Exhibit 10.32 

 

FORTRESS BIOTECH, INC.

 

Common Stock

 

(par value $0.001 per share)

 

Amended and Restated At Market Issuance Sales Agreement

 

August 17, 2016

 

FBR Capital Markets & Co.

1300 North 17th Street, Suite 1400

Arlington, Virginia 22209

 

MLV & Co. LLC

299 Park Avenue, 7th Floor

New York, New York 10171

 

Ladies and Gentlemen:

 

Fortress Biotech, Inc., a Delaware corporation (the “Company”), and MLV & Co.
LLC (“MLV”), are parties to that certain At Market Issuance Sales Agreement
dated April 29, 2013, as amended on July 12, 2013, and April 28, 2016 (the
“Original Sales Agreement”). Together with FBR Capital Markets & Co. (“FBR”;
each of FBR and MLV individually an “Agent” and collectively, the “Agents”), the
Company and the Agents desire to amend and restate the Original Sales Agreement
with this agreement (the “Agreement”), and hereby agree 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 Agents shares
(the “Placement Shares”) of the Company’s common stock, par value $0.001 per
share (the “Common Stock”) provided however, that in no event shall the Company
issue or sell through the Agents such number of Placement Shares that (a)
exceeds the number of shares of Common Stock registered on the effective
Registration Statement (as defined below) pursuant to which the offering is
being made, or (b) exceeds the number of authorized but unissued shares of
Common Stock (the lesser of (a) and (b), the “Maximum Amount”). In addition, in
no event shall the Company issue or sell Placement Shares through the Agents in
a number and in a manner that would require the Company to obtain stockholder
approval under NASDAQ Listing Rule 5635 without first obtaining such stockholder
approval. Notwithstanding anything to the contrary contained herein, the parties
hereto agree that compliance with the limitations set forth in this Section 1 on
the number of Placement Shares issued and sold under this Agreement shall be the
sole responsibility of the Company and that the Agents shall have no obligation
in connection with such compliance. The issuance and sale of Placement Shares
through the Agents will be effected pursuant to the Registration Statement filed
by the Company and declared effective by the Securities and Exchange Commission
(the “Commission”), although nothing in this Agreement shall be construed as
requiring the Company to use the Registration Statement to issue Placement
Shares. Through the date of this Agreement, the Company has sold 2,238,172
shares under the Original Agreement for aggregate gross proceeds of $16,783,645.

 

 

 

 

The Company has filed with the Commission, in accordance with the provisions of
the Securities Act of 1933, as amended (the “Securities Act”) and the rules and
regulations thereunder (the “Securities Act Regulations”), with respect to sales
of Placement Shares prior to the effectiveness of the registration statement to
be initially filed on or about August 18, 2016, a registration statement on Form
S-3 (File No. 333-189935), and, with respect to sales of Placement Shares on or
after the effectiveness of the registration statement to be initially filed on
or about August 18, 2016, the registration statement on Form S-3 to be initially
filed on or about August 18, 2016, including a base prospectus, relating to
certain securities, and a prospectus relating to 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 “Exchange Act
Regulations”). The Company will, if necessary, prepare a prospectus supplement
(the “Prospectus Supplement”) to the prospectus included as part of each such
registration statement specifically relating to the Placement Shares. The
Company will furnish to the Agents, for use by the Agents, copies of the
prospectus included as part of each such registration statement, as
supplemented, if at all, by the Prospectus Supplement, relating to the Placement
Shares. Except where the context otherwise requires, each such registration
statement, and any post-effective amendment thereto, 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 Regulations or
deemed to be a part of each such registration statement pursuant to Rule 430B of
the Securities Act Regulations are collectively herein called the “Registration
Statement.” The prospectus relating to the Placement Shares, including all
documents incorporated therein by reference, included in the Registration
Statement, as it may be supplemented by the Prospectus Supplement, if any, in
the form in which such prospectus and/or Prospectus Supplement have most
recently been filed by the Company with the Commission pursuant to Rule 424(b)
under the Securities Act Regulations, together with the then issued Issuer Free
Writing Prospectus(es) (as defined in Section 25 hereof), is herein called the
“Prospectus.” Any reference herein to the Registration Statement, the Prospectus
or any amendment or supplement thereto shall be deemed to refer to and include
the documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein (the “Incorporated Documents”).

 

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”).

 

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2.         Placements. Each time that the Company wishes to issue and sell
Placement Shares hereunder (each, a “Placement”), it will notify an Agent (the
“Designated Agent”) by email notice (or other method mutually agreed to in
writing by the Parties) of the proposed terms of such Placement, which shall
include at a minimum 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 Trading Day (as defined in
Section 3(a) hereof) 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 Designated Agent set forth on Schedule 3, as such Schedule
3 may be amended from time to time. The Placement Notice shall be effective
unless and until (i) the Designated Agent declines to accept the terms contained
therein for any reason, in its sole discretion, (ii) the entire amount of the
Placement Shares thereunder have been sold, (iii) the Company suspends or
terminates the Placement Notice or (iv) the Agreement has been terminated under
the provisions of Section 13. The amount of any discount, commission or other
compensation to be paid by the Company to the Designated 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 Agents 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 Designated Agent and the Designated 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 Sections 2 or 3 of this Agreement and the
terms of a Placement Notice, the terms of the Placement Notice will control.

 

3.         Sale of Placement Shares by the Designated Agent.

 

a.           Subject to the terms and conditions of this Agreement, for the
period specified in the Placement Notice, the Designated Agent 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 Capital 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 Designated Agent will provide written confirmation to the
Company no later than the opening of the Trading Day 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 Designated Agent pursuant to Schedule 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 Designated 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 Designated 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 Regulations, 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 Designated Agent may also sell Placement Shares
by any other method permitted by law and the rules and regulations of the
Exchange, including but not limited to in negotiated transactions, with the
Company’s prior written consent (which may be in the form of email
correspondence). “Trading Day” means any day on which Common Stock are purchased
and sold on the Exchange.

 

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b.           During the term of this Agreement, neither the Agents nor any of
their respective affiliates or subsidiaries shall engage, either directly or
indirectly, in (i) any short sale of any security of the Company, (ii) any sale
of any security of the Company that the Agents do not own or any sale which is
consummated by the delivery of a security of the Company borrowed by, or for the
account of, the Agents or (iii) any market making, bidding, purchasing,
stabilization or other trading activity with regard to the Common Stock, or
attempting to induce another person to do any of the foregoing, if such activity
would be prohibited under Regulation M or other anti-manipulation rules under
the Securities Act. Neither the Agents nor any of their respective affiliates or
subsidiaries, shall engage in any proprietary trading or trading for the Agents’
(or their respective affiliates’ or subsidiaries’) own account.

 

4.         Suspension of Sales. The Company or the Designated Agent may, upon
notice to the other party in writing (including by email correspondence to each
of the individuals from 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 from the other party set forth on Schedule 3), suspend any
sale of Placement Shares; 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. 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 Designated 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 Designated Agent’s acceptance 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
Designated Agent, for the period specified in the Placement Notice, will use its
commercially reasonable efforts consistent with its normal trading and sales
practices 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 Designated
Agent will be successful in selling Placement Shares, (ii) the Designated 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 Designated 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
Designated Agent shall be under no obligation to purchase Placement Shares on a
principal basis pursuant to this Agreement, except as otherwise agreed by the
Designated Agent and the Company and then only to the extent permitted by law
and the rules and regulations of the Exchange.

 

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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 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 Designated
Agent for the Placement Shares, after deduction for (i) the Designated Agent’s
commission, discount or other compensation for such sales payable by the Company
pursuant to Schedule 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 Designated Agent’s or its
designee’s account (provided the Designated Agent shall have given the Company
written notice of such designee a reasonable period of time 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 Designated 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 through no fault of the Designated Agent, the Company agrees
that in addition to and in no way limiting the rights and obligations set forth
in Section 11(a) hereto, it will (i) hold the Designated Agent harmless against
any loss, claim, damage, or reasonable documented expense (including reasonable
documented 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 Designated Agent (without duplication) any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default.

 

d.           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 Designated 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 Designated 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.

 

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e.           Sales Through Agents. The Company agrees that any offer to sell,
any solicitation of an offer to buy, or any sales of Common Stock or any other
equity security of the Company shall only be effected by or through an Agent,
and only a single Agent, on any single given date, and in no event shall the
Company request that more than one Agent sell Securities on the same day;
provided however that (i) the foregoing limitation shall not apply to (A)
exercise of any option, warrant, right or any conversion privilege set forth in
the instruction governing such securities, (B) sales solely to employees,
directors or security holders of the Company or its subsidiaries, or to a
trustee or other person acquiring such securities for the accounts of such
person and (ii) such limitation shall not apply (A) on any day during which no
sales are made pursuant to this Agreement or (B) during a period in which the
Company has notified the Agents that it will not sell Common Stock under this
Agreement and (1) no Placement Notice is pending or (2) after a Placement Notice
has been withdrawn.

 

6.         Representations and Warranties of the Company. Except as disclosed in
the Registration Statement or the Prospectus (including Incorporated Documents),
the Company represents and warrants to, and agrees with each of the Agents that
as of each Applicable Time (as defined below), unless such representation,
warranty or agreement specifies a different date or time:

 

a.           Registration Statement and Prospectus. The Company and, assuming no
act or omission on the part of the Agents that would make such statement untrue,
the transactions contemplated by this Agreement meet the requirements for and
comply with the conditions for the use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Prospectus will name MLV and FBR as the
Company’s agents in the section entitled “Plan of Distribution.” The Company has
not received, and has received no written 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 so described or
filed. Copies of the Registration Statement, the Prospectus, and any such
amendments or supplements and all documents incorporated by reference therein
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 Agents and their
counsel. The Company has not distributed and, prior to 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 to which the Agents have
consented, such consent not to be unreasonably withheld, conditioned or delayed.
The Common Stock is currently listed on the Exchange under the trading symbol
“FBIO”. Except as disclosed in the Registration Statement, including the
Incorporated Documents, the Company has not, in the 12 months preceding the date
hereof, received notice from the Exchange to the effect that the Company is not
in compliance with the listing or maintenance requirements of the Exchange.
Except as disclosed in the Registration Statement, including the Incorporated
Documents, or the Prospectus, the Company has no reason to believe that it will
not in the foreseeable future continue to be in compliance in all material
respects with all such listing and maintenance requirements applicable to the
Company.

 

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b.           No Misstatement or Omission. The Registration Statement, when it
became or becomes effective, and the Prospectus, and any amendment or supplement
thereto, on the date of such Prospectus or amendment or supplement, conformed
and will conform in all material respects with the requirements of the
Securities Act. 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. The Registration Statement, when it became
or becomes effective, did not, and will 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 documents incorporated by reference in the Prospectus or any
Prospectus Supplement did not, and any further documents filed and incorporated
by reference therein 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, and the Company neither makes nor shall make any
representation or warranty in respect of, statements in, or omissions from, any
such document made in reliance upon, and in conformity with, information
furnished to the Company by an 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 documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
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.

 

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, complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in compliance in all material respects
with the requirements of the Securities Act and Exchange Act, as applicable, and
in conformity with generally accepted accounting principles in the United States
(“GAAP”) applied on a consistent basis (except for such adjustments to
accounting standards and practices as are noted therein) during the periods
involved (subject, in the case of unaudited statements, to normal recurring
adjustments); the other financial and statistical data with respect to the
Company and the Subsidiaries contained or incorporated by reference in the
Registration Statement, the Prospectus and the Issuer Free Writing Prospectuses,
if any, are accurately and fairly presented and prepared on a basis consistent
with the financial statements and 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 do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not described in the
Registration Statement (including the exhibits thereto and Incorporated
Documents), and the Prospectus which are required to be described in the
Registration Statement or the Prospectus (including Exhibits thereto and
Incorporated Documents); 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.

 

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e.           Conformity with EDGAR Filing. The Prospectus delivered to the
Agents 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 the Subsidiaries are, and will be,
duly organized, validly existing as a corporation and in good standing under the
laws of their respective jurisdictions of organization. The Company and the
Subsidiaries are, and will be, duly licensed or qualified as a foreign
corporation for transaction of business and in good standing under the laws of
each other jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such license or
qualification, and have all corporate power and authority necessary to own or
hold their respective properties and to conduct their respective businesses as
described in the Registration Statement and the Prospectus, except where the
failure to be so qualified or in good standing or have such power or authority
would not, individually or in the aggregate, have a material adverse effect or
would reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, properties, condition (financial or otherwise),
prospects, stockholders’ equity (as set forth on the Company’s most recent
balance sheet included in the Incorporated Documents) or results of operations
of the Company and the Subsidiaries (as defined below) taken as a whole, or
prevent or materially interfere with consummation of the transactions
contemplated hereby (a “Material Adverse Effect”).

 

g.           Subsidiaries. As of the date of this Agreement, Cyprium, Inc., CB
Securities Corporation, and FBIO Acquisition, Inc. (the “Subsidiaries” and each
a “Subsidiary”) are the Company’s only wholly-owned subsidiaries. Except as set
forth in the Registration Statement and in the Prospectus, the Company owns,
directly or indirectly, all of the equity interests of the Subsidiaries free and
clear of any lien, charge, security interest, encumbrance, right of first
refusal or other restriction, and all the equity interests of the Subsidiaries
are validly issued and are fully paid, nonassessable and free of preemptive and
similar rights.

 

h.           No Violation or Default. Neither the Company nor the Subsidiaries
are (i) in violation of their 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 the Subsidiaries are a party or by which the Company or the
Subsidiaries are bound or to which any of the property or assets of the Company
or the 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 having jurisdiction over the Company,
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,
reasonably be expected to have a Material Adverse Effect. Except as described in
the Prospectus, the Prospectus Supplement or the Incorporated Documents, to the
Company’s knowledge, no other party under any material contract or other
agreement to which it or the Subsidiaries are a party is in default in any
respect thereunder where such default would reasonably be expected to have a
Material Adverse Effect.

 

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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 the Incorporated Documents),
there has not been (i) any Material Adverse Effect, or any development involving
a prospective Material Adverse Effect, in or affecting the business, properties,
management, condition (financial or otherwise), results of operations, or
prospects of the Company and the Subsidiaries taken as a whole, (ii) other than
the transactions 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, (iv) any material change in
the capital stock (other than (a) as a result of the sale of Placement Shares
(b) as described in a proxy statement filed on Schedule 14A or a Registration
Statement on Form S-4 and otherwise publicly announced, (c) changes in the
number of outstanding shares of Common Stock due to the issuance of shares upon
the exercise or conversion of securities exercisable for, or convertible into,
shares of Common Stock outstanding on the date hereof, or (d) the issuance of
options or warrants to purchase Common Stock or the issuance of restricted stock
or other equity awards of the Company, in each case, pursuant to the Company’s
equity incentive plans) or outstanding long-term indebtedness of the Company or
the 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 (A) in the ordinary course of business, (B) as otherwise
disclosed in the Registration Statement or Prospectus (including the
Incorporated Documents) or (C) where such matter, item, change, or development
would not make the statements in the Registration Statement or the Prospectus
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.

 

j.            Capitalization. The issued and outstanding shares of capital stock
of the Company have been validly issued, are fully paid and non-assessable and,
other than as disclosed in or contemplated by the Registration Statement or the
Prospectus, are not subject to any preemptive rights, rights of first refusal or
similar rights. 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,
restricted stock or other equity awards under the Company’s equity incentive
plans, or changes in the number of outstanding 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 or as a result of the issuance of Placement Shares) and such authorized
capital stock conforms in all material respects to the description thereof set
forth in the Registration Statement and the Prospectus. The description of the
Common Stock in the Registration Statement and the Prospectus is complete and
accurate in all material respects. Except as disclosed in or contemplated by the
Registration Statement or the Prospectus, as of the date referred to therein,
the Company did 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, or any contracts or commitments to issue or sell, any shares
of capital stock or other securities.

 

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k.          Authorization; Enforceability. The Company has full legal right,
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 against the Company in accordance with its 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 and
contribution provisions of Section 11 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.

 

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
and validly authorized and issued and fully paid and nonassessable, free and
clear of any pledge, lien, encumbrance, security interest or other claim (other
than any pledge, lien, encumbrance, security interest or other claim arising
from an act or omission of an Agent or a purchaser), 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 any
governmental or regulatory authority having jurisdiction over the Company is
required for the execution, delivery and performance by the Company of this
Agreement, and the issuance and sale by the Company of the Placement Shares as
contemplated hereby, except for the registration of the Placement Shares under
the Securities Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under the Exchange Act,
applicable state securities laws or by the by-laws and rules of Financial
Industry Regulatory Authority (“FINRA”) or the Exchange in connection with the
sale of the Placement Shares by the Agents.

 

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 that may be granted or
issuances of Common Stock or other equity awards, from time to time under the
Company’s equity incentive plans), (ii) no Person has any preemptive 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 from the Company which
have not been duly waived with respect to the offering contemplated hereby,
(iii) except as may be disclosed to the Agents in writing, no 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 Common Stock, 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, except
for such rights as have been waived on or prior to the date hereof.

 

 10 

 

 

o.           Independent Registered Public Accounting Firm. EisnerAmper LLP and
PricewaterhouseCoopers LLP (each the “Accountant”), whose reports on the
consolidated financial statements of the Company are filed with the Commission
as part of the Company’s most recent Annual Report on Form 10-K filed with the
Commission and incorporated into the Registration Statement, are and, during the
periods covered by their reports, were independent registered public accounting
firms within the meaning of the Securities Act and the Public Company Accounting
Oversight Board (United States). To the Company’s knowledge, neither Accountant
is 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. All agreements between the Company
and third parties expressly referenced in the Prospectus, other than such
agreements that have expired by their terms or whose termination is disclosed in
documents filed by the Company on EDGAR, are legal, valid and binding
obligations of the Company enforceable against the Company 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, except for any unenforceability that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.

 

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 investigations, to which the Company or a Subsidiary is a party or to
which any property of the Company or a Subsidiary is the subject that,
individually or in the aggregate, if determined adversely to the Company or any
Subsidiary, 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 that, individually or in the
aggregate, if determined adversely to the Company or any Subsidiary, would
reasonably be expected to have a Material Adverse Effect; or (i) there are no
current or pending legal, governmental or regulatory actions, suits or
proceedings, or, to the Company’s knowledge, investigations, that are required
under the Securities Act to be described in the Prospectus that are not
described in the Prospectus including any Incorporated Document; 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.

 

 11 

 

 

r.            Licenses and Permits. Except as set forth in the Registration
Statement or the Prospectus, the Company and the Subsidiaries possess or have
obtained, all licenses, certificates, consents, orders, approvals, permits and
other authorizations issued by, and have made all declarations and filings with,
the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described in the
Registration Statement and the Prospectus (the “Permits”), except where the
failure to possess, obtain or make the same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Registration Statement or the Prospectus, neither the Company
nor the Subsidiaries have received written notice of any proceeding relating to
revocation or modification of any such Permit or has any reason to believe that
such Permit will not be renewed in the ordinary course, except where the failure
to obtain any such renewal would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

s.          No Material Defaults. Neither the Company nor the Subsidiaries have
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. 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.

 

t.            Certain Market Activities. Neither the Company, nor the
Subsidiaries, nor, to the Company’s knowledge, any of their respective
directors, officers or controlling persons has taken, directly or indirectly,
any 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.

 

u.           Broker/Dealer Relationships. Neither the Company nor 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).

 

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

 

w.          Taxes. The Company and the Subsidiaries have filed all federal,
state, local and foreign tax returns which have been required to be filed 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 do so 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 the 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 or
threatened against it which would have a Material Adverse Effect.

 

 12 

 

 

x.         Title to Real and Personal Property. Except as set forth in the
Registration Statement or the Prospectus, the Company and the Subsidiaries have
good and valid title in fee simple to all items of real property and good and
marketable title to all personal property (excluding Intellectual Property which
is addressed below) described in the Registration Statement or Prospectus as
being owned by them that are material to the businesses of the Company or such
Subsidiaries, in each case free and clear of all liens, encumbrances and claims,
except those that (i) do not materially interfere with the use made and proposed
to be made of such property by the Company and the Subsidiaries or (ii) would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Any real property described in the Registration Statement or
Prospectus as being leased by the Company and the Subsidiaries is held by them
under valid, existing and enforceable leases, except those that (A) do not
materially interfere with the use made or proposed to be made of such property
by the Company or the Subsidiaries (B) would not be reasonably expected,
individually or in the aggregate, to have a Material Adverse Effect.

 

y.         Intellectual Property. Except as set forth in the Registration
Statement or the Prospectus, to the Company’s knowledge, the Company and the
Subsidiaries own or possess adequate enforceable rights to use all patents,
patent applications, trademarks (both registered and unregistered), service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, the “Intellectual Property”), necessary for the
conduct of their respective businesses as conducted as of the date hereof,
except to the extent that the failure to own or possess 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
writing to the Agents, the Company and the Subsidiaries have not received any
written notice of any claim of infringement or conflict which asserted
Intellectual Property rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would reasonably be expected to result in a
Material Adverse Effect; there are no pending, or to the Company's knowledge,
threatened judicial proceedings or interference proceedings against the Company
challenging the Company's or any Subsidiary's rights in or to or the validity of
the scope of any of the Company's or any of its Subsidiary's material patents,
patent applications or proprietary information, except for such proceedings that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; no other entity or individual has any right or claim in
any of the Company's or any of its Subsidiary's material patents, patent
applications or any patent to be issued therefrom by virtue of any contract,
license or other agreement entered into between such entity or individual and
the Company or a Subsidiary or by any non-contractual obligation, other than by
written licenses granted by the Company or a Subsidiary, except for such right
or claim that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; the Company and the Subsidiaries
have not received any written notice of any claim challenging the rights of the
Company or the Subsidiaries in or to any Intellectual Property owned, licensed
or optioned by the Company or the Subsidiaries which claim, if the subject of an
unfavorable decision would reasonably be expected to result in a Material
Adverse Effect.

 

 13 

 

 

z.         Environmental Laws. Except as set forth in the Registration Statement
or the Prospectus, the Company and the Subsidiaries (i) are in compliance in all
material respects with any and all applicable federal, state, local and foreign
laws, rules, regulations, decisions 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 in all material respects 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.

 

aa.         Disclosure Controls. The Company maintains systems of internal
accounting controls designed 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 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 differences. 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 the Subsidiaries is
made known to the certifying officers by others within those entities,
particularly 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
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. 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 adversely affect
the Company’s internal controls. To the knowledge of the Company, the Company’s
“internal controls over financial reporting” and “disclosure controls and
procedures” are effective.

 

 14 

 

 

bb.         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 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 during the past
12 months. 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.

 

cc.         Finder’s Fees. Neither the Company nor the Subsidiaries have
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 the Agents pursuant to this Agreement.

 

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

 

ee.         Investment Company Act. Neither the Company nor the Subsidiaries
have 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”).

 

ff.         Operations. The operations of the Company and the Subsidiaries are
and have been conducted at all times in compliance in all material respects 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 the 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 having jurisdiction over the Company (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 the Subsidiaries with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened.

 

gg.         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 structured 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.

 

hh.         Underwriting Agreements. The Company is not a party to any agreement
with an agent or underwriter for any other “at the market” or continuous equity
transaction, provided, however, that nothing in this Agreement shall prohibit
the Company from entering into a committed equity financing or similar
transaction.

 

 15 

 

 

ii.         ERISA. To the knowledge of the Company, (i) 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 the 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”); (ii) 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 (iii) 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)
equals or exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions other than, in the case of
(i), (ii) and (iii) above, as would not reasonably be expected to have a
Material Adverse Effect.

 

jj.         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. The Forward Looking Statements
incorporated by reference in the Registration Statement and the Prospectus from
the Company’s Annual Report on Form 10-K for the fiscal year most recently ended
(i) except for any Forward Looking Statement included in any financial
statements and notes thereto, are, to the Company’s knowledge, within the
coverage of the safe harbor for forward looking statements set forth in Section
27A of the Securities Act, Rule 175(b) under the Securities Act or Rule 3b-6
under the Exchange Act, as applicable, (ii) were made by the Company with a
reasonable basis and in good faith and reflect the Company’s good faith
commercially reasonable best estimate of the matters described therein as of the
respective dates on which such statements were made, and (iii) have been
prepared in accordance with Item 10 of Regulation S-K under the Securities Act.

 

kk.         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.

 

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

 

 16 

 

 

mm.         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) to the Company’s knowledge, 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) to the Company’s knowledge, 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, stockholders or directors
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; and
(v) to the Company’s knowledge, no officer or director of the Company has
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
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.

 

nn.         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.

 

oo.         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 25 below) through the completion of any
Placement for which such Issuer Free Writing Prospectus is used or deemed used,
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 deemed to be a
part thereof 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 Agents specifically for use therein.

 

 17 

 

 

pp.         No Conflicts. Neither the execution of this Agreement by the
Company, nor the issuance, offering or sale of the Placement Shares, nor the
consummation by the Company of any of the transactions contemplated herein and
therein, nor the compliance by the Company with the terms and provisions hereof
and thereof 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, defaults, liens, charges or encumbrances 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 certificate of incorporation or bylaws of
the Company, or (y) 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, except where such violation would not reasonably
be expected to have a Material Adverse Effect.

 

qq.         Clinical Studies. The clinical, pre-clinical and other studies and
tests conducted by or, to the knowledge of the Company, on behalf of the Company
were, and, if still pending, are being, conducted in accordance in all material
respects with all statutes, laws, rules and regulations, as applicable
(including, without limitation, those administered by the U.S. Food and Drug
Administration’s (the “FDA”) Good Laboratory Practices and Good Clinical
Practices as well as all other applicable rules, regulations, or requirements of
the FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA), except
where the failure do so would not have a Material Adverse Effect. Except as set
forth in the Registration Statement and Prospectus, the Company has not received
any written notices or other written correspondence from the FDA or any other
foreign, federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA requiring the Company to
terminate or suspend any ongoing clinical or pre-clinical studies or tests.

 

rr.         Compliance Program. Except as disclosed in the Registration
Statement and the Prospectus, the Company has established and administers a
compliance program applicable to the Company, to assist the Company and the
directors, officers and employees of the Company in complying with applicable
regulatory guidelines (including, without limitation, those administered by the
FDA and any other foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA); except
where such noncompliance would not reasonably be expected to have a Material
Adverse Effect.

 

ss.         OFAC.

 

(i)          The Company represents that, neither the Company nor the
Subsidiaries (collectively, the “Entities”, or, to the Company’s knowledge, any
director, officer, employee, agent, affiliate or representative of the Entities,
is a government, individual, or entity (in this paragraph (ss), “Person”) that
is, or is owned or controlled by a Person that is:

 

 18 

 

 

 

(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.

 

(ii)         The Company represents and covenants that it will not, directly or
indirectly, knowingly 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 Company represents and covenants that, except as detailed in
the Prospectus, for the past five years, it has not knowingly engaged in, is not
now knowingly engaged in, and will not knowingly 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.

 

tt.         Stock Transfer Taxes. On each Settlement Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid by the
Company 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 by the Company in all material respects.

 

Any certificate in the form of Exhibit 7(l) signed by an executive officer of
the Company and delivered to an Agent or to counsel for the Agents pursuant to
or in connection with this Agreement shall be deemed to be a representation and
warranty by the Company, as applicable, to the Agents under this Agreement as to
the matters set forth therein.

 

 19 

 

 

7.          Covenants of the Company. The Company covenants and agrees with the
Agents 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 the Agents under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act) (the “Prospectus Delivery Period”), (i) the Company will
notify the Agents 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, other than documents incorporated by reference,
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, within
a reasonable period following the Agents’ request, any amendments or supplements
to the Registration Statement or Prospectus that, in either of the Agents’
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Placement Shares by an Agent (provided, however, that the
failure of the Agents to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect the Agents’ right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy the Agents 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
other than documents incorporated by reference, relating to the Placement Shares
or a security convertible into the Placement Shares unless a copy thereof has
been submitted to the Agents within a reasonable period of time before the
filing and the Agents has not reasonably objected thereto (provided, however,
that (A) the failure of the Agents to make such objection shall not relieve the
Company of any obligation or liability hereunder, or affect the Agents’ right to
rely on the representations and warranties made by the Company in this
Agreement, and (B) the Company has no obligation to provide the Agents any
advance copy of such filing or to provide the Agents an opportunity to object to
such filing if such filing does not name the Agents or does not relate to the
transactions contemplated by this Agreement, provided, further, that the only
remedy the Agents shall have with respect to the failure to by the Company to
obtain such consent shall be to cease making sales under this Agreement) and the
Company will furnish to the Agents 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
Agents, 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 Agents 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.

 

 20 

 

 

c.           Delivery of Prospectus; Subsequent Changes. During the Prospectus
Delivery Period, the Company will use its commercially reasonable 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 omitted any information from the Registration Statement
pursuant to Rule 430A 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 430A and to notify the Agents
promptly of all such filings. If during the Prospectus Delivery 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 Prospectus Delivery Period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify the Designated
Agent to suspend the offering of 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 judgment of the Company, it is
in the best interests of the Company to do so.

 

d.           Listing of Placement Shares. During the Prospectus Delivery Period,
the Company will use its commercially reasonable efforts to cause the Placement
Shares to be listed on the Exchange and to qualify the Placement Shares for sale
under the securities laws of such jurisdictions as each of the Agents reasonably
designates and to continue such qualifications in effect so long as required for
the distribution of the Placement Shares; provided, however, that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities or file a general consent to service of
process in any jurisdiction.

 

e.           Delivery of Registration Statement and Prospectus. The Company will
furnish to the Agents and their counsel (at the expense of the Company) copies
of the Registration Statement, the Prospectus (including all documents
incorporated by reference therein) and all amendments and supplements to the
Registration Statement or Prospectus that are filed with the Commission during
the Prospectus Delivery Period (including all documents filed with the
Commission during such period that are deemed to be incorporated by reference
therein), in each case as soon as reasonably practicable and in such quantities
as either of the Agents may from time to time reasonably request and, at the
Agents’ 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 Agents 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.

 

 21 

 

 

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 the
Agents, 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 the Agents hereunder and ending on 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 termination of this Agreement; 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 Common Stock issuable upon the exercise of options, pursuant to any employee
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 Agents and (iii) Common Stock, or securities
convertible into or exercisable for Common Stock, offered and sold in a
negotiated transaction to vendors, customers, strategic partners or potential
strategic partners or other investors conducted in a manner so as not to be
integrated with the offering of Common Stock hereby.

 

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

 

j.            Due Diligence Cooperation. During the term of this Agreement, the
Company will cooperate with any reasonable due diligence review conducted by the
Agents 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 or some other location mutually agreed to
by the parties, as the Agents may reasonably request.

 

 22 

 

 

k.          Required Filings Relating to Placement of Placement Shares. The
Company agrees that on such dates as the Securities Act shall require, 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 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 Agents, the Net Proceeds to the Company and the compensation payable by the
Company to the Agents with respect to such Placement Shares or, if any such
prospectus supplement is not filed pursuant to Rule 424(b), otherwise include
such information in the Company’s Exchange Act filings on such dates as shall be
required by the Exchange Act, 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.

 

l.            Representation Dates; Certificate. Each time during the term of
this Agreement that the Company:

 

(i)          post-effectively amends the Registration Statement or supplements
the Prospectus in either case such that the audited financial information
contained therein is amended, 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 audited
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 Agents no later than five (5) Trading Days after
each Representation Date (but in the case of clause (iv) above only if either of
the Agents reasonably determines that the information contained in such Form 8-K
is material) with a certificate, in the form attached hereto as Exhibit 7(l).
The requirement to provide a certificate under this Section 7(l) shall be
automatically waived for any Representation Date occurring at a time at which no
Placement Notice is pending, which waiver shall continue until the earlier to
occur of the date the Company delivers a Placement Notice hereunder (which for
such calendar quarter shall be considered a Representation Date) and the next
occurring Representation Date; provided, however, that such waiver shall not
apply for any Representation Date on which the Company files its annual report
on Form 10-K. Notwithstanding the foregoing, (i) upon the delivery of the first
Placement Notice hereunder and (ii) if the Company subsequently decides to sell
Placement Shares following a Representation Date when the Company relied on such
waiver and did not provide the Agents with a certificate under this Section
7(l), then before the Company delivers the Placement Notice or the Agents sells
any Placement Shares, the Company shall provide the Agents with a certificate,
in the form attached hereto as Exhibit 7(l), dated the date of the Placement
Notice.

 

 23 

 

 

m.           Legal Opinion. On or prior to the date of the first Placement
Notice given hereunder and within five (5) Trading Days after each subsequent
Representation Date with respect to which the Company is obligated to deliver a
certificate in the form attached hereto as Exhibit 7(l) for which no waiver is
applicable, the Company shall cause to be furnished to the Agents written
opinions and negative assurance of Wyrick Robbins Yates & Ponton LLP (“Company
Counsel”), or other counsel reasonably satisfactory to the Agents, in form and
substance reasonably satisfactory to the Agents and their counsel; provided,
however, the Company shall be required to furnish to the Agents no more than one
opinion hereunder per calendar quarter and the Company shall not be required to
furnish the opinion 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
Agents with a letter (a “Reliance Letter”) to the effect that the Agents 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. On or prior to the date of the first Placement
Notice given hereunder and within seven (7) Trading Days after each subsequent
Representation Date, other than pursuant to Section 7(l)(iii), with respect to
which the Company is obligated to deliver a certificate in the form attached
hereto as Exhibit 7(l) for which no waiver is applicable, the Company shall
cause its independent registered public accounting firm to furnish the Agents
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 either of the Agents, the Company shall cause a Comfort Letter
to be furnished to the Agents 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) requiring the filing of a current report on
Form 8-K containing material financial information and the date the first
Placement Notice is given hereunder following such a material transaction or
event, whichever is later. The Comfort Letter from the Company’s independent
registered public accounting firm shall be in a form and substance reasonably
satisfactory to the Agents, (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 independent registered public accounting firms “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
Placement Shares or (ii) sell, bid for, or purchase Placement Shares in
violation of Regulation M, or pay anyone any compensation for soliciting
purchases of the Placement Shares other than the Agents.

 

 24 

 

 

p.           Investment Company Act. The Company will conduct its affairs in
such a manner so as to reasonably ensure that neither it nor the Subsidiaries
will be or become, at any time prior to the termination of this Agreement, 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 Agents in its capacity as agent
hereunder, neither of the Agents nor the Company (including its agents and
representatives, other than the Agents in their capacity as such) will, directly
or indirectly, 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 to be sold by each Agent in its capacity as
agent hereunder.

 

r.            Sarbanes-Oxley Act. The Company will maintain and keep accurate
books and records reflecting its 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
authorization, and (iv) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that would have a material effect on its financial statements.
The Company 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
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.

 

 25 

 

 

8.          Representations and Covenants of the Agents. Each of the Agents
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 such Agent is exempt from registration or such registration is not
otherwise required. Each of the Agents shall continue, for the term of this
Agreement, to be 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 it is
exempt from registration or such registration is not otherwise required, during
the term of this Agreement. Each of the Agents shall comply with all applicable
law and regulations, including but not limited to Regulation M, in connection
with the transactions contemplated by this Agreement, including without
limitation, the issuance and sale through the Agents of the Placement Shares.

 

9.          Payment of Expenses.

 

a.           The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation, filing,
including any fees required by the Commission, and printing of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment and supplement thereto and each Free Writing Prospectus, in
such number as the Agents shall deem reasonably necessary, (ii) the printing and
delivery to the Agents of this Agreement and such other documents as may be
reasonably 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 Agents, 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 Agents, (iv) the fees and disbursements of the counsel,
accountants and other advisors to the Company, (v) the reasonable fees and
disbursements of counsel to the Agents, up to a maximum of $25,000, (vi) the
fees and expenses of the transfer agent and registrar for the Common Stock,
(vii) the filing fees incident to any review by FINRA of the terms of the sale
of the Placement Shares, and (viii) the fees and expenses incurred in connection
with the listing of the Placement Shares on the Exchange.

 

b.           If this Agreement is terminated by the Agents in accordance with
the provisions of Section 13(a) hereof as a result of a material breach by the
Company of its obligations hereunder, the Company shall reimburse the Agents for
all of its reasonable documented out-of-pocket expenses, including reasonable
fees and disbursements of counsel for the Agents (less any amounts paid under
clause (a)(v) above) up to a maximum of $25,000.

 

10.         Conditions to the Agents’ Obligations. The obligations of the Agents
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 Agents of a due diligence review satisfactory to it in its
reasonable judgment, and to the continuing satisfaction (or waiver by each of
the Agents in its sole discretion) of the following additional conditions:

 

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 an Agent and not yet sold by such Agent and (ii) sale of all
Placement Shares contemplated to be issued by any Placement Notice.

 

 26 

 

 

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; (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 document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, the Prospectus or documents 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, 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. Neither of the Agents 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 Agents’ reasonable opinion is material, or omits to state a fact that in
the Agents’ opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

 

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, on a consolidated basis, in the
authorized capital stock of the Company or any Material Adverse Effect, or any
development in the business or affairs of the Company that would reasonably be
expected to cause a Material Adverse Effect.

 

e.           Legal Opinion. The Agents shall have received the opinions and
negative assurances of Company Counsel required to be delivered pursuant to
Section 7(m) on or before the date on which such delivery of such opinions are
required pursuant to Section 7(m).

 

f.            Comfort Letter. The Agents 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 letter is required pursuant to Section 7(n).

 

g.           Representation Certificate. The Agents 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.           Secretary’s Certificate. On the date of this Agreement, the Agents
shall have received a certificate, signed on behalf of the Company by its
corporate Secretary, in form and substance reasonably satisfactory to the Agents
and their counsel.

 27 

 

 

i.            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.

 

j.            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 Agents such appropriate further information, certificates and documents
as either of the Agents may have reasonably requested in writing prior to such
date and which are usually and customarily furnished by an issuer of securities
in connection with an underwritten public offering thereof. The Company will
furnish the Agents with such conformed copies of such opinions, certificates,
letters and other documents as the Agents shall reasonably request.

 

k.          Securities Act Filings Made. All filings with the Commission
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.

 

l.            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.

 

m.           No Termination Event. There shall not have occurred any event that
would permit the Agents 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 Agents, its partners, members, directors, officers, employees and
agents and each person, if any, who controls the Agents 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 any such settlement is effected with the
written consent of the Company, which consent shall not unreasonably be delayed
or withheld; and

 

 28 

 

 

(iii)        against any and all expense whatsoever, as incurred (including the
reasonable 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 directly or indirectly
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 either of the Agents 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.           Indemnification by the Agents. Each Agent agrees to indemnify and
hold harmless the Company and its directors and each officer of the Company who
signed the Registration Statement, and each person, if any, who (i) controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act or (ii) is controlled by or is under common control with the
Company against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 11(c), as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendments thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
information relating to an Agent furnished to the Company in writing by such
Agent expressly for use therein.

 

 29 

 

 

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 or material impairment 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 after the indemnifying
party receives a written invoice relating to fees, disbursements and other
charges in reasonable detail. An indemnifying party will not, in any event, be
liable for any settlement of any action or claim effected without its written
consent. 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.           Intentionally Omitted.

 

 30 

 

 

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 an Agent,
the Company and such 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
Agents, such as persons who control the Company within the meaning of the
Securities Act or the Exchange 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 Agents 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 Agents on the other hand. The relative
benefits received by the Company on the one hand and the Agents 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 Agents (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 such 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 such Agent, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and each 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) and except in the
case of gross negligence or willful misconduct, an 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 or the Exchange Act, and any
officers, directors, partners, employees or agents of an 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 and the Agents 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 Agents,
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.

 

 31 

 

 

13.         Termination.

 

a.           An Agent may terminate this Agreement, by written 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 Material Adverse Effect, or any development that
has occurred that is reasonably likely to have a Material Adverse Effect has
occurred or, in the reasonable judgment of such Agent, is material and adverse
and makes it impracticable 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 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 reasonable judgment of such 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 for a period of at least ten Trading Days, (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 9 (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 an Agent elects to terminate this Agreement as provided in this
Section 13(a), such 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
9 (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.

 

c.           Each of the Agents 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 9 (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.

 

 32 

 

 

d.           Unless earlier terminated pursuant to this Section 13, this
Agreement shall automatically terminate upon the earlier to occur of (i) the
third (3rd) year anniversary of the date hereof and (ii) the issuance and sale
of all of the Placement Shares through the Agents on the terms and subject to
the conditions set forth herein except that the provisions of Section 9 (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.

 

e.           This Agreement shall remain in full force and effect unless
terminated pursuant to Sections 13(a), (b), (c), or (d) 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 9 (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) shall
remain in full force and effect. Upon termination of this Agreement, the Company
shall not have any liability to an Agent for any discount, commission or other
compensation with respect to any Placement Shares not otherwise sold by an Agent
under this Agreement.

 

f.            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 an 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.

 

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 Agents,
shall be delivered to:

 

FBR Capital Markets & Co.

1300 North 17th Street, Suite 1400

Arlington, Virginia 22209

Attention: Legal Department

Telephone: (703) 312-9500

Email: atmdesk@fbr.com

 

and

 

MLV & Co. LLC

299 Park Avenue, 7th Floor

New York, New York 10171

Attention: Legal Department

Telephone: (212) 542-5880

Email: mlvlegal@mlvco.com

 

 33 

 

 

with a copy to:

Duane Morris LLP

One Riverfront Plaza

1037 Raymond Boulevard, Suite 1800

Newark, New Jersey 07102

Attention: James T. Seery

Telephone: (973) 424-2088

Email: jtseery@duanemorris.com

 

and if to the Company, shall be delivered to:

Fortress Biotech, Inc.

2 Gansevoort Street, 9th Floor

New York, New York 10014

Attention: Samuel W. Berry

Telephone: (781) 652-4500

Email: sberry@fortressbiotech.com

 

with a copy to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, North Carolina 27607

Attention: W. David Mannheim

Telephone: (919) 781-4000

Email: wmannheim@wyrick.com

 

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 confirmation
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.

 

 34 

 

 

15.         Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and each 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.

 

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 share consolidation, stock split, stock dividend, corporate
domestication 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 of the parties with respect to the
subject matter hereof 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 each of the Agents. 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 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.

 

 35 

 

 

20.         Use of Information. The Agents may not use any information gained in
connection with this Agreement and the transactions contemplated by this
Agreement, including due diligence, to advise any party with respect to
transactions not expressly approved by the Company.

 

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 transmission.

 

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

 

23.         Permitted Free Writing Prospectuses. The Company represents,
warrants and agrees that, unless it obtains the prior consent of each of the
Agents, which consent shall not be unreasonably withheld, conditioned or
delayed, and each of the Agents represents, warrants and agrees that, unless it
obtains the prior consent of the Company, which consent shall not be
unreasonably withheld, conditioned or delayed, 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 Agents 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 G hereto are
Permitted Free Writing Prospectuses.

 

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

 

a.           Each 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 either 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 such Agent has
advised or is advising the Company on other matters, and neither Agent has any
obligation to the Company with respect to the transactions contemplated by this
Agreement except the obligations expressly set forth in this Agreement;

 

 36 

 

 

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 Agent has 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 each Agent and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and such Agent has 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 an Agent 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 such Agent 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 such Agents’ obligations under this Agreement and to
keep information provided by the Company to such Agent and its 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 Regulations.

 

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

 

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.

 

 37 

 

 

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 Agents
outside of the United States.

 

[Remainder of the page intentionally left blank]

 

 38 

 

 

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

 

  Very truly yours,       FORTRESS BIOTECH, INC.       By: /s/ Lindsay A.
Rosenwald   Name: Lindsay A. Rosenwald   Title: President and Chief Executive
Officer       ACCEPTED as of the date first-above written:       FBR CAPITAL
MARKETS & CO.       By: /s/ Patrice McNicoll   Name: Patrice McNicoll   Title:
Co-Head of Capital Markets       MLV & CO. LLC       By: /s/ Patrice McNicoll  
Name: Patrice McNicoll   Title: Chief Executive Officer

 

 

 

 

SCHEDULE 1

 

 

 

FORM OF PLACEMENT NOTICE

 

 

 

From: Fortress Biotech, Inc.     To: [•]     Attention: [•]     Subject: At
Market Issuance—Placement Notice     Date: _____________, 20__

 

Gentlemen:

 

Pursuant to the terms and subject to the conditions contained in the Amended and
Restated At Market Issuance Sales Agreement between Fortress Biotech, Inc., a
Delaware corporation (the “Company”), and FBR Capital Markets & Co. and MLV &
Co. LLC, dated August 17, 2016, the Company hereby requests that [identify
Designated Agent] sell up to _______ shares of the Company’s Common Stock,
$0.001 par value per share, at a minimum market price of $               share,
during the time period beginning [month, day, time] and ending [month, day,
time].

 

[The Company may include such other sales parameters as it deems appropriate.]

 

 

 

 

SCHEDULE 2

 

 

 

COMPENSATION

 

 

 

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

 

 

 

 

SCHEDULE 2

 

 

 

NOTICE PARTIES

 

 

 

The Company

 

  Lindsay A. Rosenwald, M.D. lrosenwald@fortressbiotech.com         Lucy Lu,
M.D. llu@fortressbiotech.com         Robyn Hunter rhunter@fortressbiotech.com  
      Samuel W. Berry sberry@fortressbiotech.com

 

MLV

 

  Miranda Toledano mtoledano@fbr.com         Ryan Loforte rloforte@fbr.com      
    Patrice McNicoll pmcnicoll@fbr.com           Keith Pompliano
kpompliano@fbr.com  

 

With a copy to atmdesk@fbr.com.

 

 

 

 

EXHIBIT 7(l)

Form of Representation Date Certificate

 

__________________, 20___

 

This Officers Certificate (this “Certificate”) is executed and delivered in
connection with Section 7(l) of the Amended and Restated At Market Issuance
Sales Agreement (the “Agreement”), dated August 17, 2016, and entered into
between Fortress Biotech, Inc. (the “Company”) and FBR Capital Markets & Co. and
MLV & Co. LLC. All capitalized terms used but not defined herein shall have the
meanings given to such terms in the Agreement.

 

The undersigned, a duly appointed and authorized officer of the Company, having
made reasonable inquiries to establish the accuracy of the statements below and
having been authorized by the Company to execute this certificate on behalf of
the Company, hereby certifies, on behalf of the Company and not in the
undersigned’s individual capacity, as follows:

 

1.          As of the date of this Certificate, (i) the Registration Statement
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading and (ii) neither the Registration Statement
nor the Prospectus contains any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (iii) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading.

 

2.          Each of the representations and warranties of the Company contained
in the Agreement was true and correct in all material respects, when originally
made, and, except for those representations and warranties that speak solely as
of a specific date, is true and correct as of the date of this Certificate.

 

3.          Except as waived by the Agents in writing, each of the covenants
required to be performed by the Company in the Agreement on or prior to the date
of the Agreement, this Representation Date, and each such other date prior to
the date hereof as set forth in the Agreement, has been performed in all
material respects and each condition required to be complied with by the Company
on or prior to the date of the Agreement, this Representation Date, and each
such other date prior to the date hereof as set forth in the Agreement has been
complied with in all material respects.

 

4.          Subsequent to the date of the most recent financial statements in
the Prospectus, and except as described in the Prospectus, including
Incorporated Documents, there has been no Material Adverse Effect.

 

5.          No stop order suspending (a) the effectiveness of the Registration
Statement or of any part thereof or (b) the qualification or registration of the
Placement Shares under the securities or Blue Sky laws of any jurisdiction has
been issued, and, to the Company’s knowledge, no proceedings for that purpose
have been instituted or are pending or threatened by any securities or other
governmental authority (including, without limitation, the Commission).

 

 

 

 

The undersigned has executed this Officer’s Certificate as of the date first
written above.

 

  FORTRESS BIOTECH, INC.         By:                   Name:           Title: