Exhibit 10.1

KEMPHARM, INC.

COMMON STOCK

SALES AGREEMENT

October 3, 2016

Cowen and Company, LLC

599 Lexington Avenue

New York, NY 10022

Ladies and Gentlemen:

KemPharm, Inc. (the “Company”), confirms its agreement (this “Agreement”) with
Cowen and Company, LLC (“Cowen”), 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 Cowen, acting as agent and/or
principal, shares (the “Placement Shares”) of the Company’s common stock, par
value $0.0001 per share (the “Common Stock”), having an aggregate offering price
of up to $50,000,000. Notwithstanding anything to the contrary contained herein,
the parties hereto agree that compliance with the limitation set forth in this
Section 1 on the number of shares of Common Stock issued and sold under this
Agreement shall be the sole responsibility of the Company, and Cowen shall have
no obligation in connection with such compliance. The issuance and sale of
Common Stock through Cowen will be effected pursuant to the Registration
Statement (as defined below) filed, or to be filed, by the Company and after
such Registration Statement has been 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 (as
defined below) to issue the Common Stock.

On the date of this Agreement, the Company has filed, or will file, in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the “Securities Act”), with
the Commission a registration statement on Form S-3, including a base
prospectus, relating to certain securities, including the Common Stock, 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, and the rules and
regulations thereunder (collectively, the “Exchange Act”). The Company has
prepared a sales prospectus specifically relating to the Placement Shares (the
“Sales Prospectus”) included as part of such registration statement. Following
the date that such registration statement is declared effective, the Company
shall furnish to Cowen, for use by Cowen, copies of the Sales Prospectus, as
supplemented, if at all, by any prospectus supplement, relating to the Placement
Shares. Except where the context otherwise requires, such registration
statement, as amended when it becomes effective, including all documents filed
as part thereof or incorporated by reference therein, and including any
information contained in a

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Prospectus (as defined below) subsequently filed with the Commission pursuant to
Rule 424(b) under the Securities Act or deemed to be a part of such registration
statement pursuant to Rule 430B or 462(b) of the Securities Act, is herein
called the “Registration Statement.” The base prospectus, including all
documents incorporated therein by reference, and the Sales Prospectus, including
all documents incorporated therein by reference, each of which is included in
the Registration Statement, as it or they may be supplemented by one or more
additional prospectus supplements, in the form in which such prospectus and/or
Sales Prospectus have most recently been filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act, together with any
“issuer free writing prospectus,” as defined in Rule 433 of the Securities Act
regulations (“Rule 433”), relating to the Placement Shares that (i) is required
to be filed with the Commission by the Company or (ii) is exempt from filing
pursuant to Rule 433(d)(5)(i), 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), 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. 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 any copy filed with the Commission
pursuant to the Electronic Data Gathering Analysis and Retrieval System
(“EDGAR”).

2. Placements. Each time that the Company wishes to issue and sell the Placement
Shares hereunder (each, a “Placement”), it will notify Cowen by email notice (or
other method mutually agreed to in writing by the parties) (a “Placement
Notice”) containing the parameters in accordance with which it desires the
Placement Shares to be sold, which shall at a minimum include 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) and any minimum price below which
sales may not be made, a form of which containing such minimum sales parameters
necessary is attached hereto as Schedule 1. The Placement Notice shall originate
from any of the individuals from the Company set forth on Schedule 2 (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 Cowen set forth on
Schedule 2, as such Schedule 2 may be amended from time to time. The Placement
Notice shall be effective upon receipt by Cowen unless and until (i) in
accordance with the notice requirements set forth in Section 4, Cowen declines
to accept the terms contained therein for any reason, in its sole discretion,
(ii) the entire amount of the Placement Shares have been sold, (iii) in
accordance with the notice requirements set forth in Section 4, the Company
suspends or terminates the Placement Notice for any reason, in its sole
discretion, (iv) the Company issues a subsequent Placement Notice with
parameters superseding those on the earlier dated Placement Notice, or (v) this
Agreement has been terminated under the provisions of Section 11. The amount of
any discount, commission or other compensation to be paid by the Company to
Cowen in connection with the sale of the Placement Shares shall be calculated in
accordance with the terms set forth in Schedule 3. It is expressly acknowledged
and agreed that neither the Company nor Cowen will have any obligation
whatsoever with respect to a Placement or any Placement Shares unless and until
the Company delivers a Placement Notice to Cowen and

 

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Cowen does not decline such Placement Notice pursuant to the terms set forth
above, and then only upon the terms specified therein and herein. In the event
of a conflict between the terms of this Agreement and the terms of a Placement
Notice, the terms of the Placement Notice will control.

3. Sale of Placement Shares by Cowen. Subject to the terms and conditions herein
set forth, upon the Company’s delivery 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, Cowen, for
the period specified in the Placement Notice, will use its commercially
reasonable efforts consistent with its normal trading and sales practices and
applicable state and federal laws, rules and regulations and the rules of the
Nasdaq Stock Market LLC (“Nasdaq”) to sell such Placement Shares up to the
amount specified in such Placement Notice, and otherwise in accordance with the
terms of such Placement Notice. Cowen will provide written confirmation to the
Company (including by email correspondence to each of the individuals of the
Company set forth on Schedule 2, if receipt of such correspondence is actually
acknowledged by any of the individuals to whom the notice is sent, other than
via auto-reply) no later than the opening of the Trading Day (as defined below)
immediately following the Trading Day on which it has made sales of Placement
Shares hereunder setting forth the number of Placement Shares sold on such day,
the volume-weighted average price of the Placement Shares sold, and the Net
Proceeds (as defined below) payable to the Company. Cowen may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415(a)(4) of the Securities Act, including without limitation
sales made through Nasdaq, on any other existing trading market for the Common
Stock or to or through a market maker. If expressly authorized by the Company in
a Placement Notice, Cowen may also sell Placement Shares in negotiated
transactions. Notwithstanding the provisions of Section 6(aaa), Cowen shall not
purchase Placement Shares for its own account as principal unless expressly
authorized to do so by the Company in a Placement Notice. The Company
acknowledges and agrees that (i) there can be no assurance that Cowen will be
successful in selling Placement Shares, and (ii) Cowen 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 Cowen to use its
commercially reasonable efforts consistent with its normal trading and sales
practices to sell such Placement Shares as required under this Section 3. For
the purposes hereof, “Trading Day” means any day on which the Company’s Common
Stock is purchased and sold on Nasdaq.

4. Suspension of Sales.

(a) The Company or Cowen may, upon notice to the other party in writing
(including by email correspondence to each of the individuals of the other party
set forth on Schedule 2, if receipt of such correspondence is actually
acknowledged by any of the individuals to whom the notice is sent, other than
via auto-reply) or by telephone (confirmed immediately by verifiable facsimile
transmission or email correspondence to each of the individuals of the other
party set forth on Schedule 2), suspend any sale of Placement Shares; provided,
however, that such suspension shall not affect or impair either 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 the other unless it is made to one of
the individuals named on Schedule 2 hereto, as such schedule may be amended from
time to time.

 

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(b) Notwithstanding any other provision of this Agreement, during any period in
which the Company is in possession of material non-public information, the
Company and Cowen agree that (i) no sale of Placement Shares will take place,
(ii) the Company shall not request the sale of any Placement Shares, and (iii)
Cowen shall not be obligated to sell or offer to sell any Placement Shares.

(c) If either Cowen or the Company has reason to believe that the exemptive
provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act
are not satisfied with respect to the Common Stock, it shall promptly notify the
other party, and Cowen may, at its sole discretion, suspend sales of the
Placement Shares under this Agreement.

5. Settlement.

(a) 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” and the first such settlement date, the “First Delivery
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 Cowen at which such Placement
Shares were sold, after deduction for (i) Cowen’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2 hereof,
(ii) any other amounts due and payable by the Company to Cowen hereunder
pursuant to Section 7(g) (Expenses) hereof, and (iii) any transaction fees
imposed by any governmental or self-regulatory organization in respect of such
sales.

(b) 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 Cowen’s or its designee’s account (provided Cowen
shall have given the Company written notice of such designee at least one
Trading Day prior to the Settlement Date) at The Depository Trust Company
through its Deposit and Withdrawal at Custodian System or by such other means of
delivery as may be mutually agreed upon by the parties hereto which in all cases
shall be freely tradeable, transferable, registered shares in good deliverable
form. On each Settlement Date, Cowen will deliver the related Net Proceeds in
same day funds to an account designated by the Company on, or prior to, the
Settlement Date. If the Company, or its transfer agent (if applicable), defaults
in its obligation to deliver duly authorized Placement Shares on a Settlement
Date, the Company agrees that in addition to and in no way limiting the rights
and obligations set forth in Section 9(a) (Indemnification and Contribution)
hereto, it will (i) hold Cowen harmless against any loss, claim, damage, or
reasonable and documented expense (including reasonable and documented legal
fees and expenses), as incurred, arising out of or in connection with such
default by the Company and (ii) pay to Cowen (without duplication) any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default.

6. Representations and Warranties of the Company. Except as disclosed in the
Registration Statement or the Sales Prospectus, the Company represents and
warrants to, and agrees with, Cowen that, unless such representation, warranty
or agreement specifies otherwise, as of each Applicable Time (as defined in
Section 20):

(a) Other than as of the date of this Agreement, the Registration Statement has
been declared effective by the Commission under the Securities Act. The Company
has complied to the Commission’s satisfaction with all requests of the
Commission for additional or supplemental information related to the
Registration Statement and the Prospectus. No stop order suspending the
effectiveness of the Registration Statement is in effect and no proceedings for
such purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated or threatened by the Commission. The Company meets the
requirements for use of Form S-3 under the Securities Act.

 

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(b) As of the date of this Agreement, the proposed sale of the Placement Shares
hereunder meets the requirements of General Instruction I.B.6 of Form S-3.

(c) The Prospectus when filed will comply or complied and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act. Each of the Registration Statement and any post-effective
amendments or supplements thereto, at the time it becomes effective or its date,
as applicable, will comply and as of each of the Settlement Dates, if any, will
comply in all material respects with the Securities Act and did not and, as of
each Settlement Date, if any, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented, as of its date, did not and, as of each of the
Settlement Dates, if any, will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information furnished to the Company in writing by Cowen
expressly for use therein. There are no contracts or other documents required to
be described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.

(d) The Company has delivered to Cowen one complete copy of the Registration
Statement and a copy of each consent and certificate of experts filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits)
and the Prospectus, as amended or supplemented, in such quantities and at such
places as Cowen has reasonably requested.

(e) As of the date of this Agreement, the Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act.

(f) The Company is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act. The Company agrees to notify Cowen promptly upon the Company
becoming an “ineligible issuer.”

(g) The Company has not distributed and will not distribute, prior to the
completion of Cowen’s distribution of the Placement Shares, any offering
material in connection with the offering and sale of the Placement Shares other
than the Prospectus or the Registration Statement.

 

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(h) The Company has the corporate power and authority to enter into and perform
its obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.

(i) The Placement Shares, when issued and delivered, will be duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company against payment therefor pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.

(j) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified to do business and is in good standing as a foreign
corporation or in each jurisdiction in which its respective ownership or lease
of property or the conduct of its business requires such qualification and has
all power and authority (corporate or other) necessary to own or hold its
properties and to conduct the business in which it is engaged, except where the
failure to so qualify or have such power or authority would not (i) have,
singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, assets, business or prospects
of the Company, or (ii) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or to consummate any
transactions contemplated by this Agreement or the Prospectus (any such effect
as described in clauses (i) or (ii), a “Material Adverse Effect”). The Company
has no subsidiaries.

(k) All of the issued shares of capital stock of the Company, have been duly and
validly authorized and issued, are fully paid and non-assessable, have been
issued in compliance with federal and state securities laws and conform in all
material respects to the description thereof contained in the Prospectus under
the heading “Description of Capital Stock.” All of the Company’s options,
warrants and other rights to purchase or exchange any securities for shares of
the Company’s capital stock have been duly authorized and validly issued and
were issued in compliance with federal and state securities laws. None of the
outstanding shares of Common Stock was issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. As of June 30, 2016, there were no
authorized or outstanding shares of capital stock, options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company other than those described in the Prospectus. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, as described
or incorporated by reference in the Prospectus, accurately and fairly present in
all material respects the information required to be shown with respect to such
plans, arrangements, options and rights.

 

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(l) The execution, delivery and performance of this Agreement by the Company,
the issue and sale of the Placement Shares by the Company and the consummation
of the transactions contemplated hereby will not (with or without notice or
lapse of time or both) (i) conflict with or result in a breach or violation of
any of the terms or provisions of, constitute a default or a Debt Repayment
Triggering Event (as defined below) under, give rise to any right of termination
or other right or the cancellation or acceleration of any right or obligation or
loss of a benefit under, or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property or assets of
the Company pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject, (ii) result in any violation of the provisions of the certificate of
incorporation or by-laws of the Company or (iii) result in any violation of any
law, statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its properties or assets; except in the cases of clauses (i)
and (iii), to the extent that any such conflict, breach, violation or default
would not, individually or in the aggregate, have a Material Adverse Effect. A
“Debt Repayment Triggering Event” means any event or condition that gives, or
with the giving of notice or lapse of time would give the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company.

(m) Subject to any applicable restrictions imposed by General Instruction I.B.6
of Form S-3 (and the making of any additional filings with the Commission
required as a result thereof) and except for such consents, approvals,
authorizations, orders, registrations, qualifications or filings that may be
required (i) by or with the Nasdaq Global Market in connection with the listing
of the Placement Shares on the Nasdaq Global Market or the Financial Industry
Regulatory Authority (“FINRA”) or (ii) pursuant to the Securities Act, the
Exchange Act or any applicable state or foreign securities laws, no consent,
approval, authorization or order of, or filing, qualification or registration
(each an “Authorization”) with, any court, governmental or non-governmental
agency or body, foreign or domestic, which has not been made, obtained or taken
and is not in full force and effect, is required for the execution, delivery and
performance of the Agreement by the Company, the offer, issuance and sale of the
Placement Shares by the Company or the consummation of the transactions
contemplated hereby; and no event has occurred that allows or results in, or
after notice or lapse of time or both would allow or result in, revocation,
suspension, termination or invalidation of any such Authorization or any other
impairment of the rights of the holder or maker of any such Authorization. All
corporate approvals (including those of stockholders, if any) necessary for the
Company to consummate the transactions contemplated by this Agreement have been
obtained and are in effect.

(n) Ernst & Young LLP, who have certified certain financial statements included
or incorporated by reference in the Prospectus, is an independent registered
public accounting firm with respect to the Company within the meaning of Article
2-01 of Regulation S-X and the Public Company Accounting Oversight Board (United
States) (the “PCAOB”).

