person associated with a member” or “associated person of a member” (within the
meaning set forth in the FINRA Manual).

 

(z)           No Reliance.   The Company has not relied upon the Agent or legal
counsel for the Agent for any legal, tax or accounting advice in connection with
the offering and sale of the Placement Shares.

 

(aa)         Taxes.   The Company and each of its Subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns and other
material tax returns which

 

-13-

 

 

have been required to be filed by the Company or a Subsidiary, or have properly
requested extensions thereof, and paid all taxes shown thereon through the date
hereof, to the extent that such taxes have become due and are not being
contested in good faith, except where the failure to so file or pay would not
reasonably be expected to have a Material Adverse Effect. Except as otherwise
disclosed in or contemplated by the Registration Statement or the Prospectus, no
tax deficiency has been determined adversely to the Company or any of its
Subsidiaries which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company has no
knowledge of any federal, state or other governmental tax deficiency, penalty or
assessment which has been or might be asserted against it which would not
reasonably be expected to have a Material Adverse Effect.

 

(bb)        Title to Real and Personal Property.   Except as set forth in the
Registration Statement or the Prospectus, the Company and its Subsidiaries have
good and marketable title in fee simple to all real property owned by them and
good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free
and clear of all liens, except for (i) liens as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries and
(ii) liens for the payment of federal, state or other taxes, for which
appropriate reserves have been made in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.

 

(cc)        Environmental Laws. Except as set forth in the Registration
Statement or the Prospectus, to the Company’s knowledge the Company and its
Subsidiaries (i) are in compliance with all applicable federal, state, local and
foreign laws, rules, regulations, and orders relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (collectively, “Environmental Laws”); (ii) have
received and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses as described in the Registration Statement and the Prospectus; and
(iii) have 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, in the case of any of
clauses (i), (ii) or (iii) above, for any such failure to comply or failure to
receive required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The representations and warranties made in this Section 6(cc)
are the only representations and warranties made by the Company under this
Agreement with respect to Environmental Laws.

 

(dd)        Disclosure Controls.   The Company and each of its Subsidiaries
maintain systems 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 (“GAAP”) and to maintain asset
accountability; (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

 

-14-

 

 

differences. The Company’s internal control over financial reporting is
effective and the Company is not aware of any material weaknesses in its
internal control over financial reporting (other than as set forth in the
Prospectus). Since the date of the latest audited financial statements of the
Company included in the Prospectus, there has been no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting (other than as set forth in the Prospectus). The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15 and 15d-15) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company and each
of its Subsidiaries is made known to the certifying officers by others within
those entities, including during the period in which the Company’s Annual Report
on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, is being
prepared. The Company’s certifying officers have evaluated the effectiveness of
the Company’s disclosure controls and procedures as of a date within 90 days
prior to the filing date of the Form 10-K for the fiscal year most recently
ended (such date, the “Evaluation Date”). The Company presented in its Form 10-K
for the fiscal year most recently ended the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date and the disclosure controls and
procedures were effective. Since the Evaluation Date, there have been no
significant changes in the Company’s internal controls (as such term is defined
in Item 307(b) of Regulation S-K under the Securities Act) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s
internal controls.

 

(ee)        Sarbanes-Oxley.   There is and has been no failure on the part of
the Company or, to the knowledge of the Company, any of the Company’s directors
or officers, in their capacities as such, to comply in all material respects
with any applicable provisions of the Sarbanes-Oxley Act and the rules and
regulations promulgated thereunder. Each of the principal executive officer and
the principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial officer of
the Company as applicable) has made all certifications required by Sections 302
and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms,
statements and other documents required to be filed by it or furnished by it to
the Commission. For purposes of the preceding sentence, “principal executive
officer” and “principal financial officer” shall have the meanings given to such
terms in the Sarbanes-Oxley Act.

 

(ff)          Finder’s Fees.   Neither the Company nor any of the Subsidiaries
has incurred any liability for any finder’s fees, brokerage commissions or
similar payments in connection with the transactions herein contemplated, except
as may otherwise exist with respect to Agent pursuant to this Agreement.

 

(gg)        Labor Disputes.   No labor disturbance by or dispute with employees
of the Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is threatened which would reasonably be expected to result in a
Material Adverse Effect.

 

(hh)        Investment Company Act.   Neither the Company nor any of the
Subsidiaries is or, after giving effect to the offering and sale of the
Placement Shares, will be an “investment company” or an entity “controlled” by
an “investment company,” as such terms are defined in the Investment Company Act
of 1940, as amended (the “Investment Company Act”).

 

-15-

 

 

(ii)          Operations.   The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions to which the Company or its Subsidiaries are subject, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”), except as would not reasonably be
expected to result in a Material Adverse Effect; and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 

(jj)          Off-Balance Sheet Arrangements.    There are no transactions,
arrangements and other relationships between and/or among the Company, and/or,
to the knowledge of the Company, any of its affiliates and any unconsolidated
entity, including, but not limited to, any structural finance, special purpose
or limited purpose entity (each, an “Off Balance Sheet Transaction”) that would
reasonably be expected to affect materially the Company’s liquidity or the
availability of or requirements for its capital resources, including those Off
Balance Sheet Transactions described in the Commission’s Statement about
Management’s Discussion and Analysis of Financial Conditions and Results of
Operations (Release Nos. 33-8056; 34-45321; FR-61), required to be described in
the Prospectus which have not been described as required.

 

(kk)        Underwriter Agreements.   Except as previously disclosed to the
Agents, the Company is not a party to any agreement with an agent or underwriter
for any other “at-the-market” or continuous equity transaction.

 

(ll)          ERISA.   To the knowledge of the Company, each material employee
benefit plan, within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and any of its Subsidiaries has
been maintained in material compliance with its terms and the requirements of
any applicable statutes, orders, rules and regulations, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
“Code”); no prohibited transaction, within the meaning of Section 406 of ERISA
or Section 4975 of the Code, has occurred which would result in a material
liability to the Company with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption; and for each such
plan that is subject to the funding rules of Section 412 of the Code or Section
302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of
the Code has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.

 

(mm)      Forward Looking Statements.   No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) (a “Forward Looking Statement”) contained in the Registration Statement and
the Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.

 

-16-

 

 

(nn)        Agent Purchases.   The Company acknowledges and agrees that the
Agent has informed the Company that the Agent may, to the extent permitted under
the Securities Act and the Exchange Act, purchase and sell Common Stock for its
own account while this Agreement is in effect, provided, that (i) no such
purchase or sales shall take place while a Placement Notice is in effect (except
to the extent each Agent may engage in sales of Placement Shares purchased or
deemed purchased from the Company as a “riskless principal” or in a similar
capacity), (ii) the Company shall not be deemed to have authorized or consented
to any such purchases or sales by the Agent and (iii) the Agent has implemented
and will use reasonable policies and procedures to ensure that individuals
making investment decisions on behalf of the Agent or any of its subsidiaries or
affiliates will not violate laws prohibiting trading on the basis of material
nonpublic information in connection with such purchases and sales.

 

(oo)        Margin Rules.   Neither the issuance, sale and delivery of the
Placement Shares nor the application of the proceeds thereof by the Company as
described in the Registration Statement and the Prospectus will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or
any other regulation of such Board of Governors.

 

(pp)        Insurance.   The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company and
each of its Subsidiaries reasonably believe are adequate for the conduct of
their properties and as is customary for companies engaged in similar businesses
of comparable size in similar industries.

 

(qq)        No Improper Practices.   (i) Neither the Company nor, to the
Company’s knowledge, the Subsidiaries, nor to the Company’s knowledge, any of
their respective executive officers has, in the past five years, made any
unlawful contributions to any candidate for any political office (or failed
fully to disclose any contribution in violation of law) or made any contribution
or other payment to any official of, or candidate for, any federal, state,
municipal, or foreign office or other person charged with similar public or
quasi-public duty in violation of any law or of the character required to be
disclosed in the Prospectus; (ii) no relationship, direct or indirect, exists
between or among the Company or, to the Company’s knowledge, any Subsidiary or
any affiliate of any of them, on the one hand, and the directors, officers and
stockholders of the Company or, to the Company’s knowledge, any Subsidiary, on
the other hand, that is required by the Securities Act to be described in the
Registration Statement and the Prospectus that is not so described; (iii) no
relationship, direct or indirect, exists between or among the Company or any
Subsidiary or any affiliate of them, on the one hand, and the directors,
officers, or stockholders of the Company or, to the Company’s knowledge, any
Subsidiary, on the other hand, that is required by the rules of FINRA to be
described in the Registration Statement and the Prospectus that is not so
described; (iv) except as described in the Prospectus, there are no material
outstanding loans or advances or material guarantees of indebtedness by the
Company or, to the Company’s knowledge, any Subsidiary to or for the benefit of
any of their respective officers or directors or any of the members of the
families of any of them; (v) the Company has not offered, or caused any
placement agent to offer, Common Stock to any person with the intent to
influence unlawfully (A) a customer or supplier of the Company or any Subsidiary
to alter the customer’s or supplier’s level or type of business with the Company
or any Subsidiary or (B) a trade journalist or publication to write or publish
favorable information about the Company or any Subsidiary or any of their
respective products or services, and (vi) neither the Company nor any Subsidiary
nor, to the Company’s knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any

 

-17-

 

 

Subsidiary or received or retained any funds in violation of any law, rule or
regulation (including, without limitation, the Foreign Corrupt Practices Act of
1977), which payment, receipt or retention of funds is of a character required
to be disclosed in the Registration Statement or the Prospectus.

 

(rr)          Status Under the Securities Act.   The Company was not and is not
an ineligible issuer as defined in Rule 405 under the Securities Act at the
times specified in Rules 164 and 433 under the Securities Act in connection with
the offering of the Placement Shares.

 

(ss)         No Misstatement or Omission in an Issuer Free Writing Prospectus.
   Each Issuer Free Writing Prospectus, as of its issue date and as of each
Applicable Time (as defined in Section 24 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any Incorporated Document that has not been superseded or modified. The
foregoing sentence does not apply to statements in or omissions from any Issuer
Free Writing Prospectus based upon and in conformity with written information
furnished to the Company by the Agent specifically for use therein.

 

(tt)          No Conflicts.   Neither the execution of this Agreement, nor the
issuance, offering or sale of the Placement Shares, nor the consummation of any
of the transactions contemplated herein, nor the compliance by the Company with
the terms and provisions hereof will conflict with, or will result in a breach
of, any of the terms and provisions of, or has constituted or will constitute a
default under, or has resulted in or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
pursuant to the terms of any contract or other agreement to which the Company
may be bound or to which any of the property or assets of the Company is
subject, except (i) such conflicts, breaches or defaults as may have been waived
and (ii) such conflicts, breaches and defaults that would not reasonably be
expected to have a Material Adverse Effect; nor will such action result (x) in
any violation of the provisions of the organizational or governing documents of
the Company, or (y) to the Company’s knowledge, in any material violation of the
provisions of any statute or any order, rule or regulation applicable to the
Company or of any court or of any federal, state or other regulatory authority
or other government body having jurisdiction over the Company, other than, with
respect to clause (y) only, any violation that would not reasonably be expected
to have a Material Adverse Effect.

 

(uu)        Sanctions.   (i) The Company represents that, neither the Company
nor any of its Subsidiaries (collectively, the “Entity”) or any director,
officer, employee, agent, affiliate or representative of the Entity, is a
government, individual, or entity (in this paragraph (uu), “Person”) that is, or
is owned or controlled by a Person that is:

 

(A)  the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control, the United Nations
Security Council, the European Union, Her Majesty’s Treasury, or other relevant
sanctions authority (collectively, “Sanctions”), nor

 

(B)  located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).

 

-18-

 

 

(ii)  The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:

 

(A)  to fund or facilitate any activities or business of or with any Person or
in any country or territory that, at the time of such funding or facilitation,
is the subject of Sanctions; or

 

(B)  in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

 

(iii)  The Entity represents and covenants that, except as detailed in the
Registration Statement and the Prospectus, for the past 5 years, it has not
knowingly engaged in, is not now knowingly engaged in, and will not engage in,
any dealings or transactions with any Person, or in any country or territory,
that at the time of the dealing or transaction is or was the subject of
Sanctions.

 

(vv)        Stock Transfer Taxes.   On each Settlement Date, all stock transfer
or similar transfer taxes (other than income taxes) which are required to be
paid in connection with the sale and transfer of the Placement Shares to be sold
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with,
except in each case for any taxes or compliance that would not reasonably be
expected to have a Material Adverse Effect.

 

(ww)      Reserved.

 

Any certificate signed by an officer of the Company and delivered to the Agent
or to counsel for the Agent pursuant to or in connection with this Agreement
shall be deemed to be a representation and warranty by the Company, as
applicable, to the Agent as to the matters set forth therein.

 

7.           Covenants of the Company.  The Company covenants and agrees with
Agent that:

 

(a)          Registration Statement Amendments.   After the date of this
Agreement and during any period in which a Prospectus relating to any Placement
Shares is required to be delivered by Agent under the Securities Act (including
in circumstances where such requirement may be satisfied pursuant to Rule 172
under the Securities Act), (i) the Company will notify the Agent promptly of the
time when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the Commission and/or
has become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement to
the Registration Statement or Prospectus or for additional information, (ii) the
Company will prepare and file with the Commission, promptly upon the Agent’s
request, any amendments or supplements to the Registration Statement or
Prospectus that, in such Agent’s reasonable opinion, may be necessary or
advisable in connection with the distribution of the Placement Shares by the
Agent (provided, however, that the failure of the Agent to make such request
shall not relieve the Company of any obligation or liability hereunder, or
affect the Agent’s right to rely on the representations and

 

-19-

 

 

warranties made by the Company in this Agreement and provided, further, that the
only remedy the Agent shall have with respect to the failure to make such filing
shall be to cease making sales under this Agreement until such amendment or
supplement is filed); (iii) the Company will not file any amendment or
supplement to the Registration Statement or Prospectus disclosing a material
change in the terms of the Placement Shares or a security convertible into the
Placement Shares unless a copy thereof has been submitted to Agent within a
reasonable period of time before the filing and the Agent has not reasonably
objected in writing thereto within two (2) Business Days (provided, however,
that the failure of the Agent to make such objection shall not relieve the
Company of any obligation or liability hereunder, or affect the Agent’s right to
rely on the representations and warranties made by the Company in this Agreement
and the Company has no obligation to provide the Agent any advance copy of such
filing or to provide the Agent any opportunity to object to such filing if such
filing does not name the Agent and does not relate to the transactions
contemplated by this Agreement, and provided, further, that the only remedy
Agent shall have with respect to the failure by the Company to seek such consent
shall be to cease making sales under this Agreement) and the Company will
furnish to the Agent at the time of filing thereof a copy of any document that
upon filing is deemed to be incorporated by reference into the Registration
Statement or Prospectus, except for those documents available via EDGAR; and
(iv) the Company will cause each amendment or supplement to the Prospectus to be
filed with the Commission as required pursuant to the applicable paragraph of
Rule 424(b) of the Securities Act or, in the case of any document to be
incorporated therein by reference, to be filed with the Commission as required
pursuant to the Exchange Act, within the time period prescribed (the
determination to file or not file any amendment or supplement with the
Commission under this Section 7(a), based on the Company’s reasonable opinion or
reasonable objections, shall be made exclusively by the Company).

 

(b)          Notice of Commission Stop Orders.   The Company will advise the
Agent, promptly after it receives notice or obtains knowledge thereof, of the
issuance or threatened issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, of the suspension of the
qualification of the Placement Shares for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its commercially reasonable efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order should be
issued. The Company will advise the Agent promptly after it receives any request
by the Commission for any amendments to the Registration Statement or any
amendment or supplements to the Prospectus or any Issuer Free Writing Prospectus
or for additional information related to the offering of the Placement Shares or
for additional information related to the Registration Statement, the Prospectus
or any Issuer Free Writing Prospectus.

 

(c)          Delivery of Prospectus; Subsequent Changes.   During any period in
which a Prospectus relating to the Placement Shares is required to be delivered
by the Agent under the Securities Act with respect to the offer and sale of the
Placement Shares, (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act), the Company will use
reasonable best efforts to comply in all material respects with all requirements
imposed upon it by the Securities Act, as from time to time in force, and to
file on or before their respective due dates all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision
of or under the Exchange Act. If the Company has

 

-20-

 

 

omitted any information from the Registration Statement pursuant to Rule 430B
under the Securities Act, it will use its commercially reasonable efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to said Rule 430B and to notify the Agent promptly of all such filings
if not available on EDGAR. If during such period any event occurs as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend or supplement the
Registration Statement or Prospectus to comply with the Securities Act, the
Company will promptly notify Agent to suspend the offering of the Placement
Shares during such period and the Company will promptly amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance; provided, however,
that the Company may delay any such amendment or supplement if, in the
reasonable judgment of the Company, it is in the best interests of the Company
to do so.

 

(d)          Listing of Placement Shares.   During any period in which the
Prospectus relating to the Placement Shares is required to be delivered by the
Agent under the Securities Act with respect to the offer and sale of the
Placement Shares, the Company will use its commercially reasonable efforts to
cause the Placement Shares to be listed on the Exchange.

 

(e)          Delivery of Registration Statement and Prospectus.   The Company
will furnish to the Agent and its counsel (at the expense of the Company) copies
of the Registration Statement, the Prospectus (including all Incorporated
Documents) and all amendments and supplements to the Registration Statement or
Prospectus that are filed with the Commission during any period in which a
Prospectus relating to the Placement Shares is required to be delivered under
the Securities Act (including all Incorporated Documents filed with the
Commission during such period), in each case as soon as reasonably practicable
and in such quantities as the Agent may from time to time reasonably request
and, at the Agent’s request, will also furnish copies of the Prospectus to each
exchange or market on which sales of the Placement Shares may be made; provided,
however, that the Company shall not be required to furnish any document (other
than the Prospectus) to the Agent to the extent such document is available on
EDGAR.

 

(f)           Earnings Statement.   The Company will make generally available to
its security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act.

 

(g)          Use of Proceeds.   The Company will use the Net Proceeds as
described in the Prospectus in the section entitled “Use of Proceeds.”

 

(h)          Notice of Other Sales.   Without the prior written consent of
Agent, which such consent shall not be unreasonably withheld, the Company will
not, directly or indirectly, offer to sell, sell, contract to sell, grant any
option to sell or otherwise dispose of any Common Stock (other than the
Placement Shares offered pursuant to this Agreement) or securities convertible
into or exchangeable for Common Stock, warrants or any rights to purchase or
acquire, Common Stock during the period beginning on the fifth (5th) Trading Day
immediately prior to the date on which any Placement Notice is delivered to
Agent hereunder and ending on

 

-21-

 

 

the fifth (5th) Trading Day immediately following the final Settlement Date with
respect to Placement Shares sold pursuant to such Placement Notice (or, if the
Placement Notice has been terminated or suspended prior to the sale of all
Placement Shares covered by a Placement Notice, the date of such suspension or
termination); and will not directly or indirectly in any other “at-the-market”
or continuous equity transaction offer to sell, sell, contract to sell, grant
any option to sell or otherwise dispose of any Common Stock (other than the
Placement Shares offered pursuant to this Agreement) or securities convertible
into or exchangeable for Common Stock, warrants or any rights to purchase or
acquire, Common Stock prior to the later of the termination of this Agreement
and the thirtieth (30th) day immediately following the final Settlement Date
with respect to Placement Shares sold pursuant to such Placement Notice;
provided, however, that such restrictions will not be required in connection
with the Company’s issuance or sale of (i) Common Stock, options to purchase
Common Stock or restricted stock units or stock awards or Common Stock issuable
upon the exercise of options, pursuant to any employee, consultant or director
stock option or benefits plan, stock ownership plan or dividend reinvestment
plan (but not Common Stock subject to a waiver to exceed plan limits in its
dividend reinvestment plan) of the Company whether now in effect or hereafter
implemented, (ii) Common Stock issuable upon conversion of securities or the
exercise of warrants, options or other rights in effect or outstanding, and
disclosed in filings by the Company available on EDGAR or otherwise in writing
to the Agent and (iii) Common Stock or securities convertible into or
exchangeable for shares of Common Stock as consideration for mergers,
acquisitions, other business combinations or strategic alliances occurring after
the date of this Agreement which are not issued for capital raising purposes.

 

(i)           Change of Circumstances.   The Company will, at any time during
the pendency of a Placement Notice, advise the Agent promptly after it shall
have received notice or obtained knowledge thereof, of any information or fact
that would adversely affect in any material respect any opinion, certificate,
letter or other document required to be provided to the Agent pursuant to this
Agreement.

 

(j)           Due Diligence Cooperation.   The Company will cooperate with any
reasonable due diligence review conducted by the Agent or its representatives in
connection with the transactions contemplated hereby, including, without
limitation, providing information and making available documents and senior
corporate officers, during regular business hours and at the Company’s principal
offices, as the Agent may reasonably request.

 

(k)          Required Filings Relating to Placement of Placement Shares.   The
Company agrees that on such dates as the Securities Act shall require the filing
of a prospectus supplement with respect to the sale of Placement Shares
hereunder, the Company will (i) file a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) under the Securities Act (each and
every filing date under Rule 424(b), a “Filing Date”), which prospectus
supplement will set forth, within the relevant period, the amount of Placement
Shares sold through the Agent, the Net Proceeds to the Company and the
compensation payable by the Company to the Agent with respect to such Placement
Shares, and (ii) deliver such number of copies of each such prospectus
supplement to each exchange or market on which such sales were effected as may
be required by the rules or regulations of such exchange or market.

 

-22-

 

 

(l)           Representation Dates; Certificate.    (1) On or prior to the date
of the first Placement Notice and (2) following the delivery of the first
Placement Notice each time during the term of this Agreement that the Company:

 

(i) files the Prospectus relating to the Placement Shares or amends or
supplements (other than a prospectus supplement relating solely to an offering
of securities other than the Placement Shares) the Registration Statement or the
Prospectus relating to the Placement Shares by means of a post-effective
amendment, sticker, or supplement but not by means of incorporation of documents
by reference into the Registration Statement or the Prospectus relating to the
Placement Shares;

 

(ii) files an annual report on Form 10-K under the Exchange Act (including any
Form 10-K/A containing amended financial information or a material amendment to
the previously filed Form 10-K);

 

(iii) files its quarterly reports on Form 10-Q under the Exchange Act; or

 

(iv) files a current report on Form 8-K containing amended financial information
(other than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K
or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the
reclassification of certain properties as discontinued operations in accordance
with Statement of Financial Accounting Standards No. 144) under the Exchange Act
(each date of filing of one or more of the documents referred to in clauses (i)
through (iv) shall be a “Representation Date”);

 

the Company shall furnish the Agent (but in the case of clause (iv) above only
if the Agent reasonably determines that the information contained in such Form
8-K is material) with a certificate dated the Representation Date, in the form
and substance satisfactory to the Agent and its counsel, substantially similar
to the form previously provided to the Agent and its counsel, modified, as
necessary, to relate to the Registration Statement and the Prospectus as amended
or supplemented. The requirement to provide a certificate under this Section
7(l) shall be waived for any Representation Date occurring at a time in which no
Placement Notice is pending (including as a result of a Suspension being in
effect), which waiver shall continue until the earlier to occur of the date the
Company delivers instructions for the sale of Placement Shares hereunder (which
for such calendar quarter shall be considered a Representation Date) and the
next occurring Representation Date. Notwithstanding the foregoing, if the
Company subsequently decides to sell Placement Shares following a Representation
Date when such waiver applied and did not provide the Agent with a certificate
under this Section 7(l), then before the Company delivers the instructions for
the sale of Placement Shares or the Agent sells any Placement Shares pursuant to
such instructions, the Company shall provide the Agent with a certificate in
conformity with this Section 7(l) dated as of the date that the instructions for
the sale of Placement Shares are issued.

 

(m)          Legal Opinions.    (1) On or prior to the date of the first
Placement Notice and (2) unless a Suspension is in effect, within five (5)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate pursuant to Section 7(l) for which no waiver
is applicable and excluding the date of this Agreement, the Company shall cause
to be furnished to the Agent a written opinion of each of (A) Mintz, Levin,
Cohn,

 

-23-

 

 

Ferris, Glovsky and Popeo, P.C. (“Company Counsel”), or other counsel
satisfactory to the Agent and (B) D Young & Co LLP and Nelson Mullins Riley &
Scarborough LLP (“IP Counsel”), or other counsel satisfactory to the Agent, in
each case in form and substance satisfactory to Agent and its counsel,
substantially similar to the form previously provided to the Agent and its
counsel, respectively, modified, as necessary, to relate to the Registration
Statement and the Prospectus as then amended or supplemented; provided, however,
the Company shall be required to furnish to Agent no more than one opinion from
each of Company Counsel and the IP Counsel hereunder per calendar quarter and
the Company shall not be required to furnish any such letter if the Company does
not intend to deliver a Placement Notice in such calendar quarter until such
time as the Company delivers its next Placement Notice; provided, further, that
in lieu of such opinions for subsequent periodic filings under the Exchange Act,
counsel may furnish the Agent with a letter (a “Reliance Letter”) to the effect
that the Agent may rely on a prior opinion delivered under this Section 7(m) to
the same extent as if it were dated the date of such letter (except that
statements in such prior opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented as of the date of the
Reliance Letter).

 

(n)          Comfort Letter.   (1) On or prior to the date of the first
Placement Notice and (2) unless a Suspension is in effect, within five (5)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate pursuant to Section 7(l) for which no waiver
is applicable and excluding the date of this Agreement, the Company shall cause
its independent registered public accounting firm to furnish the Agent letters
(the “Comfort Letters”), dated the date the Comfort Letter is delivered, which
shall meet the requirements set forth in this Section 7(n); provided, that if
requested by the Agent, the Company shall cause a Comfort Letter to be furnished
to the Agent within ten (10) Trading Days of the date of occurrence of any
material transaction or event, including the restatement of the Company’s
financial statements. The Comfort Letter from the Company’s independent
registered public accounting firm shall be in a form and substance satisfactory
to the Agent, (i) confirming that they are an independent registered public
accounting firm within the meaning of the Securities Act and the PCAOB, (ii)
stating, as of such date, the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered
public offerings (the first such letter, the “Initial Comfort Letter”) and (iii)
updating the Initial Comfort Letter with any information that would have been
included in the Initial Comfort Letter had it been given on such date and
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.

 

(o)          Market Activities.   The Company will not, directly or indirectly,
(i) take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of Common
Stock or (ii) sell, bid for, or purchase the Placement Shares, or pay anyone any
compensation for soliciting purchases of the Placement Shares other than the
Agent.

 

(p)          Investment Company Act.   The Company will conduct its affairs in
such a manner so as to reasonably ensure that neither it nor any of its
Subsidiaries will be or become, at

 

-24-

 

 

any time prior to the termination of this Agreement, required to register as an
“investment company,” as such term is defined in the Investment Company Act.

 

(q)          No Offer to Sell.   Other than an Issuer Free Writing Prospectus
approved in advance by the Company and the Agent in its capacity as agent
hereunder, neither the Agent nor the Company (including its agents and
representatives, other than the Agent in its capacity as such) will make, use,
prepare, authorize, approve or refer to any written communication (as defined in
Rule 405 under the Securities Act), required to be filed with the Commission,
that constitutes an offer to sell or solicitation of an offer to buy Placement
Shares hereunder.

 

(r)           Blue Sky and Other Qualifications.   The Company will use its
commercially reasonable efforts, in cooperation with the Agent, to qualify the
Placement Shares for offering and sale, or to obtain an exemption for the
Placement Shares to be offered and sold, under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Agent may
reasonably designate and to maintain such qualifications and exemptions in
effect for so long as required for the distribution of the Placement Shares (but
in no event for less than one year from the date of this Agreement); provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Placement Shares
have been so qualified or exempt, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification or exemption, as the case may be, in effect for so long as
required for the distribution of the Placement Shares (but in no event for less
than one year from the date of this Agreement) so long as the Company has
approved in advance the sale of Placement Shares in such jurisdiction.

 

(s)          Sarbanes-Oxley Act.   The Company and the Subsidiaries will
maintain and keep accurate books and records reflecting their assets and
maintain internal accounting controls in a manner designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP and
including those policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company, (ii) provide reasonable assurance
that transactions are recorded as necessary to permit the preparation of the
Company’s consolidated financial statements in accordance with GAAP, (iii) that
receipts and expenditures of the Company are being made only in accordance with
management’s and the Company’s directors’ authorization, and (iv) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on its financial statements. The Company and the Subsidiaries
will maintain such controls and other procedures, including, without limitation,
those required by Sections 302 and 906 of the Sarbanes-Oxley Act, and the
applicable regulations thereunder that are designed 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, including,
without limitation, controls and procedures designed 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

 

-25-

 

 

Company’s management, including its principal executive officer and principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure and to ensure that material
information relating to the Company or the Subsidiaries is made known to them by
others within those entities, particularly during the period in which such
periodic reports are being prepared.

 

(t)           Secretary’s Certificate; Further Documentation.   On or prior to
the date of the first Placement Notice, the Company shall deliver to the Agent a
certificate of the Secretary of the Company and attested to by an executive
officer of the Company, dated as of such date, certifying as to (i) the Amended
and Restated Certificate of Incorporation of the Company, (ii) the Amended and
Restated Bylaws of the Company, (iii) the resolutions of the Board of Directors
of the Company, or a duly authorized committee of the Board of Directors,
authorizing the execution, delivery and performance of this Agreement and the
issuance of the Placement Shares and (iv) the incumbency of the officers duly
authorized to execute this Agreement and the other documents contemplated by
this Agreement. Unless a Suspension is in effect, within five (5) Trading Days
of each Representation Date, the Company shall have furnished to the Agent such
further information, certificates and documents as the Agent may reasonably
request.

 

8.           Payment of Expenses.   The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation and filing of the Registration Statement, including any fees
required by the Commission, and the printing or electronic delivery of the
Prospectus as originally filed and of each amendment and supplement thereto, in
such number as the Agent shall deem necessary, (ii) the printing and delivery to
the Agent of this Agreement and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Placement Shares, (iii) the preparation, issuance and delivery of the
certificates, if any, for the Placement Shares to the Agent, including any stock
or other transfer taxes and any capital duties, stamp duties or other duties or
taxes payable upon the sale, issuance or delivery of the Placement Shares to the
Agent, (iv) the fees and disbursements of the counsel, accountants and other
advisors to the Company, (v)  the fees and disbursements of the counsel to the
Agent, payable upon the execution of this Agreement, in an amount not to exceed
$50,000; (vi) the qualification or exemption of the Placement Shares under state
securities laws in accordance with the provisions of Section 7(r) hereof,
including filing fees, but excluding fees of the Agent’s counsel, (vii) the
printing and delivery to the Agent of copies of any Permitted Issuer Free
Writing Prospectus and the Prospectus and any amendments or supplements thereto
in such number as the Agent shall reasonably deem necessary, (viii) the
preparation, printing and delivery to the Agent of copies of the blue sky
survey, if applicable, (ix) the fees and expenses of the transfer agent and
registrar for the Common Stock, (x) the filing and other fees incident to any
review by FINRA of the terms of the sale of the Placement Shares including the
fees of the Agent’s counsel (subject to the cap, set forth in clause (v) above),
and (xi) the fees and expenses incurred in connection with the listing of the
Placement Shares on the Exchange.

 

9.           Representations and Covenants of Agent.  Agent represents and
warrants that it is duly registered as a broker-dealer under FINRA, the Exchange
Act and the applicable statutes and regulations of each state in which the
Placement Shares will be offered and sold, except such states in which Agent is
exempt from registration or such registration is not otherwise required. Agent
shall continue, for the term of this Agreement, to be duly registered as a
broker-dealer

 

-26-

 

 

under FINRA, the Exchange Act and the applicable statutes and regulations of
each state in which the Placement Shares will be offered and sold, except such
states in which Agent is exempt from registration or such registration is not
otherwise required, during the term of this Agreement. Agent will comply with
all applicable law and regulations in connection with the Placement Shares,
including, but not limited to, Regulation M.

 

10.         Conditions to Agent’s Obligations.   The obligations of the Agent
hereunder with respect to a Placement will be subject to the continuing accuracy
and completeness of the representations and warranties made by the Company
herein, to the due performance by the Company of its obligations hereunder, to
the completion by the Agent of a due diligence review satisfactory to it in its
reasonable judgment, and to the continuing satisfaction (or waiver by the Agent
in its sole discretion) of the following additional conditions as of each
Representation Date.

 

(a)          Registration Statement Effective.   The Registration Statement
shall have become effective and shall be available for the (i) resale of all
Placement Shares issued to the Agent and not yet sold by the Agent and (ii) sale
of all Placement Shares contemplated to be issued by any Placement Notice.

 

(b)          No Material Notices.   None of the following events shall have
occurred and be continuing: (i) receipt by the Company of any request for
additional information from the Commission or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement, the response to which would require any post-effective amendments or
supplements to the Registration Statement or the Prospectus (other than
immaterial amendments or supplements to documents incorporated by reference
therein) if such post effective amendments or supplements have not been made and
become effective; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Placement Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; or (iv) the occurrence of any event that
makes any material statement made in the Registration Statement or the
Prospectus or any material Incorporated Document by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, the Prospectus or material Incorporated Document so that, in the case
of the Registration Statement, it will not contain any materially untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and so
that, in the case of the Prospectus, it will not contain any materially untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(c)          No Misstatement or Material Omission.   The Agent shall not have
advised the Company that the Registration Statement or Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact that in
the Agent’s reasonable opinion is material, or omits to state a fact that in the
Agent’s reasonable opinion is material and is required to be stated therein or
is necessary to make the statements therein not misleading.

 

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(d)          Material Changes.   Except as contemplated in the Prospectus, or
disclosed in the Company’s reports filed with the Commission, there shall not
have been any material adverse change in the authorized capital stock of the
Company or any Material Adverse Effect or any development that would reasonably
be expected to cause a Material Adverse Effect, or a downgrading in or
withdrawal of the rating assigned to any of the Company’s securities (other than
asset backed securities) by any rating organization or a public announcement by
any rating organization that it has under surveillance or review its rating of
any of the Company’s securities (other than asset backed securities), the effect
of which, in the case of any such action by a rating organization described
above, in the reasonable judgment of the Agent (without relieving the Company of
any obligation or liability it may otherwise have), is so material as to make it
impracticable or inadvisable to proceed with the offering of the Placement
Shares on the terms and in the manner contemplated in the Prospectus.

 

(e)          Legal Opinions.   The Agent shall have received the opinions of
Company Counsel and the IP Counsel required to be delivered pursuant to
Section 7(m) on or before the date on which such delivery of such opinion is
required pursuant to Section 7(m).

 

(f)           Comfort Letter.   The Agent shall have received the Comfort Letter
required to be delivered pursuant to Section 7(n) on or before the date on which
such delivery of such Comfort Letter is required pursuant to Section 7(n).

 

(g)          Representation Certificate.   The Agent shall have received the
certificate required to be delivered pursuant to Section 7(l) on or before the
date on which delivery of such certificate is required pursuant to Section 7(l).

 

(h)          No Suspension.   Trading in the Common Stock shall not have been
suspended on the Exchange and the Common Stock shall not have been delisted from
the Exchange.

 

(i)           Other Materials.   On each date on which the Company is required
to deliver a certificate pursuant to Section 7(l), the Company shall have
furnished to the Agent such appropriate further information, opinions,
certificates, letters and other documents as the Agent may reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof.

 

(j)           Securities Act Filings Made.   All filings with the Commission
with respect to the Placement Shares required by Rule 424 under the Securities
Act to have been filed prior to the issuance of any Placement Notice hereunder
shall have been made within the applicable time period prescribed for such
filing by Rule 424.

 

(k)          Approval for Listing.   The Placement Shares shall either have been
approved for listing on the Exchange, subject only to notice of issuance, or the
Company shall have filed an application for listing of the Placement Shares on
the Exchange at, or prior to, the issuance of any Placement Notice.

 

(l)           FINRA.   FINRA shall have raised no objection to the terms of this
offering and the amount of compensation allowable or payable to the Agent as
described in the Prospectus.

 

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(m)         No Termination Event.   There shall not have occurred any event that
would permit the Agent to terminate this Agreement pursuant to Section 13(a).

 

11.         Indemnification and Contribution.

 

(a)          Company Indemnification.   The Company agrees to indemnify and hold
harmless the Agent, its partners, members, directors, officers, employees and
agents and each person, if any, who controls the Agent within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:

 

(i)          against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact included in any related
Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

(ii)         against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 11(d) below) any such
settlement is effected with the written consent of the Company, which consent
shall not unreasonably be delayed or withheld; and

 

(iii)        against any and all expense whatsoever, as incurred (including the
documented fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above,

 

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made solely in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use in the Registration Statement (or any
amendment thereto), or in any related Issuer Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto).

 

(b)          Agent Indemnification.   Agent agrees to indemnify and hold
harmless the Company and its directors and each officer and director of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 11(a), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or

 

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omissions, made in the Registration Statement (or any amendments thereto) or the
Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing
Prospectus in reliance upon and in conformity with information furnished to the
Company in writing by the Agent expressly for use therein. The Company hereby
acknowledges that the only information that the Agent has furnished to the
Company expressly for use in the Registration Statement, the Prospectus or any
Issuer Free Writing Prospectus (or any amendment or supplement thereto) are the
statements set forth in the seventh and eighth paragraphs under the caption
“Plan of Distribution” in the Prospectus.

 

(c)          Procedure.   Any party that proposes to assert the right to be
indemnified under this Section 11 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 11, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 11 and (ii) any
liability that it may have to any indemnified party under the foregoing
provision of this Section 11 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred and after the indemnifying
party receives a written notice relating to the fees, disbursements and other
charges in reasonable detail. An indemnifying party will not, in any

 

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event, be liable for any settlement of any action or claim effected without its
written consent if such consent is required by this Section 11(c). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 11 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent (1) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (2) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

 

(d)          Settlement Without Consent if Failure to Reimburse.   If an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel for which it is
entitled to reimbursement under this Section 11, such indemnifying party agrees
that it shall be liable for any settlement of the nature contemplated by
Section 11(a)(ii) effected without its written consent if (1) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (2) 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 (3) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.

 

(e)          Contribution.   In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 11 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or the
Agent, the Company and the Agent will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Agent, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company and the Agent may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agent on the other hand. The relative benefits received by the
Company on the one hand and the Agent on the other hand shall be deemed to be in
the same proportion as the total Net Proceeds from the sale of the Placement
Shares (before deducting expenses) received by the Company bear to the total
compensation received by the Agent (before deducting expenses) from the sale of
Placement Shares on behalf of the Company. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and the Agent, on the
other hand, with respect to the statements or omission that resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as well
as any other relevant equitable considerations with respect to such offering.
Such relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Agent, the intent of the parties and their relative knowledge,
access to information and opportunity to

 

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correct or prevent such statement or omission. The Company and the Agent agree
that it would not be just and equitable if contributions pursuant to this
Section 11(e) were to be determined by pro rata allocation or by any other
method of allocation that 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, liability, expense, or damage, or action
in respect thereof, referred to above in this Section 11(e) shall be deemed to
include, for the purpose of this Section 11(e), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim to the extent consistent with Section
11(c) hereof. Notwithstanding the foregoing provisions of this Section 11(e),
the Agent shall not be required to contribute any amount in excess of the
commissions received by it under this Agreement and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 11(e),
any person who controls a party to this Agreement within the meaning of the
Securities Act, and any officers, directors, partners, employees or agents of
the Agent, will have the same rights to contribution as that party, and each
officer and director of the Company who signed the Registration Statement will
have the same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 11(e), will notify any
such party or parties from whom contribution may be sought, but the omission to
so notify will not relieve that party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 11(e)
except to the extent that the failure to so notify such other party materially
prejudiced the substantive rights or defenses of the party from whom
contribution is sought. Except for a settlement entered into pursuant to the
last sentence of Section 11(c) hereof, no party will be liable for contribution
with respect to any action or claim settled without its written consent if such
consent is required pursuant to Section 11(c) hereof.

 

12.         Representations and Agreements to Survive Delivery.  The indemnity
and contribution agreements contained in Section 11 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of the Agent, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the Placement
Shares and payment therefor or (iii) any termination of this Agreement.

 

13.         Termination.

 

(a)          The Agent may terminate this Agreement, by notice to the Company,
as hereinafter specified at any time (1) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any change, or any development or event involving a
prospective change, in the condition, financial or otherwise, or in the
business, properties, earnings, results of operations or prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, which individually or in the
aggregate, in the sole judgment of the Agent is material and adverse and makes
it impractical or inadvisable to market the Placement Shares or to enforce
contracts for the sale of the Placement Shares, (2) if there has occurred any
material

 

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adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Agent, impracticable or inadvisable to market the Placement
Shares or to enforce contracts for the sale of the Placement Shares, (3) if
trading in the Common Stock has been suspended or limited by the Commission or
the Exchange, or if trading generally on the Exchange has been suspended or
limited, or minimum prices for trading have been fixed on the Exchange, (4) if
any suspension of trading of any securities of the Company on any exchange or in
the over-the-counter market shall have occurred and be continuing, (5) if a
major disruption of securities settlements or clearance services in the United
States shall have occurred and be continuing, or (6) if a banking moratorium has
been declared by either U.S. Federal or New York authorities. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 8 (Payment of Expenses), Section 11
(Indemnification and Contribution), Section 12 (Representations and Agreements
to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial)
and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and
effect notwithstanding such termination. If the Agent elects to terminate this
Agreement as provided in this Section 13(a), the Agent shall provide the
required notice as specified in Section 14 (Notices).

 

(b)          The Company shall have the right, by giving ten (10) days’ notice
as hereinafter specified to terminate this Agreement in its sole discretion at
any time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of Section
8, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in full
force and effect notwithstanding such termination.

 

(c)          The Agent shall have the right, by giving ten (10) days’ notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of Section
8, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in full
force and effect notwithstanding such termination.

 

(d)          This Agreement shall remain in full force and effect unless
terminated pursuant to Sections 13(a), (b), or (c) above or otherwise by mutual
agreement of the parties; provided, however, that any such termination by mutual
agreement shall in all cases be deemed to provide that Section 8, Section 11,
Section 12, Section 18 and Section 19 shall remain in full force and effect.

 

(e)          Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by the Agent or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement.

 

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14.         Notices. All notices or other communications required or permitted
to be given by any party to any other party pursuant to the terms of this
Agreement shall be in writing, unless otherwise specified, and if sent to the
Agent, shall be delivered to:

 

Cantor Fitzgerald & Co.

499 Park Avenue

New York, New York 10022

Attention:      Capital Markets/Jeffrey Lumby

Facsimile:      (212) 307-3730

 

with copies to

 

Cantor Fitzgerald & Co.

499 Park Avenue

New York, New York 10022

Attention:      Stephen Merkel

General Counsel

Facsimile:      (212) 307-3730

 

and with a copy to:

 

Reed Smith LLP

599 Lexington Avenue

New York, New York 10022

Attention:      Daniel I. Goldberg, Esq.

Facsimile:      (212) 521-5450

 

and if to the Company, shall be delivered to:

 

Cyclacel Pharmaceuticals, Inc.

200 Connell Drive

Suite 1500

Berkeley Heights, New Jersey, 07922
Attention:      Chief Executive Officer
Facsimile:      (866) 271-3466

 

with a copy (which shall not constitute notice) to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

666 Third Avenue

New York, New York 10017

Attention:      Joel I. Papernik, Esq.

Facsimile:      (212) 983-3115

 

and

 

Cyclacel Limited

1 James Lindsay Place

 

-34-

 

 

Dundee DD1 5JJ

UK

Attention:      COO

Facsimile:      +44 1382 206067

 

Each party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such purpose.
Each such notice or other communication shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 4:30 p.m., New York City time, on a Business Day or, if such day is
not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized overnight courier
and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid). For
purposes of this Agreement, “Business Day” shall mean any day on which the
Exchange and commercial banks in the City of New York are open for business.

 

An electronic communication (“Electronic Notice”) shall be deemed written notice
for purposes of this Section 14 if sent to the electronic mail address specified
by the receiving party under separate cover. Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives verification
of receipt by the receiving party. Any party receiving Electronic Notice may
request and shall be entitled to receive the notice on paper, in a nonelectronic
form (“Nonelectronic Notice”) which shall be sent to the requesting party within
ten (10) days of receipt of the written request for Nonelectronic Notice.

 

15.         Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the Company and the Agent and their respective successors
and the affiliates, controlling persons, officers and directors referred to in
Section 11 hereof. References to any of the parties contained in this Agreement
shall be deemed to include the successors and permitted assigns of such party.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement. Neither party
may assign its rights or obligations under this Agreement without the prior
written consent of the other party; provided, however, that the Agent may assign
its rights and obligations hereunder to an affiliate, so long as such affiliate
is a registered broker-dealer, thereof without obtaining the Company’s consent.

 

16.         Adjustments for Stock Splits.  The parties acknowledge and agree
that all share-related numbers contained in this Agreement shall be adjusted to
take into account any stock split, stock dividend or similar event effected with
respect to the Placement Shares.

 

17.         Entire Agreement; Amendment; Severability.  This Agreement
(including all schedules and exhibits attached hereto and Placement Notices
issued pursuant hereto) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and undertakings, both written and
oral, among the parties hereto with regard to the subject matter hereof. Neither
this Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by the Company and the Agent. In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable as written by a court of
competent jurisdiction, then such provision shall

 

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be given full force and effect to the fullest possible extent that it is valid,
legal and enforceable, and the remainder of the terms and provisions herein
shall be construed as if such invalid, illegal or unenforceable term or
provision was not contained herein, but only to the extent that giving effect to
such provision and the remainder of the terms and provisions hereof shall be in
accordance with the intent of the parties as reflected in this Agreement.

 

18.         GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL.  THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF
DAY REFER TO NEW YORK CITY TIME. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

19.         CONSENT TO JURISDICTION.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
(CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

 

20.         Use of Information.  The Agent may not provide any information
gained in connection with this Agreement and the transactions contemplated by
this Agreement, including due diligence, to any third party other than its legal
counsel advising it on this Agreement unless expressly approved by the Company
in writing.

 

21.         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
Agreement by one party to the other may be made by facsimile or electronic
transmission.

 

22.         Effect of Headings.  The section and exhibit headings herein are for
convenience only and shall not affect the construction hereof.

 

-36-

 

 

23.         Permitted Free Writing Prospectuses.  The Company represents,
warrants and agrees that, unless it obtains the prior consent of the Agent,
which consent shall not be unreasonably withheld, conditioned or delayed, and
the Agent represents, warrants and agrees that, unless it obtains the prior
consent of the Company, it has not made and will not make any offer relating to
the Placement Shares that would constitute an Issuer Free Writing Prospectus, or
that would otherwise constitute a “free writing prospectus,” as defined in
Rule 405, required to be filed with the Commission. Any such free writing
prospectus consented to by the Agent or by the Company, as the case may be, is
hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company
represents and warrants that it has treated and agrees that it will treat each
Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as
defined in Rule 433, and has complied and will comply with the requirements of
Rule 433 applicable to any Permitted Free Writing Prospectus, including timely
filing with the Commission where required, legending and record keeping. For the
purposes of clarity, the parties hereto agree that all free writing
prospectuses, if any, listed in Exhibit 23 hereto are Permitted Free Writing
Prospectuses.

 

24.         Absence of Fiduciary Relationship.  The Company acknowledges and
agrees that:

 

(a)          the Agent is acting solely as agent in connection with the public
offering of the Placement Shares and in connection with each transaction
contemplated by this Agreement and the process leading to such transactions, and
no fiduciary or advisory relationship between the Company or any of its
respective affiliates, stockholders (or other equity holders), creditors or
employees or any other party, on the one hand, and the Agent, on the other hand,
has been or will be created in respect of any of the transactions contemplated
by this Agreement, irrespective of whether or not the Agent has advised or is
advising the Company on other matters, and the Agent has no obligation to the
Company with respect to the transactions contemplated by this Agreement except
the obligations expressly set forth in this Agreement;

 

(b)          it is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;

 

(c)          neither the Agent nor its affiliates have provided any legal,
accounting, regulatory or tax advice with respect to the transactions
contemplated by this Agreement and it has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate;

 

(d)          it is aware that the Agent and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and the Agent and its affiliates have no obligation to disclose
such interests and transactions to the Company by virtue of any fiduciary,
advisory or agency relationship or otherwise; and

 

(e)          it waives, to the fullest extent permitted by law, any claims it
may have against the Agent or its affiliates for breach of fiduciary duty or
alleged breach of fiduciary duty in connection with the sale of Placement Shares
under this Agreement and agrees that the Agent and its affiliates shall not have
any liability (whether direct or indirect, in contract, tort or otherwise) to it
in respect of such a fiduciary duty claim or to any person asserting a fiduciary
duty claim on its behalf or in right of it or the Company, employees or
creditors of Company, other than in respect of the Agent’s obligations under
this Agreement and to keep information

 

-37-

 

 

provided by the Company to the Agent and the Agent's counsel confidential to the
extent not otherwise publicly-available.

 

25.         Definitions.  As used in this Agreement, the following terms have
the respective meanings set forth below:

 

“Applicable Time” means (i) each Representation Date and (ii) the time of each
sale of any Placement Shares pursuant to this Agreement.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433, relating to the Placement Shares that (1) is required to be
filed with the Commission by the Company, (2) is a “road show” that is a
“written communication” within the meaning of Rule 433(d)(8)(i) whether or not
required to be filed with the Commission, or (3) is exempt from filing pursuant
to Rule 433(d)(5)(i) because it contains a description of the Placement Shares
or of the offering that does not reflect the final terms, in each case in the
form filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant to Rule 433(g)
under the Securities Act.

 

“Rule 164,” “Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,” “Rule 424(b),”
“Rule 430B,” and “Rule 433” refer to such rules under the Securities Act.

 

All references in this Agreement to financial statements and schedules and other
information that is “contained,” “included” or “stated” in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Registration Statement or
the Prospectus, as the case may be.

 

All references in this Agreement to the Registration Statement, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to EDGAR; all references in
this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the Commission) shall be deemed to include the copy thereof filed with the
Commission pursuant to EDGAR; and all references in this Agreement to
“supplements” to the Prospectus shall include, without limitation, any
supplements, “wrappers” or similar materials prepared in connection with any
offering, sale or private placement of any Placement Shares by the Agent outside
of the United States.

 

[Signature Page Follows]

 

 

-38-

 

 

If the foregoing correctly sets forth the understanding between the Company and
the Agent, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Agent.

 

  Very truly yours,       CYCLACEL PHARMACEUTICALS, INC.         By: /s/ Paul
McBarron     Name: Paul McBarron     Title: Executive Vice President – Finance,
Chief Financial Officer and Chief Operating Officer         ACCEPTED as of the
date first-above written:       CANTOR FITZGERALD & CO.         By: /s/ Jeffrey
Lumby     Name: Jeffrey Lumby     Title: Senior Managing Director

 

Signature Page

Cyclacel Pharmaceuticals, Inc. – Sales Agreement

  

 

 

 

SCHEDULE 1

__________________________

 

Form of Placement Notice

__________________________

 

From: Cyclacel Pharmaceuticals, Inc.     To: Cantor Fitzgerald & Co.  
Attention:  [•]     Subject: Placement Notice     Date: [•], 2015     Gentlemen:
 

 

Pursuant to the terms and subject to the conditions contained in the Sales
Agreement between Cyclacel Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and Cantor Fitzgerald & Co. (“Agent”), dated July [•], 2015, the
Company hereby requests that the Agent sell up to [•] of the Company’s common
stock, par value $0.001 per share, at a minimum market price of $[•] per share,
during the time period beginning [month, day, time] and ending [month, day,
time].

 

 

 

 

 

SCHEDULE 2

__________________________

 

Compensation

__________________________

 

The Company shall pay to the Agent in cash, upon each sale of Placement Shares
pursuant to this Agreement, an amount equal to 3.0% of the aggregate gross
proceeds from each sale of Placement Shares.

 

 

 

 

SCHEDULE 3

__________________________

 

Notice Parties

__________________________

 

The Company

 

Paul McBarron (pmcbarron@cyclacel.com)

 

With copies to:

 

Spiro Rombotis (srombotis@cyclacel.com)

 

The Agent

 

Jeff Lumby (jlumby@cantor.com)

 

Josh Feldman (jfeldman@cantor.com)

 

Sameer Vasudev (svasudev@cantor.com)

 

With copies to:

 

CFControlledEquityOffering@cantor.com

 

 

 

 

SCHEDULE 4

__________________________

 

Subsidiaries

__________________________

 

Cyclacel Limited

 

 

 

 

Exhibit 23

 

Permitted Free Writing Prospectus

 

None.