(o) The financial statements, together with the related notes, included or
incorporated by reference in the Prospectus fairly present in all material
respects the financial position and the results of operations and changes in
financial position of the Company at the respective dates or

 

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for the respective periods therein specified. Such statements and related notes
have been prepared in accordance with the generally accepted accounting
principles in the United States (“GAAP”) applied on a consistent basis
throughout the periods involved except as may be set forth in the related notes
included or incorporated by reference in the Prospectus; and provided that the
unaudited interim financial statements, which are subject to normal year-end
adjustments, may not contain certain footnotes, as permitted by the applicable
rules of the Commission. The financial statements, together with the related
notes, included or incorporated by reference in the Prospectus comply in all
material respects with Regulation S-X. No other financial statements or
supporting schedules or exhibits are required by Regulation S-X to be described,
included or incorporated by reference in the Prospectus. The summary and
selected financial data, if any, included or incorporated by reference in the
Prospectus fairly present in all material respects the information shown therein
as at the respective dates and for the respective periods specified and are
derived from the financial statements set forth in or incorporated by reference
in the Prospectus and other financial information. All information contained or
incorporated by reference in in the Prospectus regarding “non-GAAP financial
measures” (as defined in Regulation G) complies in all material respects with
Regulation G and Item 10 of Regulation S-K, to the extent applicable.

(p) Other than as set forth or contemplated in the Prospectus: (i) the Company
has not (1) sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material loss or
material interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, (2) incurred any material
liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (3) entered
into any material transaction other than in the ordinary course of business or
(4) declared or paid any dividends on its capital stock; and (ii) since the date
of the latest audited financial statements included or incorporated by reference
in the Prospectus, there has not been any material change in the capital stock
(other than (1) Common Stock issued pursuant to the exercise of warrants or
conversion of convertible securities or upon the exercise or vesting of stock
options or other awards outstanding under the Company’s equity compensation or
other plans, (2) options, Common Stock or other securities granted or issued
pursuant to the Company’s equity compensation or other plans, (3) Common Stock
issued upon conversion or reclassification of the Company’s convertible
preferred stock, (4) the issuance of the Placement Shares and (5) stock
repurchases required to be made by the Company pursuant to the terms of existing
agreements) or long-term debt of the Company, or any material adverse changes,
or any development involving a prospective material adverse change, in or
affecting the business, assets, general affairs, management, financial position,
prospects, stockholders’ equity or results of operations of the Company.

(q) There is no legal or governmental proceeding to which the Company is a party
or of which any property or assets of the Company is the subject, including any
proceeding before the United States Food and Drug Administration of the U.S.
Department of Health and Human Services (“FDA”) or comparable federal, state,
local or foreign governmental bodies (it being understood that the interaction
between the Company and the FDA and such comparable governmental bodies relating
to the clinical development and product approval process shall not be deemed
proceedings for purposes of this representation), which is required to be
described in the Prospectus and is not described therein, or which, singularly
or in the aggregate, if

 

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determined adversely to the Company, would have a Material Adverse Effect; and
to the Company’s knowledge after reasonable investigation and due diligence
inquiry (“Knowledge”), no such proceedings are threatened by governmental
authorities or by others. The Company is in compliance with all applicable
federal, state, local and foreign laws, regulations, orders and decrees
governing its business as prescribed by the FDA, or any other federal, state or
foreign agencies or bodies engaged in the regulation of pharmaceuticals or
biohazardous substances or materials, except where noncompliance would not,
singularly or in the aggregate, have a Material Adverse Effect. All preclinical
studies and clinical trials conducted by or on behalf of the Company to support
approval for commercialization of the Company’s products have been conducted by
the Company, or to the Company’s Knowledge by third parties, in compliance with
all applicable federal, state or foreign laws, rules, orders and regulations,
except for such failure or failures to be in compliance as would not, singularly
or in the aggregate, have a Material Adverse Effect.

(r) The Company (i) is not in violation of its charter or by-laws, (ii) is not
in default in any respect, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it is bound or to which any of its property
or assets is subject (including, without limitation, those administered by the
FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) and (iii)
is not in violation in any respect of any law, ordinance, governmental rule,
regulation or court order, decree or judgment to which it or its property or
assets may be subject except, in the case of clauses (ii) and (iii) of this
paragraph (r), for any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.

(s) The Company possesses all licenses, certificates, authorizations and permits
issued by, and has made all declarations and filings with, the appropriate
local, state, federal or foreign regulatory agencies or bodies (including,
without limitation, those administered by the FDA or by any foreign, federal,
state or local governmental or regulatory authority performing functions similar
to those performed by the FDA) which are necessary for the conduct of its
business as described in the Prospectus (collectively, the “Governmental
Permits”) except where any failures to possess or make the same, singularly or
in the aggregate, would not have a Material Adverse Effect. The Company is in
compliance with all such Governmental Permits, except where the failure to be in
compliance would not, singularly or in the aggregate, have a Material Adverse
Effect; all such Governmental Permits are valid and in full force and effect,
except where the invalidity or failure to be in full force and effect would not,
singularly or in the aggregate, have a Material Adverse Effect. All such
Governmental Permits are free and clear of any material restriction or material
condition. The Company has not received notification of any material revocation,
modification, suspension, termination or invalidation (or proceedings related
thereto) of any such Governmental Permit, and to the Knowledge of the Company,
no event has occurred that allows or results in, or after notice or lapse of
time or both would allow or result in, revocation, modification, suspension,
termination or invalidation (or proceedings related thereto) of any such
Governmental Permit and the Company has no Knowledge that any such Governmental
Permit will not be renewed. The studies, tests and preclinical studies or
clinical trials conducted by or on behalf of the Company that are described in
the Prospectus (the

 

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“Company Studies and Trials”) were and, if still pending, are being, conducted
in all material respects in accordance with experimental protocols, procedures
and controls pursuant to, where applicable, accepted professional scientific
standards; the descriptions of the results of the Company Studies and Trials
contained in the Prospectus are accurate in all material respects; and the
Company has not received any notices or correspondence with the FDA or any
foreign, state or local governmental body exercising comparable authority
requiring the termination, suspension or material modification of any Company
Studies or Trials that termination, suspension or material modification would
reasonably be expected to have a Material Adverse Effect.

(t) The Company is not and, after giving effect to the offering of the Placement
Shares and the application of the proceeds thereof as described in the
Prospectus, will not become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.

(u) Neither the Company nor any of its officers, directors or, to the Company’s
Knowledge, affiliates has taken or will take, directly or indirectly, any action
designed or intended to stabilize or manipulate the price of any security of the
Company in connection with the offering of the Placement Shares, or which caused
or resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Placement Shares.

(v) The Company owns or possesses the valid right to use all (i) valid and
enforceable patents, patent applications, trademarks, trademark registrations,
service marks, service mark registrations, Internet domain name registrations,
copyrights, copyright registrations, licenses, trade secret rights
(“Intellectual Property Rights”) and (ii) inventions, software, works of
authorships, trademarks, service marks, trade names, databases, formulae, know
how, show how, Internet domain names and other intellectual property (including
trade secrets and other unpatented and/or unpatentable proprietary confidential
information, systems, or procedures) (collectively, “Intellectual Property
Assets”), in each case, necessary to conduct its business as currently
conducted, and as currently proposed to be conducted and described in the
Prospectus; provided that the foregoing representation is made only to the
Company’s Knowledge as it concerns third-party rights and trademarks. The
Company has not received any opinion from its legal counsel concluding that any
activities of its business as currently conducted infringes, misappropriates, or
otherwise violates, valid and enforceable Intellectual Property Rights of any
other person, and has not received written notice of any challenge, which is to
the Company’s Knowledge still pending, by any other person to the rights of the
Company with respect to any Intellectual Property Rights or Intellectual
Property Assets owned or used by the Company. To the Knowledge of the Company,
the Company’s business as currently conducted does not infringe, misappropriate
or otherwise violate any valid and enforceable Intellectual Property Rights of
any other person. All licenses for the use of the Intellectual Property Rights
described in the Prospectus are valid, binding upon, and enforceable by or
against the Company and, to the Company’s Knowledge, the parties thereto in
accordance to its terms, except (i) as limited by laws of general application
relating to bankruptcy, insolvency and other relief of debtors, and (ii) as
limited by rules of law governing specific performance, injunctive relief or
other equitable remedies and by general principals of equity. The Company has
complied in all material respects with, and is not in breach in any material
respect nor has received any asserted or

 

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threatened claim of breach of any intellectual property license, and the Company
has no Knowledge of any breach or anticipated breach by any other person to any
intellectual property license to which the Company is a party. No claim has been
made against the Company alleging the infringement by the Company of any patent,
trademark, service mark, trade name, copyright, trade secret, license in or
other intellectual property right or franchise right of any person. The Company
has taken reasonable steps to protect, maintain and safeguard its Intellectual
Property Rights, including the execution of appropriate nondisclosure and
confidentiality agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any other person
in respect of, the Company’s right to own, use, or hold for use any of the
Intellectual Property Rights as owned, used or held for use in the conduct of
the business as currently conducted. The Company has at all times complied with
all applicable laws relating to privacy, data protection, and the collection and
use of personal information collected, used, or held for use by the Company in
the conduct of the Company’s business. No claims have been asserted or
threatened against the Company alleging a violation of any person’s privacy or
personal information or data rights and the consummation of the transactions
contemplated hereby will not breach or otherwise cause any violation of any law
related to privacy, data protection, or the collection and use of personal
information collected, used, or held for use by the Company in the conduct of
the Company’s business. The Company takes reasonable measures to ensure that
such information is protected against unauthorized access, use, modification, or
other misuse. The Company has taken commercially reasonable measures to obtain
ownership of all works of authorship and inventions made by its employees,
consultants and contractors during the time they were employed by or under
contract with the Company and that are material to the Company’s business. All
founders and key employees have signed confidentiality and invention assignment
agreements with the Company.

(w) The Company has valid title to, or has valid rights to lease or otherwise
use, all items of real or personal property (provided, that for the sake of
clarity, rights to Intellectual Property Assets are addressed exclusively in
Section 2(v) above) which are material to the business of the Company, in each
case free and clear of all liens, encumbrances, security interests, claims and
defects other than those described in the Prospectus and those that do not,
singularly or in the aggregate, materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company; and all of the leases and subleases material to the business of the
Company and under which the Company holds properties described in the
Prospectus, are in full force and effect, and the Company does not have any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company to the
continued possession of the leased or subleased premises under any such lease or
sublease.

(x) The documents incorporated or deemed to be incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of the
Exchange Act, and, when read together with the other information in the
Prospectus, at the Settlement Dates, 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 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.

 

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(y) There is (i) no significant unfair labor practice complaint pending against
the Company, nor to the Knowledge of the Company, threatened against it, before
the National Labor Relations Board, any state or local labor relation board or
any foreign labor relations board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company, or, to the Knowledge of the
Company, threatened against it and (ii) no material labor disturbance by the
employees of the Company exists or, to the Company’s Knowledge, is imminent, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers, customers or
contractors, that would be expected, singularly or in the aggregate, to have a
Material Adverse Effect. The Company is not aware that any key employee or
significant group of employees of the Company plans to terminate employment with
the Company.

(z) No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the thirty (30)-day notice requirement under Section 4043 of ERISA has
been waived) has occurred or would reasonably be expected to occur with respect
to any employee benefit plan of the Company which would, singularly or in the
aggregate, have a Material Adverse Effect. Each employee benefit plan of the
Company is in compliance in all material respects with applicable law, including
ERISA and the Code. The Company has not incurred and would not reasonably be
expected to incur material liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in ERISA). Each
pension plan for which the Company would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified, and to the
Company’s Knowledge, nothing has occurred, whether by action or by failure to
act, which would, singularly or in the aggregate, cause the loss of such
qualification.

(aa) None of the Company or, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company is currently subject to any
U.S. sanctions administered by the Office of Foreign Office Control of the U.S.
Department of the Treasury (“OFAC”); and the Company will not, directly or
indirectly, use the proceeds of the offering of the Placement Shares hereunder,
or lend, contribute or otherwise make available such proceeds to any joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.

(bb) The Company is in compliance in all material respects with all foreign,
federal, state and local rules, laws and regulations relating to the use,
treatment, storage and disposal of hazardous or toxic substances or waste and
protection of health and safety or the environment which are applicable to their
businesses (“Environmental Laws”). There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic or other wastes or other hazardous substances by,
due to, or caused by the Company (or, to the Company’s Knowledge, any other
entity for whose acts or omissions the Company is or may reasonably be expected
to otherwise be liable) upon any of the property now or previously owned or
leased by the Company, or upon any other property, in violation of any

 

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law, statute, ordinance, rule, regulation, order, judgment, decree or permit or
which would, under any law, statute, ordinance, rule (including rule of common
law), regulation, order, judgment, decree or permit, give rise to any liability
other than any such violation or liability as would not have, singularly or in
the aggregate, a Material Adverse Effect; and there has been no disposal,
discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has Knowledge and which
would have, singularly or in the aggregate, a Material Adverse Effect.

(cc) The Company (i) has timely filed all necessary federal, state, local and
foreign tax returns (or timely filed extensions with respect to such returns),
and all such returns were true, complete and correct in all material respects,
(ii) has paid all federal, state, local and foreign taxes, assessments,
governmental or other charges due and payable for which it is liable, including,
without limitation, all sales and use taxes and all taxes which the Company is
obligated to withhold from amounts owing to employees, creditors and third
parties (other than such amounts being disputed in good faith and by appropriate
proceedings and for which appropriate reserves, if required, have been
established), and (iii) does not have any tax deficiency or claims outstanding
or assessed or, to its Knowledge, proposed against any of them, except those, in
each of the cases described in clauses (i), (ii) and (iii) of this paragraph
(cc), that would not, singularly or in the aggregate, have a Material Adverse
Effect. The Company has not engaged in any transaction which is a corporate tax
shelter or which would be characterized as such by the Internal Revenue Service
or any other taxing authority. The accruals and reserves on the books and
records of the Company in respect of tax liabilities for any taxable period not
yet finally determined are adequate to meet any assessments and related
liabilities for any such period, and since December 31, 2015 the Company has not
incurred any liability for taxes other than in the ordinary course of business.

(dd) The Company carries, or is covered by, insurance in such amounts and
covering such risks as generally deemed adequate and customary for the conduct
of its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries. The Company does
not have any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect. All policies of insurance
owned by the Company are, to the Company’s Knowledge, in full force and effect
and the Company is in material compliance with the terms of such policies. The
Company has not received written notice from any insurer, agent of such insurer
or the broker of the Company that any material capital improvements or any other
material expenditures (other than premium payments) are required or necessary to
be made in order to continue such insurance. The Company does not insure risk of
loss through any captive insurance, risk retention group, reciprocal group or by
means of any fund or pool of assets specifically set aside for contingent
liabilities other than as described in the Prospectus.

(ee) The Company maintains a system of internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the Exchange Act) that complies
with any applicable requirements of the Exchange Act and has been designed by
the Company’s principal executive officer and principal financial officer, or
under their supervision, to provide reasonable assurances that (i) transactions
are executed in accordance with management’s general or

 

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specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; and (v) the interactive data in eXtensible Business Reporting
Language incorporated by reference in the Prospectus is accurate. Since the end
of the Company’s most recent audited fiscal year, there has been (A) no material
weakness in the Company’s internal control over financial reporting (whether or
not remediated) and (B) 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. The
Company’s internal control over financial reporting is overseen by the Audit
Committee of the Board of Directors of the Company (the “Audit Committee”) in
accordance with the Exchange Act Rules. As of the date of this Agreement, the
Company has not publicly disclosed or reported to the Audit Committee or to the
Board, and within the next 90 days the Company does not reasonably expect to
publicly disclose or report to the Audit Committee or the Board, a significant
deficiency, material weakness, change in internal control over financial
reporting or fraud involving management or other employees who have a
significant role in the internal control over financial reporting (each an
“Internal Control Event”), any violation of, or failure to comply with, U.S.
federal securities laws, or any financial reporting matter which, if determined
adversely to the Company, would have a Material Adverse Effect.

(ff) As of the date of this Agreement, and as of each date that the Company
files an annual report on Form 10-K under the Exchange Act, a member of the
Audit Committee has confirmed to the Chief Executive Officer or Chief Financial
Officer of the Company that the Audit Committee is not reviewing or
investigating, and neither the Company’s independent auditors nor its internal
auditors is recommending that the Audit Committee review or investigate, (i)
adding to, deleting, changing the application of or changing the Company’s
disclosure with respect to, any of the Company’s material accounting policies,
(ii) any matter which would reasonably be expected to result in a restatement of
the Company’s financial statements for any annual or interim period during the
current or prior three fiscal years, or (iii) any Internal Control Event.

(gg) The Company has made and keeps books, records and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company in all material respects.

(hh) The Company maintains disclosure controls and procedures (as such is
defined in Rule 13a-15(e) under the Exchange Act) that comply with any
applicable requirements of the Exchange Act; such disclosure controls and
procedures have been reasonably designed to ensure that information required to
be disclosed by the Company is accumulated and communicated to the Company’s
management, including the Company’s principal executive officer and principal
financial officer by others within the Company, and such disclosure controls and
procedures are effective.

(ii) As of the date hereof and as of each date that the Company files an annual
report on Form 10-K under the Exchange Act or files its quarterly reports on
Form 10-Q under the Exchange Act, the minute books of the Company have been made
available to Cowen and

 

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counsel for Cowen, and such books (i) contain an accurate summary of all
meetings and actions of the board of directors (including each board committee)
and stockholders of the Company since the time of its incorporation through the
date of the latest meeting and action and (ii) accurately in all material
respects reflect all transactions referred to in such minutes; provided,
however, that no minute books have been made available to Cowen for meetings
subsequent to September 13, 2016, and a summary of the actions taken thereat has
been communicated to Cowen and counsel for Cowen, as of the date hereof.

(jj) There is no franchise agreement, lease, contract, or other agreement or
document required by the Securities Act to be described in the Prospectus or to
be filed by the Company with the Commission which is not so described or filed
therewith as required; and all descriptions of any such franchise agreements,
leases, contracts, or other agreements or documents, if any, contained in the
Prospectus are accurate descriptions of such documents in all material
respects. Other than as described in the Prospectus, no such franchise
agreement, lease, contract or other agreement has been terminated, otherwise
than by expiration of the agreement on its stated termination date, or as a
result of all parties completing their obligations under such agreement, and
such termination is material to the Company.

(kk) No relationship, direct or indirect, exists between or among the Company on
the one hand, and the directors, officers, stockholders (or analogous interest
holders), customers or suppliers of the Company or any of its affiliates on the
other hand, which is required to be described in the Prospectus and which is not
so described.

(ll) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company within 90 days of the date
hereof. There are no persons with registration rights or similar rights to have
any securities registered by the Company under the Securities Act.

(mm) The Company does not own any “margin securities” as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the
“Federal Reserve Board”), and none of the proceeds of the sale of the Placement
Shares will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Placement Shares
to be considered a “purpose credit” within the meanings of Regulation T, U or X
of the Federal Reserve Board.

(nn) The Company is not a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company or Cowen
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Placement Shares or any transaction contemplated by
this Agreement or the Sales Prospectus.

(oo) The exercise price of each option issued under the Company’s stock option
or other employee benefit plans has been no less than the fair market value of a
share of common stock as determined on the date of grant of such option. All
grants of options were validly issued and properly approved by the board of
directors of the Company (or a duly authorized committee thereof) in material
compliance with all applicable laws and regulations and recorded in the
Company’s financial statements in accordance with GAAP and, to the Company’s
Knowledge, no such grants involved “back dating,” “forward dating” or similar
practice with respect to the effective date of grant.

 

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(pp) The Company is not a Passive Foreign Investment Company (“PFIC”) within the
meaning of Section 1296 of the Code, and the Company is not likely to become a
PFIC.

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

(rr) The Company is in compliance in all material respects with all applicable
provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations
promulgated thereunder or implementing the provisions thereof (the
“Sarbanes-Oxley Act”) that are then in effect and is taking all reasonable steps
to ensure that it will be in compliance in all material respects with other
applicable provisions of the Sarbanes-Oxley Act not currently in effect upon the
Company at all times after the effectiveness of such provisions.

(ss) The Company is in compliance in all material respects with all applicable
corporate governance requirements set forth in the rules of Nasdaq that are then
in effect and is taking and will take all reasonable steps to ensure that it
will be in compliance with other applicable corporate governance requirements
set forth in the rules of Nasdaq not currently in effect upon the Company at all
times after the effectiveness of such requirements.

(tt) Neither the Company nor, to the Company’s Knowledge, any employee or agent
of the Company, has (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended or (iv) made any other unlawful payment.

(uu) There are no transactions, arrangements or other relationships between
and/or among the Company, any of its affiliates (as such term is defined in Rule
405 under the Securities Act) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited purpose entity
that would reasonably be expected to materially affect the Company’s liquidity
or the availability of or requirements for its capital resources required to be
described in the Prospectus which have not been described as required.

(vv) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members. All
transactions by the Company with office holders or control persons of the
Company have been duly approved by the board of directors of the Company, or
duly appointed committees or officers thereof, if and to the extent required
under applicable U.S. law.

(ww) The statistical and market related data included or incorporated by
reference in the Prospectus are based on or derived from sources that the
Company believes to be reliable and accurate, and such data is consistent with
the sources from which they are derived.

 

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(xx) The operations of the Company are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money Laundering Laws”), and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company with respect to the Money Laundering Laws
is pending, or to the Company’s Knowledge, threatened.

(yy) The Company is not Insolvent (as defined below). For purposes of this
Section 6(yy), “Insolvent” means, with respect to any person, (i) the present
fair saleable value of such person’s assets is less than the amount required to
pay such person’s total Indebtedness, (ii) such person is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.

(zz) The interactive data in eXtensible Business Reporting Language incorporated
by reference in the Prospectus fairly presents the information called for in all
material respects and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto.

(aaa) The Company acknowledges and agrees that Cowen has informed the Company
that Cowen may, to the extent permitted under the Securities Act and the
Exchange Act, purchase and sell shares of Common Stock for its own account while
this Agreement is in effect;

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

The Company acknowledges that Cowen and, for purposes of the opinions to be
delivered pursuant to Section 7 hereof, counsel to the Company and counsel to
Cowen, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.

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

(a) Registration Statement Amendments. After the date of this Agreement and
during any period in which a Sales Prospectus is required to be delivered by
Cowen under the Securities Act (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act),
(i) the Company will notify Cowen promptly of the time when any subsequent
amendment to the Registration Statement, other than documents incorporated by
reference, has been filed with the Commission and/or has become effective or any
subsequent supplement to the Prospectus has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or
Prospectus or for additional information (insofar as it relates to the
transactions contemplated hereby), (ii) the Company will prepare and file with
the Commission, promptly upon Cowen’s reasonable request, any amendments or
supplements to the Registration Statement or Prospectus that, in Cowen’s
reasonable opinion, may be necessary or advisable in connection with the
distribution of the

 

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Placement Shares by Cowen (provided, however, that the failure of Cowen to make
such request shall not relieve the Company of any obligation or liability
hereunder, or affect Cowen’s right to rely on the representations and warranties
made by the Company in this Agreement and provided, further, that the only
remedy Cowen shall have with respect to the failure to make such filing will 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 Cowen within a
reasonable period of time before the filing and Cowen has not reasonably
objected thereto (provided, however, that the failure of Cowen to make such
objection shall not relieve the Company of any obligation or liability
hereunder, or affect Cowen’s right to rely on the representations and warranties
made by the Company in this Agreement and provided, further, that the only
remedy Cowen shall have with respect to the failure to make such filing will be
to cease making sales under this Agreement) and the Company will furnish to
Cowen 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, other than documents
incorporated by reference, to be filed with the Commission as required pursuant
to the applicable paragraph of Rule 424(b) of the Securities Act.

(b) Notice of Commission Stop Orders. The Company will advise Cowen, 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.

(c) Delivery of Prospectus; Subsequent Changes. During any period in which the
Sales Prospectus is required to be delivered by Cowen under the Securities Act
with respect to a pending sale of the Placement Shares, (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will use its commercially reasonable efforts to
comply 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 (taking
into account any extensions available under the Exchange Act) 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 during such period any event
occurs as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will promptly notify Cowen 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 the filing of any amendment or
supplement, if in the judgment of the Company, it is in the best interest of the
Company.

 

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(d) Listing of Placement Shares. During any period in which the Sales Prospectus
is required to be delivered by Cowen under the Securities Act with respect to a
pending sale of the Placement Shares (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act), the
Company will use its commercially reasonable efforts to cause the Placement
Shares to be listed on Nasdaq and to qualify the Placement Shares for sale under
the securities laws of such jurisdictions as Cowen 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 Cowen and its counsel (at the expense of the Company) copies of (i) the
Registration Statement and the Prospectus (including all documents incorporated
by reference therein) and (ii) all amendments and supplements to the
Registration Statement or Prospectus that are filed with the Commission during
any period in which the Sales Prospectus is required to be delivered under the
Securities Act (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 Cowen may from time to
time reasonably request and, at Cowen’s request, will also furnish copies of the
Prospectus to each exchange or market on which sales of the Placement Shares may
be made; provided, however, that the Company shall not be required to furnish
any document (other than the Prospectus) to Cowen or its counsel to the extent
such document is available on EDGAR.

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

(g) Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, in accordance with
the provisions of Section 11 hereunder, will pay the following expenses all
incident to the performance of its obligations hereunder, including, but not
limited to, expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each
Prospectus and of each amendment and supplement thereto, (ii) the preparation,
issuance and delivery of the Placement Shares, (iii) the qualification of the
Placement Shares under securities laws in accordance with the provisions of
Section 7(d) of this Agreement, including filing fees (provided, however, that
any fees or disbursements of counsel for Cowen in connection therewith shall be
paid by Cowen except as set forth in (vii) below), (iv) the printing and
delivery to Cowen of copies of the Prospectus and any amendments or supplements
thereto, and of this Agreement, (v) the fees and expenses incurred in connection
with the listing or qualification of the Placement Shares for trading on Nasdaq,
(vi) the filing fees and expenses, if any, of the Commission, (vii) the filing
fees and reasonable associated legal expenses of Cowen’s outside counsel for
filings with the FINRA Corporate Financing Department, such legal expense
reimbursement not to exceed $10,000 and, (viii) the reasonable fees and
disbursements of Cowen’s counsel in an amount not to exceed $50,000.

 

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

(i) Notice of Other Sales. During the pendency of any Placement Notice given
hereunder, and for three (3) Trading Days following the termination of any
Placement Notice given hereunder, the Company shall provide Cowen notice as
promptly as reasonably possible before it offers to sell, contracts to sell,
sells, grants any option to sell or otherwise disposes of any shares of Common
Stock (other than Placement Shares offered pursuant to the provisions of this
Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire Common Stock; provided, that such
notice shall not be required in connection with the (i) issuance, grant or sale
of Common Stock, options or warrants to purchase shares of Common Stock,
restricted shares of Common Stock, restricted stock units or other equity
awards, or Common Stock issuable upon the exercise of options or other equity
awards pursuant to the any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, (ii) the issuance of securities in
connection with an acquisition, merger or sale or purchase of assets, (iii) the
issuance or sale of Common Stock pursuant to any dividend reinvestment plan that
the Company may adopt from time to time provided the implementation of such is
disclosed to Cowen in advance, (iv) any shares of Common Stock issuable upon the
exchange, conversion or redemption of securities or the exercise of warrants,
options or other rights in effect or outstanding or (v) the issuance or sale of
Common Stock, or securities convertible into or exercisable for Common Stock,
offered and sold in a privately negotiated transaction to vendors, customers,
strategic partners or potential strategic partners conducted in a manner so as
not to be integrated with the offering of Common Stock hereby. Notwithstanding
the foregoing provisions, nothing herein shall be construed to restrict the
Company’s ability, or require the Company to provide notice to Cowen, to file a
registration statement under the Securities Act.

(j) Change of Circumstances. The Company will, at any time during a fiscal
quarter in which the Company intends to tender a Placement Notice or sell
Placement Shares, advise Cowen 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 provided to Cowen pursuant to this Agreement.

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

(l) 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 Cowen,
the Net Proceeds to the Company and the compensation payable by the

 

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Company to Cowen with respect to such Placement Shares, and (ii) deliver such
number of copies of each such prospectus supplement to each exchange or market
on which such sales were effected as may be required by the rules or regulations
of such exchange or market.

(m) Representation Dates; Certificate. On or prior to the First Delivery Date
and each time the Company subsequently thereafter (i) amends or supplements the
Registration Statement or the Sales Prospectus (other than a Sales Prospectus
filed in accordance with Section 7(l) of this Agreement) by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of document(s) by reference to the Registration Statement or the
Sales Prospectus; (ii) files an annual report on Form 10-K under the Exchange
Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or
(iv) files a report on Form 8-K containing amended financial information (other
than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K) 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 Cowen with a certificate, in the form attached hereto as
Exhibit 7(m) within three (3) Trading Days of any Representation Date if
requested by Cowen. The requirement to provide a certificate under this
Section 7(m) 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 the calendar quarter in which such Placement Notice is
delivered 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, if the Company subsequently decides to sell
Placement Shares following a Representation Date when the Company relied on such
waiver and did not provide Cowen with a certificate under this Section 7(m),
then before the Company delivers the Placement Notice or Cowen sells any
Placement Shares, the Company shall provide Cowen with a certificate, in the
form attached hereto as Exhibit 7(m), dated the date of the Placement Notice.

(n) Legal Opinions. On or prior to the First Delivery Date and within three (3)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(m)
for which no waiver is applicable, the Company shall cause to be furnished to
Cowen a written opinion of each of Cooley LLP and McAndrews, Held & Malloy, Ltd.
(together, “Company Counsel”), or other counsel satisfactory to Cowen, in form
and substance satisfactory to Cowen and its counsel, dated the date that the
opinion is required to be delivered; provided, however, that in lieu of such
opinions for subsequent Representation Dates, such counsels may furnish Cowen
with a letter (a “Reliance Letter”) to the effect that Cowen may rely on a prior
opinion delivered by such firm under this Section 7(n) 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 at such Representation Date).

(o) Comfort Letter. On or prior to the First Delivery Date and within three (3)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(m)
for which no waiver is applicable, the Company shall cause its independent
accountants to furnish Cowen letters (the “Comfort Letters”), dated the date the
Comfort Letter is delivered, in form and substance

 

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satisfactory to Cowen, (i) confirming that they are an independent registered
public accounting firm within the meaning of the Securities Act and the PCAOB,
(ii) stating, as of such date, the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants’ “comfort letters” to Cowen 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.

(p) 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 the
Placement Shares or (ii) sell, bid for, or purchase the Common Stock to be
issued and sold pursuant to this Agreement, or pay anyone any compensation for
soliciting purchases of the Placement Shares other than Cowen; provided,
however, that the Company may bid for and purchase shares of its common stock in
accordance with Rule 10b-18 under the Exchange Act.

(q) Insurance. The Company shall maintain, or cause to be maintained, insurance
in such amounts and covering such risks as is reasonable and customary for the
business for which it is engaged.

(r) Compliance with Laws. The Company will use commercially reasonable efforts
to maintain, or cause to be maintained, all material environmental permits,
licenses and other authorizations required by federal, state and local law in
order to conduct its business as described in the Prospectus, and the Company
shall conduct its businesses, or cause its business to be conducted, in
substantial compliance with such permits, licenses and authorizations and with
applicable environmental laws, except where the failure to maintain or be in
compliance with such permits, licenses and authorizations could not reasonably
be expected to result in a Material Adverse Effect.

(s) Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that it will not 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, assuming no change in the
Commission’s current interpretation as to entities that are not considered an
investment company.

(t) Securities Act and Exchange Act. The Company will use its best efforts to
comply with all requirements imposed upon it by the Securities Act and the
Exchange Act as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Placement Shares as contemplated by
the provisions hereof and the Prospectus.

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

 

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(v) Sarbanes-Oxley Act. The Company will use its best efforts to comply with all
effective applicable provisions of the Sarbanes-Oxley Act.

(w) Emerging Growth Company Status. The Company will promptly notify Cowen if
the Company ceases to be an Emerging Growth Company at any time during the term
of this Agreement.

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

(a) Registration Statement Effective. The Registration Statement shall be
effective and shall be available for the sale of all Placement Shares
contemplated to be issued by any Placement Notice.

(b) No Material Notices. None of the following events shall have occurred and be
continuing: (i) receipt by the Company of any request for additional information
from the Commission or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement, the response to which
would require any post-effective amendments or supplements to the Registration
Statement or the Prospectus; (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, related
Prospectus or such 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. Cowen 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 Cowen’s
reasonable opinion is material, or omits to state a fact that in Cowen’s
reasonable opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

 

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(d) Material Changes. Except as contemplated in the Prospectus, or disclosed in
the Company’s reports filed with the Commission, there shall not have been any
Material Adverse Effect or any development that could reasonably be expected to
result in a Material Adverse Effect.

(e) Company Counsel Legal Opinion. Cowen shall have received the opinions of
Company Counsel required to be delivered pursuant to Section 7(n) on or before
the date on which such delivery of such opinion is required pursuant to
Section 7(n).

(f) Cowen Counsel Legal Opinion. Cowen shall have received from Morgan, Lewis &
Bockius LLP, counsel for Cowen, such opinion or opinions, on or before the date
on which the delivery of the Company Counsel legal opinion is required pursuant
to Section 7(n), with respect to such matters as Cowen may reasonably require,
and the Company shall have furnished to such counsel such documents as they
request for enabling them to pass upon such matters.

(g) Comfort Letter. Cowen shall have received the Comfort Letter required to be
delivered pursuant to Section 7(o) on or before the date on which such delivery
of such Comfort Letter is required pursuant to Section 7(o).

(h) Representation Certificate. Cowen shall have received the certificate
required to be delivered pursuant to Section 7(m) on or before the date on which
delivery of such certificate is required pursuant to Section 7(m).

(i) Secretary’s Certificate. On or prior to the First Delivery Date, Cowen shall
have received a certificate, signed on behalf of the Company by its corporate
Secretary, in form and substance satisfactory to Cowen and its counsel.

(j) No Suspension. Trading in the Common Stock shall not have been suspended on
Nasdaq.

(k) Other Materials. On each date on which the Company is required to deliver a
certificate pursuant to Section 7(m), the Company shall have furnished to Cowen
such appropriate further information, certificates and documents as Cowen may
have reasonably requested. All such opinions, certificates, letters and other
documents shall have been in compliance with the provisions hereof. The Company
will furnish Cowen with such conformed copies of such opinions, certificates,
letters and other documents as Cowen shall have reasonably requested.

(l) 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.

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

(n) No Termination Event. There shall not have occurred any event that would
permit Cowen to terminate this Agreement pursuant to Section 11(a).

 

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9. Indemnification and Contribution.

(a) Company Indemnification. The Company agrees to indemnify and hold harmless
Cowen, the directors, officers, partners, employees and agents of Cowen and each
person, if any, who (i) controls Cowen 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 Cowen from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
reasonable investigative, legal and other expenses incurred in connection with,
and any and all amounts paid in settlement (in accordance with Section 9(c)) of,
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), as and when incurred, to which Cowen, or any
such person, may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of or
are based on (x) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus or any amendment
or supplement to the Registration Statement or the Prospectus or in any free
writing prospectus based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Common Stock under the
securities laws thereof or filed with the Commission or (y) the omission or
alleged omission to state in any such document a material fact required to be
stated in it or necessary to make the statements in it, in light of the
circumstances under which they were made (other than with respect to the
Registration Statement), not misleading; provided, however, that this indemnity
agreement shall not apply to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Placement Shares pursuant to this
Agreement and is caused directly or indirectly by an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information relating to Cowen and furnished to the
Company by Cowen expressly for inclusion in the Registration Statement or the
Prospectus or any free writing prospectus. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.

(b) Cowen Indemnification. Cowen agrees to indemnify and hold harmless the
Company and its directors and each officer of the Company that 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 losses, liabilities, claims, damages and expenses
described in the indemnity contained in Section 9(a), 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) or in any free writing
prospectus in reliance upon and in conformity with written information relating
to Cowen and furnished to the Company by Cowen expressly for inclusion in the
Registration Statement or the Prospectus or any free writing prospectus.

(c) Procedure. Any party that proposes to assert the right to be indemnified
under this Section 9 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

 

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this Section 9, notify each such indemnifying party in writing 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 9 and (ii) any liability that it may have to
any indemnified party under the foregoing provision of this Section 9 unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly after the indemnifying
party receives a written invoice relating to fees, disbursements and other
charges. 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 9 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such litigation, investigation, claim, action or
proceeding and 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) 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 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or Cowen, the Company and
Cowen will contribute to the total losses, claims,

 

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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
Cowen, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company and Cowen may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and
Cowen on the other. The relative benefits received by the Company on the one
hand and Cowen 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
Cowen (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 Cowen, on the other, 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 Cowen, 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
Cowen agree that it would not be just and equitable if contributions pursuant to
this Section 9(d) 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 9(d) shall be deemed to
include, for the purpose of this Section 9(d), 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 9(c)
hereof. Notwithstanding the foregoing provisions of this Section 9(d), Cowen
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 9(d), any person who
controls a party to this Agreement within the meaning of the Securities Act, and
any officers, directors, partners, employees or agents of Cowen, 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 9(d), 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 9(d) 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 9(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 9(c) hereof.

 

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10. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 9 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of Cowen, 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.

11. Termination.

(a) Cowen shall have the right by giving written notice as hereinafter specified
at any time to terminate this Agreement if: (i) any Material Adverse Effect, or
any development that could reasonably be expected to result in a Material
Adverse Effect has occurred that, in the reasonable judgment of Cowen, may
materially impair the ability of Cowen to sell the Placement Shares hereunder;
(ii) the Company shall have failed, refused or been unable to perform any
agreement on its part to be performed hereunder; provided, however, in the case
of any failure of the Company to deliver (or cause another person to deliver)
any certification, opinion, or letter required under Sections 7(m), 7(n), or
7(o), Cowen’s right to terminate shall not arise unless such failure to deliver
(or cause to be delivered) continues for more than thirty (30) days from the
date such delivery was required; (iii) any other condition of Cowen’s
obligations hereunder is not fulfilled; provided, however, Cowen’s right to
terminate pursuant to this Section 11(a)(iii) shall not arise unless such
condition is not fulfilled within thirty (30) days after the date the Company is
provided with written notice by Cowen that such condition has not been
fulfilled; or (iv) any suspension or limitation of trading in the Placement
Shares or in securities generally on Nasdaq shall have occurred. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and
Contribution), Section 10 (Representations and Agreements to Survive Delivery),
Section 17 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of
Jury Trial) hereof shall remain in full force and effect notwithstanding such
termination. If Cowen elects to terminate this Agreement as provided in this
Section 11(a), Cowen shall provide the required written notice as specified in
Section 12 (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 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall
remain in full force and effect notwithstanding such termination.

(c) Cowen 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 7(g),
Section 10, Section 11, Section 17 and Section 18 hereof shall remain in full
force and effect notwithstanding such termination.

 

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(d) Unless earlier terminated pursuant to this Section 11, this Agreement shall
automatically terminate upon the issuance and sale of all of the Placement
Shares through Cowen on the terms and subject to the conditions set forth
herein; provided that the provisions of Section 7(g), Section 9, Section 10,
Section 16 and Section 17 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 11(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 7(g), Section 9,
Section 10, Section 16 and Section 17 shall remain in full force and effect.

(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 Cowen 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.

(g) Subject to the additional limitations set forth in Section 7 of this
Agreement and notwithstanding anything herein to the contrary, in the event of
termination of this Agreement prior to the sale of any Placement Shares, Cowen
will only be entitled to reimbursement of its out of pocket expenses actually
incurred.

12. 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 in this Agreement, and if sent
to Cowen, shall be delivered to Cowen at Cowen and Company, LLC, 599 Lexington
Avenue, New York, NY 10022, fax no. 646-562-1124, Attention: General Counsel; or
if sent to the Company, shall be delivered to KemPharm, Inc., 1180 Celebration
Blvd., Suite 103, Celebration, FL 34747, Attention: R. LaDuane Clifton, email:
lclifton@kempharm.com, with a copy (which shall not constitute notice) to Cooley
LLP, 1299 Pennsylvania Avenue NW #700, Washington, DC 20004, Attention: Brent B.
Siler. 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 (as defined below), 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 Nasdaq and commercial banks in the City of New
York are open for business.

13. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and Cowen and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section 9
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

 

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any party other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
Neither party may assign its rights or obligations under this Agreement without
the prior written consent of the other party; provided, however, that Cowen may
assign its rights and obligations hereunder to an affiliate of Cowen without
obtaining the Company’s consent so long as such affiliate is a registered broker
dealer.

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

15. Entire Agreement; Amendment; Severability. This Agreement (including all
schedules and exhibits attached hereto and Placement Notices issued pursuant
hereto) constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and Cowen, provided, however, that Schedule 2 attached
hereto may be amended by either party upon written notice to the other party
pursuant to Section 12. 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.

16. Applicable Law; Consent to Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of New York
without regard to the principles of conflicts of laws. 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.

17. Waiver of Jury Trial. The Company and Cowen each hereby irrevocably waives
any right it may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or any transaction contemplated hereby.

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

(a) Cowen has been retained solely to act as sales agent in connection with the
sale of the Common Stock and that no fiduciary, advisory or agency relationship
between the Company and Cowen has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of whether Cowen has
advised or is advising the Company on other matters;

 

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

(c) the Company has been advised that Cowen and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that Cowen has no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; and

(d) the Company waives, to the fullest extent permitted by law, any claims it
may have against Cowen, 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 Cowen shall have no liability (whether direct or
indirect) to the Company in respect of such a fiduciary claim or to any person
asserting such a fiduciary duty claim on behalf of or in right of the Company,
including stockholders, partners, employees or creditors of the Company.

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

20. Definitions. As used in this Agreement, the following term has the meaning
set forth below:

(a) “Applicable Time” means the date of this Agreement, each Representation
Date, the date on which a Placement Notice is given, and any date on which
Placement Shares are sold hereunder.

[Remainder of Page Intentionally Blank]

 

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

 

Very truly yours, COWEN AND COMPANY, LLC By:  

/s/ Chris Swindle

  Name: Chris Swindle   Title:   Managing Director ACCEPTED as of the date
first-above written: KEMPHARM, INC. By:  

/s/ R. LaDuane Clifton

Name:   R. LaDuane Clifton Title:   Chief Financial Officer

[Signature Page to Sales Agreement]

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SCHEDULE 1

FORM OF PLACEMENT NOTICE

 

From:    [                    ] Cc:    [                    ] To:   
[                    ] Subject:    Cowen at the Market Offering—Placement Notice

Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Sales
Agreement between KemPharm, Inc. (the “Company”), and Cowen and Company, LLC
(“Cowen”) dated October 3, 2016 (the “Agreement”), I hereby request on behalf of
the Company that Cowen sell up to [                ] shares of the Company’s
common stock, par value $0.0001 per share, at a minimum market price of
$[        ] per share. Sales should begin on the date of this Notice and shall
continue until [DATE] [all shares are sold].

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SCHEDULE 2

Company Individuals:

Travis C. Mickle

R. LaDuane Clifton

Cowen Individuals:

Robert Sine

Bill Follis

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SCHEDULE 3

Compensation

Cowen shall be paid compensation up to 3.0% of the gross proceeds from the sales
of Common Stock pursuant to the terms of this Agreement.

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Exhibit 7(m)

OFFICER CERTIFICATE

The undersigned, the duly qualified and elected                     , of
KemPharm, Inc. (the “Company”), a Delaware corporation, does hereby certify in
such capacity and on behalf of the Company, pursuant to Section 7(m) of the
Sales Agreement dated October 3, 2016 (the “Sales Agreement”) between the
Company and Cowen and Company, LLC, that to the best of the knowledge of the
undersigned.

(i) The representations and warranties of the Company in Section 6 of the Sales
Agreement (A) to the extent such representations and warranties are subject to
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, are true and correct on and as of the date hereof with
the same force and effect as if expressly made on and as of the date hereof,
except for those representations and warranties that speak solely as of a
specific date and which were true and correct as of such date, and (B) to the
extent such representations and warranties are not subject to any qualifications
or exceptions, are true and correct in all material respects as of the date
hereof as if made on and as of the date hereof with the same force and effect as
if expressly made on and as of the date hereof except for those representations
and warranties that speak solely as of a specific date and which were so true
and correct as of such date; and

(ii) The Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied pursuant to the Sales Agreement at or
prior to the date hereof.

 

By:  

 

  Name:   Title:

 

Date: