Exhibit 10.1

 

Execution Version

 

OPEN MARKET SALE AGREEMENTSM

 

July 17, 2020

 

JEFFERIES LLC

520 Madison Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Bellerophon Therapeutics, Inc., a Delaware corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue and sell
from time to time through Jefferies LLC, as sales agent and/or principal (the
“Agent”), shares of the Company’s common stock, par value $0.01 per share (the
“Common Shares”), having an aggregate offering price of up to $40,000,000 on the
terms set forth in this agreement (this “Agreement”).

 

Section 1.     DEFINITIONS

 

(a)            Certain Definitions. For purposes of this Agreement, capitalized
terms used herein and not otherwise defined shall have the following respective
meanings:

 

“Affiliate” of a Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first- mentioned Person. The term “control” (including
the terms “controlling,” “controlled by” and “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

 

“Agency Period” means the period commencing on the date of this Agreement and
expiring on the earliest to occur of (x) the date on which the Agent shall have
placed the Maximum Program Amount pursuant to this Agreement and (y) the date
this Agreement is terminated pursuant to ‎Section 7.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.

 

“Floor Price” means the minimum price set by the Company in the Issuance Notice
below which the Agent shall not sell Shares during the applicable period set
forth in the Issuance Notice, which may be adjusted by the Company at any time
during the period set forth in the Issuance Notice by delivering written notice
of such change to the Agent and which in no event shall be less than $1.00
without the prior written consent of the Agent, which may be withheld in the
Agent’s sole discretion.

 

 

SM “Open Market Sale Agreement” is a service mark of Jefferies LLC

 

 

 

 

“Issuance Amount” means the aggregate Sales Price of the Shares to be sold by
the Agent pursuant to any Issuance Notice.

 

“Issuance Notice” means a written notice delivered to the Agent by the Company
in accordance with this Agreement in the form attached hereto as Exhibit A that
is executed by its Chief Executive Officer, President or Chief Financial
Officer.

 

“Issuance Notice Date” means any Trading Day during the Agency Period that an
Issuance Notice is delivered pursuant to ‎Section 3(b)(i).

 

“Issuance Price” means the Sales Price less the Selling Commission.

 

“Maximum Program Amount” means Common Shares with an aggregate Sales Price of
the lesser of (a) the number or dollar amount of Common Shares registered under
the effective Registration Statement (defined below) pursuant to which the
offering is being made, (b) the number of authorized but unissued Common Shares
(less Common Shares issuable upon exercise, conversion or exchange of any
outstanding securities of the Company or otherwise reserved from the Company’s
authorized capital stock), (c) the number or dollar amount of Common Shares
permitted to be sold under Form S-3 (including General Instruction I.B.6
thereof, if applicable), or (d) the number or dollar amount of Common Shares for
which the Company has filed a Prospectus (defined below).

 

“Person” means an individual or a corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock company, governmental authority or other entity of any kind.

 

“Principal Market” means The Nasdaq Capital Market or such other national
securities exchange on which the Common Shares, including any Shares, are then
listed.

 

“Sales Price” means the actual sale execution price of each Share placed by the
Agent pursuant to this Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.

 

“Selling Commission” means three percent (3.0%) of the gross proceeds of Shares
sold pursuant to this Agreement, or as otherwise agreed between the Company and
the Agent with respect to any Shares sold pursuant to this Agreement.

 

“Settlement Date” means the second business day following each Trading Day
during the period set forth in the Issuance Notice on which Shares are sold
pursuant to this Agreement, when the Company shall deliver to the Agent the
amount of Shares sold on such Trading Day and the Agent shall deliver to the
Company the Issuance Price received on such sales.

 

“Shares” shall mean the Company’s Common Shares issued or issuable pursuant to
this Agreement.

 

“Trading Day” means any day on which the Principal Market is open for trading.

 

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Section 2.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to, and agrees with, the Agent that as of
(1) the date of this Agreement, (2) each Issuance Notice Date, (3) each
Settlement Date, (4) each Triggering Event Date with respect to which the
Company is required to deliver a certificate pursuant to Section 4(o) and (5) as
of each Time of Sale (each of the times referenced above is referred to herein
as a “Representation Date”), except as may be disclosed in the Prospectus
(including any documents incorporated by reference therein and any supplements
thereto) on or before a Representation Date:

 

(a)            Registration Statement. The Company has prepared and filed with
the Commission a shelf registration statement on Form S-3 (File No. 333-239473)
that contains a base prospectus (the “Base Prospectus”). Such registration
statement registers the issuance and sale by the Company of the Shares under the
Securities Act. The Company may file one or more additional registration
statements from time to time that will contain a base prospectus and related
prospectus or prospectus supplement, if applicable, with respect to the Shares.
Except where the context otherwise requires, such registration statement(s),
including any information deemed to be a part thereof pursuant to Rule 430B
under the Securities Act, including all financial statements, exhibits and
schedules thereto and all documents incorporated or deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Securities Act as
from time to time amended or supplemented, is herein referred to as the
“Registration Statement,” and the prospectus constituting a part of such
registration statement(s), together with any prospectus supplement filed with
the Commission pursuant to Rule 424(b) under the Securities Act relating to a
particular issuance of the Shares, including all documents incorporated or
deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3
under the Securities Act, in each case, as from time to time amended or
supplemented, is referred to herein as the “Prospectus,” except that if any
revised prospectus is provided to the Agent by the Company for use in connection
with the offering of the Shares that is not required to be filed by the Company
pursuant to Rule 424(b) under the Securities Act, the term “Prospectus” shall
refer to such revised prospectus from and after the time it is first provided to
the Agent for such use. The Registration Statement at the time it originally
became effective is herein called the “Original Registration Statement.” As used
in this Agreement, the terms “amendment” or “supplement” when applied to the
Registration Statement or the Prospectus shall be deemed to include the filing
by the Company with the Commission of any document under the Exchange Act after
the date hereof that is or is deemed to be incorporated therein by reference.

 

All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” “stated” in or “part of” the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in or otherwise deemed under the Securities Act to be a part of or
included in the Registration Statement or the Prospectus, as the case may be, as
of any specified date; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include, without limitation, the filing of any document under the
Exchange Act which is or is deemed to be incorporated by reference in or
otherwise deemed under the Securities Act to be a part of or included in the
Registration Statement or the Prospectus, as the case may be, as of any
specified date. The Company’s obligations under this Agreement to furnish,
provide or deliver or make available copies of any report or statement shall be
deemed satisfied if the same is filed with the Commission through its Electronic
Data Gathering, Analysis and Retrieval system (“EDGAR”).

 

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At the time the Original Registration Statement was declared effective and at
the time the Company’s most recent annual report on Form 10-K was filed with the
Commission, if later, the Company met the then-applicable requirements for use
of Form S-3 under the Securities Act. During the Agency Period, each time the
Company files an annual report on Form 10-K the Company will meet the
then-applicable requirements for use of Form S-3 under the Securities Act.

 

(b)            Compliance with Registration Requirements. The Original
Registration Statement and any Rule 462(b) Registration Statement have 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. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.

 

The Prospectus when filed complied or will comply in all material respects with
the Securities Act and, if filed with the Commission through EDGAR (except as
may be permitted by Regulation S T under the Securities Act), was identical to
the copy thereof delivered to the Agent for use in connection with the issuance
and sale of the Shares. Each of the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendment thereto, at
the time it became or becomes effective and at each Representation Date,
complied and will comply in all material respects with the Securities Act and
did not and 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. As of the date of this Agreement, the
Prospectus and any Free Writing Prospectus (as defined below) considered
together (collectively, the “Time of Sale Information”) did not contain any
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 under which
they were made, not misleading. The Prospectus, as amended or supplemented, as
of its date and at each Representation Date, did not and 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 three immediately preceding sentences do not apply to statements in
or omissions from the Registration Statement, any Rule 462(b) 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 relating to the Agent furnished to the Company in writing by the
Agent expressly for use therein, it being understood and agreed that the only
such information furnished by the Agent to the Company consists of the
information described in Section 6 below. 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. The Registration Statement and the offer and sale of the Shares as
contemplated hereby meet the requirements of Rule 415 under the Securities Act
and comply in all material respects with said rule.

 

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(c)            Ineligible Issuer Status. The Company is not an “ineligible
issuer” in connection with the offering of the Shares pursuant to Rules 164, 405
and 433 under the Securities Act. Any Free Writing Prospectus that the Company
is required to file pursuant to Rule 433(d) under the Securities Act has been,
or will be, filed with the Commission in accordance with the requirements of the
Securities Act. Each Free Writing Prospectus that the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act or that was
prepared by or on behalf of or used or referred to by the Company complies or
will comply in all material respects with the requirements of Rule 433 under the
Securities Act including timely filing with the Commission or retention where
required and legending, and each such Free Writing Prospectus, as of its issue
date and at all subsequent times through the completion of the issuance and sale
of the Shares did not, does not and will not include any information that
conflicted, conflicts with or will conflict with the information contained in
the Registration Statement or the Prospectus, including any document
incorporated by reference therein. Except for the Free Writing Prospectuses, if
any, and electronic road shows, if any, furnished to the Agent before first use,
the Company has not prepared, used or referred to, and will not, without the
Agent’s prior consent, which consent shall not be unreasonably withheld or
delayed, prepare, use or refer to, any Free Writing Prospectus.

 

(d)            Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the Prospectus,
at the time they were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act, as applicable, and, when
read together with the other information in the Prospectus, do not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(e)            Exchange Act Compliance. 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, and any Free Writing Prospectus or
amendment or supplement thereto 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 time the Registration Statement
and any amendments thereto become effective and at each Representation Date, as
the case may be, 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.

 

(f)            Statistical and Market-Related Data. All statistical, demographic
and market-related data included in the Registration Statement or the Prospectus
are based on or derived from sources that the Company believes, after reasonable
inquiry, to be reliable and accurate. To the extent required, the Company has
obtained the written consent for the use of such data from such sources.

 

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(g)            Disclosure Controls and Procedures; Deficiencies in or Changes to
Internal Control Over Financial Reporting. The Company has established and
maintains disclosure controls and procedures (as defined in Rules 13a-15 and
15d-15 under the Exchange Act), which (i) are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) have been evaluated by management of the Company for
effectiveness as of the end of the Company’s most recent fiscal quarter; and
(iii) are effective in all material respects to perform the functions for which
they were established. Since the end of the Company’s most recent audited fiscal
year, there have been no significant deficiencies or material weaknesses in the
Company’s internal control over financial reporting (whether or not remediated)
and 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 is not aware of
any change in its internal control over financial reporting that has occurred
during its most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

 

(h)            This Agreement. This Agreement has been duly authorized, executed
and delivered by the Company.

 

(i)             Authorization of the Shares. The Shares have been 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 validly issued, fully paid and nonassessable, and the issuance and sale
of the Shares is not subject to any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase the Shares that have not
been validly waived in writing.

 

(j)             No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.

 

(k)            No Material Adverse Change. Except as otherwise disclosed in the
Registration Statement and the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus:
(i) there has been no material adverse change, or any development that would
reasonably be expected to result in a material adverse change, in (A) the
condition, financial or otherwise, or in the earnings, business, properties,
operations, operating results, assets, liabilities or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity or (B) the ability of the Company to
consummate the transactions contemplated by this Agreement or perform its
obligations hereunder (any such change being referred to herein as a “Material
Adverse Change”); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, including without limitation any losses or interference with
their business from fire, explosion, flood, earthquakes, accident or other
calamity, whether or not covered by insurance, or from any strike, labor dispute
or court or governmental action, order or decree, that are material,
individually or in the aggregate, to the Company and its subsidiaries,
considered as one entity, and have not entered into any transactions not in the
ordinary course of business; and (iii) there has not been any material decrease
in the capital stock or any material increase in any short-term or long-term
indebtedness of the Company or its subsidiaries and there has been no dividend
or distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, by any of the Company’s
subsidiaries on any class of capital stock, or any repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.

 

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(l)             Independent Accountants. KPMG LLP, which has expressed its
opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) filed with the Commission as a
part of the Registration Statement and the Prospectus, is (i) an independent
registered public accounting firm as required by the Securities Act, the
Exchange Act and the rules of the Public Company Accounting Oversight Board
(“PCAOB”), (ii) in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X under the
Securities Act and (iii) a registered public accounting firm as defined by the
PCAOB whose registration has not been suspended or revoked and who has not
requested such registration to be withdrawn.

 

(m)            Financial Statements. The financial statements filed with the
Commission as a part of the Registration Statement and the Prospectus present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the results of their
operations, changes in stockholders’ equity and cash flows for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto and except in the case of unaudited financial statements,
which are subject to normal and recurring year-end adjustments and do not
contain all footnotes as permitted by the applicable rules of the Commission.
The interactive data in eXtensible Business Reporting Language included or
incorporated by reference in the Registration Statement 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. No
other financial statements or supporting schedules are required to be included
in the Registration Statement or the Prospectus. The financial data set forth in
each of the Registration Statement and the Prospectus fairly present, in all
material respects, the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration Statement
and the Prospectus. All disclosures contained in the Registration Statement and
the Prospectus that constitute non GAAP financial measures (as defined by the
rules and regulations under the Securities Act and the Exchange Act) comply with
Regulation G under the Exchange Act and Item 10 of Regulation S-K under the
Securities Act, as applicable. To the Company’s knowledge, no person who has
been suspended or barred from being associated with a registered public
accounting firm, or who has failed to comply with any sanction pursuant to
Rule 5300 promulgated by the PCAOB, has participated in or otherwise aided the
preparation of, or audited, the financial statements, supporting schedules or
other financial data filed with the Commission as a part of the Registration
Statement and the Prospectus.

 

(n)            Company’s Accounting System. The Company and each of its
subsidiaries make and keep accurate books and records and maintain a system of
internal accounting controls designed to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles 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 included or incorporated by reference in the Registration
Statement and the Prospectus fairly presents the information called for in all
material respects and is prepared in accordance with the Commission's rules and
guidelines applicable thereto.

 

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(o)            Incorporation and Good Standing of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in the
State of New Jersey and each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be so qualified or in good
standing, as the case may be, or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Change.

 

(p)            Subsidiaries. Each of the Company’s “subsidiaries” (for purposes
of this Agreement, as defined in Rule 405 under the Securities Act) has been
duly incorporated or organized, as the case may be, and is validly existing as a
corporation, partnership or limited liability company, as applicable, in good
standing under the laws of the jurisdiction of its incorporation or organization
and has the power and authority (corporate or other) to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus. Each of the Company’s subsidiaries is duly
qualified as a foreign corporation, partnership or limited liability company, as
applicable, to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, have a Material Adverse Change. All of the issued and
outstanding capital stock or other equity or ownership interests of each of the
Company’s subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or adverse claim. None of the outstanding capital stock or equity
interest in any subsidiary was issued in violation of preemptive or similar
rights of any security holder of such subsidiary. The constitutive or
organizational documents of each of the subsidiaries comply in all material
respects with the requirements of applicable laws of its jurisdiction of
incorporation or organization and are in full force and effect. The Company does
not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit 21 to the Company’s
most recent Annual Report on Form 10-K.

 

(q)            Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Registration Statement and the Prospectus under the caption “Capitalization”
(other than for subsequent issuances, if any, pursuant to employee benefit plans
or upon the exercise of outstanding options or warrants, in each case described
in the Registration Statement and the Prospectus). The Common Shares (including
the Shares), when issued pursuant to the terms of this Agreement, conform in all
material respects to the description thereof contained in the Prospectus. All of
the issued and outstanding Common Shares have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
all applicable federal and state securities laws. None of the outstanding Common
Shares 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.
There are no authorized or outstanding 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 or any of its subsidiaries other than those described in
the Registration Statement and the Prospectus. The descriptions of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, set forth in the Registration Statement and
the Prospectus accurately and fairly presents, in all material respects, the
information required to be shown with respect to such plans, arrangements,
options and rights.

 

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(r)             Stock Exchange Listing. The Common Shares are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and are listed on the
Principal Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Shares under the
Exchange Act or delisting the Common Shares from the Principal Market, nor has
the Company received any notification that the Commission or the Principal
Market is contemplating terminating such registration or listing. To the
Company’s knowledge, it is in compliance with all applicable listing
requirements of the Principal Market.

 

(s)            Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by laws, partnership agreement or
operating agreement or similar organizational documents, as applicable, or is in
default (or, with the giving of notice or lapse of time, would be in default)
(“Default”) under any indenture, loan, credit agreement, note, lease, license
agreement, contract, franchise or other instrument (including, without
limitation, any pledge agreement, security agreement, mortgage or other
instrument or agreement evidencing, guaranteeing, securing or relating to
indebtedness) to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of their respective
properties or assets are subject (each, an “Existing Instrument”), except for
such Defaults as could not be expected, individually or in the aggregate, to
result in a Material Adverse Change. The Company’s execution, delivery and
performance of this Agreement, consummation of the transactions contemplated
hereby and by the Registration Statement and the Prospectus and the issuance and
sale of the Shares (including the use of proceeds from the sale of the Shares as
described in the Registration Statement and the Prospectus under the caption
“Use of Proceeds”) (i) have been duly authorized by all necessary corporate
action and will not result in any violation of the provisions of the charter or
by laws, partnership agreement or operating agreement or similar organizational
documents, as applicable, of the Company or any subsidiary (ii) will not
conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except as could not be expected,
individually or in the aggregate, to result in a Material Adverse Change and
(iii) will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any of its
subsidiaries, except for such violations as would not be expected, individually
or in the aggregate, to have a Material Adverse Change. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby and by the Registration Statement and
the Prospectus, except such as have been obtained or made or will be made by the
Company under the Securities Act and such as may be required under applicable
state securities or blue sky laws or the Financial Industry Regulatory
Authority, Inc. (“FINRA”). As used herein, a “Debt Repayment Triggering Event”
means any event or condition which 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 or any of its subsidiaries.

 

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(t)             No Material Actions or Proceedings. Except as otherwise
disclosed in the Prospectus, there is no action, suit, proceeding, inquiry or
investigation brought by or before any legal or governmental entity now pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or any of its subsidiaries, which, if determined adversely to the
Company or any of its subsidiaries, would reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Change. No material labor
dispute with the employees of the Company or any of its subsidiaries, or with
the employees of any principal supplier, manufacturer, customer or contractor of
the Company, exists or, to the knowledge of the Company, is threatened or
imminent.

 

(u)            Intellectual Property Rights. Except as otherwise disclosed in
the Registration Statement or the Prospectus, the Company and its subsidiaries
own, or have obtained valid and enforceable licenses for, the inventions, patent
applications, patents, trademarks, trade names, service names, copyrights, trade
secrets and other intellectual property described in the Registration Statement
and the Prospectus as being owned or licensed by them or which are necessary for
the conduct of their respective businesses as currently conducted or as
currently proposed to be conducted (collectively, “Intellectual Property”) and,
to the Company’s knowledge, the conduct of their respective businesses does not
and will not infringe, misappropriate or otherwise conflict in any material
respect with any such rights of others. The Intellectual Property of the Company
has not been adjudged by a court of competent jurisdiction to be invalid or
unenforceable, in whole or in part, and the Company is unaware of any facts
which would form a reasonable basis for any such adjudication. To the Company’s
knowledge: (i) there are no third parties who have rights to any Intellectual
Property, except for customary reversionary rights of third-party licensors with
respect to Intellectual Property that is disclosed in the Registration Statement
and the Prospectus as licensed to the Company or one or more of its
subsidiaries; and (ii) there is no infringement by third parties of any
Intellectual Property. There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others: (A) challenging the
Company’s rights in or to any Intellectual Property, and the Company is unaware
of any facts which would form a reasonable basis for any such action, suit,
proceeding or claim; (B) challenging the validity, enforceability or scope of
any Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such action, suit, proceeding or claim; or
(C) asserting that the Company or any of its subsidiaries infringes or otherwise
violates, or would, upon the commercialization of any product or service
described in the Registration Statement or the Prospectus as under development,
infringe or violate, any patent, trademark, trade name, service name, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any facts which would form a reasonable basis for any such action, suit,
proceeding or claim. The Company and its subsidiaries have complied with the
terms of each agreement pursuant to which Intellectual Property has been
licensed to the Company or any subsidiary, and all such agreements are in full
force and effect. To the Company’s knowledge, there are no material defects in
any of the patents or patent applications included in the Intellectual Property.
The Company and its subsidiaries have taken all reasonable steps to protect,
maintain and safeguard their Intellectual Property, including the execution of
appropriate nondisclosure, confidentiality agreements and invention assignment
agreements and invention assignments with their employees, and, to the Company’s
knowledge, no employee of the Company is in or has been in violation of any term
of any employment contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement, nondisclosure
agreement, or any restrictive covenant to or with a former employer where the
basis of such violation relates to such employee’s employment with the Company.
The duty of candor and good faith as required by the United States Patent and
Trademark Office during the prosecution of the United States patents and patent
applications included in the Intellectual Property have been complied with; and
in all foreign offices having similar requirements, all such requirements have
been complied with. None of the Company owned Intellectual Property or
technology (including information technology and outsourced arrangements)
employed by the Company or its subsidiaries has been obtained or is being used
by the Company or its subsidiary in violation of any contractual obligation
binding on the Company or its subsidiaries or any of their respective officers,
directors or employees or otherwise in violation of the rights of any persons.
The product candidates described in the Registration Statement and the
Prospectus as under development by the Company or any subsidiary fall within the
scope of the claims of one or more patents owned by, or exclusively licensed to,
the Company or any subsidiary.

 

10

 

 

(v)            All Necessary Permits, etc. Except as otherwise disclosed in the
Prospectus, the Company and its subsidiaries possess such valid and current
certificates, authorizations or permits required by state, federal or foreign
regulatory agencies or bodies to conduct their respective businesses as
currently conducted and as described in the Registration Statement or the
Prospectus (“Permits”), except where the failure to possess the same or so
qualify would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Change, and except as described in the Registration
Statement or the Prospectus. Neither the Company nor any of its subsidiaries is
in violation of, or in default under, any of the Permits or has received any
notice of proceedings relating to the revocation or modification of, or non
compliance with, any such certificate, authorization or permit, except where
such violations, defaults or proceedings, if resolved unfavorably, would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Change.

 

(w)            Title to Properties. Except as otherwise disclosed in the
Prospectus, the Company and its subsidiaries have good and marketable title to
all of the real and personal property and other assets reflected as owned in the
financial statements referred to in ‎Section 2(m) above (or elsewhere in the
Registration Statement or the Prospectus, in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, adverse claims and
other defects, except such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property by the Company. The real property, improvements,
equipment and personal property held under lease by the Company or any of its
subsidiaries are held under valid and enforceable leases, with such exceptions
as are not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.

 

11

 

 

(x)             Tax Law Compliance. Except in any case in which the failure to
pay or file, as applicable, would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Change, and except as otherwise
disclosed in the Registration Statement or the Prospectus, the Company and its
subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns or have properly requested extensions thereof and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them except
as may be being contested in good faith and by appropriate proceedings. Except
to the extent of any inadequacy that would not, individually or in the
aggregate, result in a Material Adverse Change, the Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in ‎Section 2(m) above in respect of all federal, state and foreign income
and franchise taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined.

 

(y)            Company Not an “Investment Company.” The Company is not, and will
not be, either after receipt of payment for the Shares or after the application
of the proceeds therefrom as described under “Use of Proceeds” in the
Registration Statement or the Prospectus, required to register as an “investment
company” under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

 

(z)             Insurance. Except as otherwise disclosed in the Prospectus, each
of the Company and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes and
policies covering the Company and its subsidiaries for product liability claims
and clinical trial liability claims. The Company has no reason to believe that
it or any of its subsidiaries will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not reasonably be
expected to result in a Material Adverse Change. Neither the Company nor any of
its subsidiaries has been denied any insurance coverage which it has sought or
for which it has applied.

 

(aa)          No Price Stabilization or Manipulation; Compliance with Regulation
M. Neither the Company nor any of its subsidiaries has taken, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Shares or
of any “reference security” (as defined in Rule 100 of Regulation M under the
Exchange Act (“Regulation M”)) with respect to the Common Shares, whether to
facilitate the sale or resale of the Shares or otherwise, and has taken no
action which would directly or indirectly violate Regulation M.

 

(bb)          Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any of its subsidiaries or
any other person required to be described in the Registration Statement or the
Prospectus which have not been described as required.

 

12

 

 

(cc)          FINRA Matters. All of the information provided to the Agent or to
counsel for the Agent by the Company, its counsel, its officers and directors
and, to the Company’s knowledge, the holders of any securities (debt or equity)
or options to acquire any securities of the Company in connection with the
offering of the Shares is true, complete, correct and compliant with FINRA’s
rules and any letters, filings or other supplemental information provided to
FINRA pursuant to FINRA Rules or NASD Conduct Rules is true, complete and
correct. The Company meets the requirements for use of Form S-3 under the
Securities Act specified in FINRA Rule 5110(b)(7)(C)(i).

 

(dd)         No Unlawful Contributions or Other Payments. Except as otherwise
disclosed in the Prospectus, neither the Company nor any of its subsidiaries
nor, to the best of the Company’s knowledge, any employee or agent of the
Company or any subsidiary, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in violation
of any law or of the character required to be disclosed in the Registration
Statement and the Prospectus.

 

(ee)          Compliance with Environmental Laws. Except as described in the
Prospectus and except as could not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Change: (i) neither the Company
nor any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”); (ii) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements; (iii) there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

 

(ff)           ERISA Compliance. Except as could not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change, the
Company and its subsidiaries and any “employee benefit plan” (as defined under
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company, its subsidiaries or their “ERISA
Affiliates” (as defined below) are in compliance in all material respects with
ERISA. “ERISA Affiliate” means, with respect to the Company or any of its
subsidiaries, any member of any group of organizations described in Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and
the regulations and published interpretations thereunder (the “Code”) of which
the Company or such subsidiary is a member. No “reportable event” (as defined
under ERISA), for which notice has not been waived, has occurred or is
reasonably expected to occur with respect to any “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates. No “employee benefit plan” established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA). Neither the Company, its subsidiaries nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code.
Each “employee benefit plan” established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be qualified
under Section 401(a) of the Code is so qualified and, to the knowledge of the
Company, nothing has occurred, whether by action or failure to act, which would
cause the loss of such qualification.

 

13

 

 

(gg)         Brokers. Except as otherwise disclosed in the Prospectus, there is
no broker, finder or other party that is entitled to receive from the Company
any brokerage or finder’s fee or other fee or commission as a result of any
transactions contemplated by this Agreement.

 

(hh)         No Outstanding Loans or Other Extensions of Credit. The Company
does not have any outstanding extension of credit, in the form of a personal
loan, to or for any director or executive officer (or equivalent thereof) of the
Company except for such extensions of credit as are expressly permitted by
Section 13(k) of the Exchange Act.

 

(ii)            Compliance with Laws. The Company and its subsidiaries have been
and are in compliance with all applicable laws, rules and regulations, except
where failure to be so in compliance could not be expected, individually or in
the aggregate, to result in a Material Adverse Change.

 

(jj)            Dividend Restrictions. Except as disclosed in the Prospectus, no
subsidiary of the Company is prohibited or restricted, directly or indirectly,
from paying dividends to the Company, or from making any other distribution with
respect to such subsidiary’s equity securities or from repaying to the Company
or any other subsidiary of the Company any amounts that may from time to time
become due under any loans or advances to such subsidiary from the Company or
from transferring any property or assets to the Company or to any other
subsidiary.

 

(kk)          Anti-Corruption and Anti-Bribery Laws. Neither the Company nor any
of its subsidiaries, directors or officers, nor to the knowledge of the Company,
any agent, employee, controlled affiliate or other person acting on behalf of
the Company or any of its subsidiaries has, in the course of its actions for, or
on behalf of, the Company or any of its subsidiaries (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made, offered, promised,
authorized or taken any act in furtherance of any direct or indirect unlawful
payment or benefit to any foreign or domestic government official or employee,
including of any government-owned or controlled entity or public international
organization, or any political party, party official, or candidate for political
office; (iii) violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended (the “FCPA”), the UK Bribery Act 2010,
or any other applicable anti-bribery or anti-corruption law; or (iv) made,
offered, authorized, requested or taken an act in furtherance of any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment or
benefit. The Company and its subsidiaries and, to the knowledge of the Company,
the Company’s controlled affiliates have conducted their respective businesses
in compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

 

14

 

 

(ll)            Money Laundering Laws. The operations of the Company and its
subsidiaries 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, the money laundering
statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar applicable rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (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
or any of its subsidiaries with respect to the Money Laundering Laws is pending
or, to the best knowledge of the Company, threatened.

 

(mm)        Clinical Data and Regulatory Compliance. The preclinical tests and
clinical trials, and other studies (collectively, “studies”) that are described
in, or the results of which are referred to in, the Registration Statement or
the Prospectus were and, if still pending, are being conducted in all material
respects in accordance with the protocols, procedures and controls designed and
approved for such studies and with standard medical and scientific research
procedures; each description of the results of such studies is accurate and
complete in all material respects and fairly presents the data derived from such
studies, and the Company and its subsidiaries have no knowledge of any other
studies the results of which are materially inconsistent with, or otherwise call
into question, the results described or referred to in the Registration
Statement or the Prospectus; the Company and its subsidiaries have made all such
filings and obtained all such approvals as may be required by the Food and Drug
Administration of the U.S. Department of Health and Human Services or any
committee thereof or from any other U.S. or foreign government or drug or
medical device regulatory agency, or health care facility Institutional Review
Board (collectively, the “Regulatory Agencies”) for the conduct of the clinical
trials described in, or the results of which are referred to in, the
Registration Statement or the Prospectus; neither the Company nor any of its
subsidiaries has received any notice of, or correspondence from, any Regulatory
Agency requiring the termination, suspension or modification of any clinical
trials that are described or referred to in the Registration Statement or the
Prospectus; and the Company and its subsidiaries have each operated and
currently are in compliance in all material respects with all applicable rules,
regulations and policies of the Regulatory Agencies.

 

(nn)         Sanctions. Neither the Company nor any of its subsidiaries,
directors or officers, nor, to the knowledge of the Company, any employee,
agent, controlled affiliate or other person acting on behalf of the Company or
any of its subsidiaries is currently the subject or the target of any applicable
sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”), the U.S. Department of State, the United
Nations Security Council, the European Union, Her Majesty’s Treasury of the
United Kingdom, or other relevant sanctions authority (collectively,
“Sanctions”); nor is the Company or any of its subsidiaries located, organized
or resident in a country or territory that is the subject or the target of
Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea, and
Syria; and the Company will not directly or indirectly use the proceeds of this
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, or any joint venture partner or other person or entity, for the
purpose of financing the activities of or business with any person, or in any
country or territory, that at the time of such financing, is the subject or the
target of Sanctions or in any other manner that will result in a violation by
any person (including any person participating in the transaction whether as
underwriter, advisor, investor or otherwise) of applicable Sanctions. For the
past five years, the Company and its subsidiaries have not knowingly engaged in
and are not now knowingly engaged in any dealings or transactions with any
person that at the time of the dealing or transaction is or was the subject or
the target of Sanctions or with any Sanctioned Country.

 

15

 

 

(oo)          Sarbanes-Oxley Act. There is, and has been, no failure on the part
of the Company or any of the Company’s directors or officers, in their
capacities as such, to comply with any applicable provision of the
Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated
in connection therewith, including Section 402 related to loans and Sections 302
and 906 related to certifications.

 

(pp)         Duties, Transfer Taxes, Etc. No stamp or other issuance or transfer
taxes or duties and no capital gains, income, withholding or other taxes are
payable by the Agent in the United States or any political subdivision or taxing
authority thereof or therein in connection with the execution, delivery or
performance of this Agreement by the Company or the sale and delivery by the
Company of the Shares.

 

(qq)          Cybersecurity. The Company’s and its subsidiaries’ information
technology assets and equipment, computers, systems, networks, hardware,
software, websites, applications, and databases (collectively, “IT Systems”) are
adequate for, and operate and perform in all material respects as required in
connection with the operation of the business of the Company and its
subsidiaries as currently conducted, free and clear of all material bugs,
errors, defects, Trojan horses, time bombs, malware and other corruptants. The
Company and its subsidiaries have implemented and maintained commercially
reasonable physical, technical and administrative controls, policies,
procedures, and safeguards designed to maintain and protect their material
confidential information and the integrity, continuous operation, redundancy and
security of all IT Systems and data, including “Personal Data,” used in
connection with their businesses. “Personal Data” means (i) a natural person’s
name, street address, telephone number, e-mail address, photograph, social
security number or tax identification number, driver’s license number, passport
number, credit card number, bank information, or customer or account number;
(ii) any information that constitutes personal data, personal information,
personally identifiable information or similar information under Privacy Laws
(as hereinafter defined); and (iii) any other piece of information that allows
the identification of such natural person. There have been no breaches,
violations, outages or unauthorized uses of or accesses to same, except for
those that have been remedied without material cost or liability or the duty to
notify any other person, nor any incidents under internal review or
investigations relating to the same. The Company and its subsidiaries are
presently in material compliance with all applicable Privacy Laws (as
hereinafter defined), internal policies and contractual obligations relating to
the privacy and security of IT Systems and Personal Data and to the protection
of such IT Systems and Personal Data from unauthorized use, access,
misappropriation or modification.

 

16

 

 

(rr)            Compliance with Data Privacy Laws. The Company and its
subsidiaries are, and at all prior times were, in material compliance with all
applicable data privacy and security laws and regulations of any relevant
jurisdiction, including without limitation, to the extent applicable, the Health
Insurance Portability and Accountability Act of 1996, as amended by the Health
Information Technology for Economic and Clinical Health Act (“HIPAA”), and the
Company and its subsidiaries have taken commercially reasonable actions to
prepare to comply with, and since May 25, 2018, have been and currently are in
compliance with, the European Union General Data Protection Regulation (EU
2016/679) (collectively, the “Privacy Laws”). To ensure compliance with the
Privacy Laws, the Company and its subsidiaries have in place, comply with, and
take commercially reasonable steps designed to ensure compliance in all material
respects with their policies and procedures relating to data privacy and
security and the collection, storage, use, disclosure, handling, and analysis of
Personal Data (the “Policies”). The Company and its subsidiaries have made all
disclosures to users or customers required by the Privacy Laws, and none of such
disclosures made or contained in any Policy have, to the knowledge of the
Company, been inaccurate or in violation of the Privacy Laws in any material
respect. The Company further certifies that neither it nor any subsidiary:
(i) has received written notice of any actual or potential liability under or
relating to, or actual or potential violation of, any of the Privacy Laws, and
has no knowledge of any event or condition that would reasonably be expected to
result in any such notice; (ii) is currently conducting or paying for, in whole
or in part, any investigation, remediation, or other corrective action pursuant
to any Privacy Law; or (iii) is a party to any order, decree, or agreement from
or with a governmental or regulatory authority or agency that imposes any
obligation or liability under any Privacy Law.

 

(ss)          Other Underwriting Agreements. The Company is not a party to any
agreement with an agent or underwriter for any other “at the market” or
continuous equity transaction.

 

(tt)            Compliance with Health Care Laws. The Company and its
subsidiaries are, and at all times have been, in compliance in all material
respects with all applicable Health Care Laws. For purposes of this Agreement,
“Health Care Laws” means: (i) the Federal Food, Drug, and Cosmetic Act (21
U.S.C. Section 301 et seq.), the Public Health Service Act (42 U.S.C.
Section 201 et seq.), and the regulations promulgated thereunder; (ii) all
applicable federal, state, local and foreign health care fraud and abuse laws,
including, without limitation, the Anti-Kickback Statute (42 U.S.C.
Section 1320a-7b(b)), the Civil False Claims Act (31 U.S.C. Section 3729 et
seq.), the criminal false statements law (42 U.S.C. Section 1320a-7b(a)), 18
U.S.C. Sections 286 and 287, the health care fraud criminal provisions under
HIPAA, the Stark Law (42 U.S.C. Section 1395nn), the civil monetary penalties
law (42 U.S.C. Section 1320a-7a), the exclusion law (42 U.S.C. Section 1320a-7),
the Physician Payments Sunshine Act (42 U.S.C. Section 1320-7h), and applicable
laws governing government funded or sponsored healthcare programs; (iii) HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health
Act (42 U.S.C. Section 17921 et seq.); (iv) the Patient Protection and
Affordable Care Act of 2010, as amended by the Health Care and Education
Reconciliation Act of 2010; (v) licensure, quality, safety and accreditation
requirements under applicable federal, state, local or foreign laws or
regulatory bodies; and (vi) all other local, state, federal, national,
supranational and foreign laws, relating to the regulation of the Company or its
subsidiaries, and (vii) the directives and regulations promulgated pursuant to
such statutes and any state or non-U.S. counterpart thereof. Neither the Company
nor any of its subsidiaries has received written notice of any claim, action,
suit, proceeding, hearing, enforcement, investigation, arbitration or other
action from any court or arbitrator or governmental or regulatory authority or
third party alleging that any product operation or activity is in violation of
any Health Care Laws nor, to the Company’s knowledge, is any such claim, action,
suit, proceeding, hearing, enforcement, investigation, arbitration or other
action threatened. The Company and its subsidiaries have filed, maintained or
submitted all material reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments as required by any
applicable Health Care Laws, and all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and accurate on the date filed in all material respects (or were
corrected or supplemented by a subsequent submission). Neither the Company nor
any of its subsidiaries is a party to any corporate integrity agreements,
monitoring agreements, consent decrees, settlement orders, or similar agreements
with or imposed by any governmental or regulatory authority. Additionally,
neither the Company, any of its subsidiaries nor, to the knowledge of the
Company, any of their respective employees, officers, directors, or agents has
been excluded, suspended or debarred from participation in any U.S. federal
health care program or human clinical research or, to the knowledge of the
Company, is subject to a governmental inquiry, investigation, proceeding, or
other similar action that could reasonably be expected to result in debarment,
suspension, or exclusion.

 

17

 

 

(uu)          Emerging Growth Company Status. From the time of initial
confidential submission of the Company’s first registration statement to the
Commission through the date hereof, the Company has been and is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging
Growth Company”).

 

Any certificate signed by any officer or representative of the Company or any of
its subsidiaries and delivered to the Agent or counsel for the Agent in
connection with an issuance of Shares shall be deemed a representation and
warranty by the Company to the Agent as to the matters covered thereby on the
date of such certificate.

 

The Company acknowledges that the Agent and, for purposes of the opinions to be
delivered pursuant to Section 4(o) hereof, counsel to the Company and counsel to
the Agent, will rely upon the accuracy and truthfulness of the foregoing
representations, including any officer’s certificate representations, and hereby
consents to such reliance.

 

Section 3.     ISSUANCE AND SALE OF COMMON SHARES

 

(a)            Sale of Securities. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company and the Agent agree that the Company
may from time to time seek to sell Shares through the Agent, acting as sales
agent, or directly to the Agent, acting as principal, as follows, with an
aggregate Sales Price of up to the Maximum Program Amount, based on and in
accordance with Issuance Notices as the Company may deliver, during the Agency
Period.

 

18

 

 

(b)            Mechanics of Issuances.

 

(i)                    Issuance Notice. Upon the terms and subject to the
conditions set forth herein, on any Trading Day during the Agency Period on
which the conditions set forth in ‎Section 5(a) and Section 5(b) shall have been
satisfied, the Company may exercise its right to request an issuance of Shares
by delivering to the Agent an Issuance Notice; provided, however, that (A) in no
event may the Company deliver an Issuance Notice to the extent that (I) the sum
of (x) the aggregate Sales Price of the requested Issuance Amount, plus (y) the
aggregate Sales Price of all Shares issued under all previous Issuance Notices
effected pursuant to this Agreement, would exceed the Maximum Program Amount;
and (B) prior to delivery of any Issuance Notice, the period set forth for any
previous Issuance Notice shall have expired or been terminated. An Issuance
Notice shall be considered delivered on the Trading Day that it is received by
email to the persons set forth in Schedule A hereto and confirmed by the Company
by telephone (including a voicemail message to the persons so identified), with
the understanding that, with adequate prior written notice, the Agent may modify
the list of such persons from time to time.

 

(ii)                   Agent Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, upon the receipt of an Issuance Notice,
the Agent will use its commercially reasonable efforts consistent with its
normal sales and trading practices to place the Shares with respect to which the
Agent has agreed to act as sales agent, subject to, and in accordance with the
information specified in, the Issuance Notice, unless the sale of the Shares
described therein has been suspended, cancelled or otherwise terminated in
accordance with the terms of this Agreement. For the avoidance of doubt, the
parties to this Agreement may modify an Issuance Notice at any time provided
they both agree in writing to any such modification.

 

(iii)                  Method of Offer and Sale. The Shares may be offered and
sold (A) in negotiated transactions with the consent of the Company or (B) by
any other method permitted by law deemed to be an “at the market offering” as
defined in Rule 415(a)(4) under the Securities Act, including block
transactions, sales made directly on the Principal Market or sales made into any
other existing trading market of the Common Shares. Nothing in this Agreement
shall be deemed to require either party to agree to the method of offer and sale
specified in the preceding sentence, and (except as specified in clause
(A) above) the method of placement of any Shares by the Agent shall be at the
Agent’s discretion.

 

(iv)                  Confirmation to the Company. If acting as sales agent
hereunder, the Agent will provide written confirmation to the Company no later
than the opening of the Trading Day next following the Trading Day on which it
has placed Shares hereunder setting forth the number of shares sold on such
Trading Day, the corresponding Sales Price and the Issuance Price payable to the
Company in respect thereof.

 

(v)                   Settlement. Each issuance of Shares will be settled on the
applicable Settlement Date for such issuance of Shares and, subject to the
provisions of ‎Section 5, on or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the Shares being
sold by crediting the Agent’s or its designee’s account at The Depository Trust
Company through its Deposit/Withdrawal At Custodian (DWAC) System, or by such
other means of delivery as may be mutually agreed upon by the parties hereto
and, upon receipt of such Shares, which in all cases shall be freely tradable,
transferable, registered shares in good deliverable form, the Agent will
deliver, by wire transfer of immediately available funds, the related Issuance
Price in same day funds delivered to an account designated by the Company prior
to the Settlement Date. The Company may sell Shares to the Agent as principal at
a price agreed upon at each relevant time Shares are sold pursuant to this
Agreement (each, a “Time of Sale”).

 

19

 

 

 

(vi)                 Suspension or Termination of Sales. Consistent with
standard market settlement practices, the Company or the Agent may, upon notice
to the other party hereto in writing or by telephone (confirmed immediately by
verifiable email), suspend any sale of Shares, and the period set forth in an
Issuance Notice shall immediately terminate; provided, however, that (A) such
suspension and termination shall not affect or impair either party’s obligations
with respect to any Shares placed or sold hereunder prior to the receipt of such
notice; (B) if the Company suspends or terminates any sale of Shares after the
Agent confirms such sale to the Company, the Company shall still be obligated to
comply with ‎Section 3(b)(v) with respect to such Shares; and (C) if the Company
defaults in its obligation to deliver Shares on a Settlement Date, the Company
agrees that it will hold the Agent harmless against any loss, claim, damage or
expense (including, without limitation, penalties, interest and reasonable legal
fees and expenses), as incurred, arising out of or in connection with such
default by the Company. The parties hereto acknowledge and agree that, in
performing its obligations under this Agreement, the Agent may borrow Common
Shares from stock lenders in the event that the Company has not delivered Shares
to settle sales as required by subsection (v) above, and may use the Shares to
settle or close out such borrowings. The Company agrees that no such notice
shall be effective against the Agent unless it is made to the persons identified
in writing by the Agent pursuant to Section 3(b)(i).

 

(vii)                No Guarantee of Placement, Etc. The Company acknowledges
and agrees that (A) there can be no assurance that the Agent will be successful
in placing Shares; (B) the Agent will incur no liability or obligation to the
Company or any other Person if it does not sell Shares; and (C) the Agent shall
be under no obligation to purchase Shares on a principal basis pursuant to this
Agreement, except as otherwise specifically agreed by the Agent and the Company.

 

(viii)               Material Non-Public Information. Notwithstanding any other
provision of this Agreement, the Company and the Agent agree that the Company
shall not deliver any Issuance Notice to the Agent, and the Agent shall not be
obligated to place any Shares, during any period in which the Company is in
possession of material non-public information.

 

(c)            Fees. As compensation for services rendered, the Company shall
pay to the Agent, on the applicable Settlement Date, the Selling Commission for
the applicable Issuance Amount (including with respect to any suspended or
terminated sale pursuant to Section 3(b)(vi)) by the Agent deducting the Selling
Commission from the applicable Issuance Amount.

 

20

 

 

(d)             Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Shares
(including all printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Shares; (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Prospectus, any
Free Writing Prospectus (as defined below) prepared by or on behalf of, used by,
or referred to by the Company, and all amendments and supplements thereto, and
this Agreement; (vi) all filing fees, attorneys’ fees and expenses incurred by
the Company or the Agent in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada, and, if requested by the Agent,
preparing and printing a “Blue Sky Survey” or memorandum and a “Canadian
wrapper”, and any supplements thereto, advising the Agent of such
qualifications, registrations, determinations and exemptions; (vii) the
reasonable and documented fees and disbursements of the Agent’s counsel,
including the reasonable and documented fees and expenses of counsel for the
Agent in connection with, FINRA review, if any, and approval of the Agent’s
participation in the offering and distribution of the Shares; (viii) the filing
fees incident to FINRA review, if any; (ix) the costs and expenses of the
Company relating to investor presentations on any “road show” undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the preparation or dissemination of any
electronic road show, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives, employees and officers of the
Company and of the Agent and any such consultants, and the cost of any aircraft
chartered in connection with the road show; and (x) the fees and expenses
associated with listing the Shares on the Principal Market. The fees and
disbursements of Agent’s counsel pursuant to subsections (vi) and (vii) above
shall not exceed (A) $50,000 in connection with execution of this Agreement and
(B) $15,000 in connection with each Triggering Event Date (as defined below) on
which the Company is required to provide a certificate pursuant to Section 4(o).

 

Section 4.       ADDITIONAL COVENANTS

 

The Company covenants and agrees with the Agent as follows, in addition to any
other covenants and agreements made elsewhere in this Agreement:

 

(a)              Exchange Act Compliance. During the Agency Period, the Company
shall (i) file, on a timely basis, with the Commission all reports and documents
required to be filed under Section 13, 14 or 15 of the Exchange Act in the
manner and within the time periods required by the Exchange Act; and (ii) either
(A) include in its quarterly reports on Form 10-Q and its annual reports on
Form 10-K, a summary detailing, for the relevant reporting period, (1) the
number of Shares sold through the Agent pursuant to this Agreement and (2) the
net proceeds received by the Company from such sales or, in the Company’s sole
discretion, (B) prepare a prospectus supplement containing, or include in such
other filing permitted by the Securities Act or Exchange Act (each an “Interim
Prospectus Supplement”), such summary information and, at least once a quarter
and subject to this Section 4, file such Interim Prospectus Supplement pursuant
to Rule 424(b) under the Securities Act (and within the time periods required by
Rule 424(b) and Rule 430B under the Securities Act)); provided, however, that
prior notice is given to the Agent of any such filing of an Interim Prospectus
Supplement.

 

21

 

 

(b)              Securities Act Compliance. After the date of this Agreement,
the Company shall promptly advise the Agent in writing (i) of the receipt of any
comments of, or requests for additional or supplemental information from, the
Commission; (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement, any Rule 462(b) Registration Statement
or any amendment or supplement to the Prospectus, or any Free Writing
Prospectus; (iii) of the time and date that any post-effective amendment to the
Registration Statement or any Rule 462(b) Registration Statement becomes
effective; (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereto, any Rule 462(b) Registration Statement or any amendment or supplement
to the Prospectus or of any order preventing or suspending the use of any Free
Writing Prospectus or the Prospectus, or of any proceedings to remove, suspend
or terminate from listing or quotation the Common Shares from any securities
exchange upon which they are listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes; and (v) of the Company losing its status as an Emerging Growth
Company as of the time the Company files with the Commission an annual report on
Form 10-K. If the Commission shall enter any such stop order at any time, the
Company will use its reasonable best efforts to obtain the lifting of such order
as soon as practicable. Additionally, the Company agrees that it shall comply
with the provisions of Rule 424(b) and Rule 433, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under such Rule 424(b) or Rule 433 were filed in a timely
manner with the Commission.

 

(c)             Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Prospectus so that the
Prospectus does not include an 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 when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Agent or counsel for the Agent it is
otherwise necessary to amend or supplement the Prospectus to comply with
applicable law, including the Securities Act, the Company agrees (subject to
Section 4(d) and Section 4(f)) to promptly prepare, file with the Commission and
furnish at its own expense to the Agent, such amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not include an 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 when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with applicable law including the Securities Act. Neither the Agent’s consent
to, or delivery of, any such amendment or supplement shall constitute a waiver
of any of the Company’s obligations under Section 4(d) and Section 4(f).
Notwithstanding the foregoing, the Company shall not be required to file such
amendment or supplement if there is no pending Issuance Notice and the Company
believes that it is in its best interests not to file such amendment or
supplement.

 

(d)             Agent’s Review of Proposed Amendments and Supplements. Prior to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus
(excluding any amendment or supplement through incorporation of any report filed
under the Exchange Act), the Company shall furnish to the Agent for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a
copy of each such proposed amendment or supplement, and the Company shall not
file or use any such proposed amendment or supplement without the Agent’s prior
consent, and to file with the Commission within the applicable period specified
in Rule 424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.

 

22

 

 

(e)              Use of Free Writing Prospectus. Neither the Company nor the
Agent has prepared, used, referred to or distributed, or will prepare, use,
refer to or distribute, without the other party’s prior written consent, any
“written communication” that constitutes a “free writing prospectus” as such
terms are defined in Rule 405 under the Securities Act with respect to the
offering contemplated by this Agreement (any such free writing prospectus being
referred to herein as a “Free Writing Prospectus”).

 

(f)              Free Writing Prospectuses. The Company shall furnish to the
Agent for review, a reasonable amount of time prior to the proposed time of
filing or use thereof, a copy of each proposed free writing prospectus or any
amendment or supplement thereto to be prepared by or on behalf of, used by, or
referred to by the Company and the Company shall not file, use or refer to any
proposed free writing prospectus or any amendment or supplement thereto without
the Agent’s consent. The Company shall furnish to the Agent, without charge, as
many copies of any free writing prospectus prepared by or on behalf of, or used
by the Company, as the Agent may reasonably request. If at any time when a
prospectus is required by the Securities Act (including, without limitation,
pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares
(but in any event if at any time through and including the date of this
Agreement) there occurred or occurs an event or development as a result of which
any free writing prospectus prepared by or on behalf of, used by, or referred to
by the Company conflicted or would conflict with the information contained in
the Registration Statement or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, the Company shall promptly
amend or supplement such free writing prospectus to eliminate or correct such
conflict or so that the statements in such free writing prospectus as so amended
or supplemented will not include an 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 prevailing at such subsequent time, not
misleading, as the case may be; provided, however, that prior to amending or
supplementing any such free writing prospectus, the Company shall furnish to the
Agent for review, a reasonable amount of time prior to the proposed time of
filing or use thereof, a copy of such proposed amended or supplemented free
writing prospectus and the Company shall not file, use or refer to any such
amended or supplemented free writing prospectus without the Agent’s consent.

 

(g)              Filing of Agent Free Writing Prospectuses. The Company shall
not take any action that would result in the Agent or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a
free writing prospectus prepared by or on behalf of the Agent that the Agent
otherwise would not have been required to file thereunder.

 

23

 

 

(h)            Copies of Registration Statement and Prospectus. After the date
of this Agreement through the last time that a prospectus is required by the
Securities Act (including, without limitation, pursuant to Rule 173(d)) to be
delivered in connection with sales of the Shares, the Company agrees to furnish
the Agent with copies (which may be electronic copies) of the Registration
Statement and each amendment thereto, and with copies (which may be electronic
copies) of the Prospectus and each amendment or supplement thereto in the form
in which it is filed with the Commission pursuant to the Securities Act or
Rule 424(b) under the Securities Act, both in such quantities as the Agent may
reasonably request from time to time; and, if the delivery of a prospectus is
required under the Securities Act or under the blue sky or securities laws of
any jurisdiction at any time on or prior to the applicable Settlement Date for
any period set forth in an Issuance Notice in connection with the offering or
sale of the Shares and if at such time any event has occurred 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 any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it is necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Agent and to request that the
Agent suspend offers to sell Shares (and, if so notified, the Agent shall cease
such offers as soon as practicable); and if the Company decides to amend or
supplement the Registration Statement or the Prospectus as then amended or
supplemented, to advise the Agent promptly by telephone (with confirmation in
writing) and to prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or the Prospectus as then
amended or supplemented that will correct such statement or omission or effect
such compliance; provided, however, that if during such same period the Agent is
required to deliver a prospectus in respect of transactions in the Shares, the
Company shall promptly prepare and file with the Commission such an amendment or
supplement.

 

(i)               Blue Sky Compliance. The Company shall cooperate with the
Agent and counsel for the Agent to qualify or register the Shares for sale under
(or obtain exemptions from the application of) the state securities or blue sky
laws or Canadian provincial securities laws of those jurisdictions designated by
the Agent, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution
of the Shares. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company will advise
the Agent promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its reasonable best efforts to
obtain the withdrawal thereof as soon as practicable.

 

(j)               Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Agent an earnings
statement (which need not be audited) covering a period of at least twelve
months beginning with the first fiscal quarter of the Company occurring after
the date of this Agreement which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the Securities Act.

 

(k)              Listing; Reservation of Shares. (a)  The Company will use its
reasonable best efforts to maintain the listing of the Shares on the Principal
Market; and (b) the Company will reserve and keep available at all times, free
of preemptive rights, Shares for the purpose of enabling the Company to satisfy
its obligations under this Agreement.

 

(l)              Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.

 

24

 

 

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

 

(n)             Representations and Warranties. The Company acknowledges that
each delivery of an Issuance Notice and each delivery of Shares on a Settlement
Date shall be deemed to be (i) an affirmation to the Agent that the
representations and warranties of the Company contained in or made pursuant to
this Agreement are true and correct as of the date of such Issuance Notice or of
such Settlement Date, as the case may be, as though made at and as of each such
date, except as may be disclosed in the Prospectus (including any documents
incorporated by reference therein and any supplements thereto); and (ii) an
undertaking that the Company will advise the Agent if any of such
representations and warranties will not be true and correct as of the Settlement
Date for the Shares relating to such Issuance Notice, as though made at and as
of each such date (except that such representations and warranties shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented relating to such Shares).

 

(o)             Deliverables at Triggering Event Dates; Certificates. The
Company agrees that on or prior to the date of the first Issuance Notice and,
during the term of this Agreement after the date of the first Issuance Notice,
upon:

 

(A)                           the filing of the Prospectus or the amendment or
supplement of any Registration Statement or Prospectus (other than a prospectus
supplement relating solely to an offering of securities other than the Shares or
a prospectus filed pursuant to Section 4(a)(ii)(B)), by means of a
post-effective amendment, sticker or supplement, but not by means of
incorporation of documents by reference into the Registration Statement or
Prospectus;

 

(B)                           the filing with the Commission of an annual report
on Form 10-K or a quarterly report on Form 10-Q (including any Form 10-K/A or
Form 10-Q/A containing amended financial information or a material amendment to
the previously filed annual report on Form 10-K or quarterly report on
Form 10-Q), in each case, of the Company; or

 

(C)                           the filing with the Commission of a current report
on Form 8-K of the Company containing amended financial information (other than
information “furnished” pursuant to Item 2.02 or 7.01 of Form 8-K or to provide
disclosure pursuant to Item 8.01 of Form 8-K relating to reclassification of
certain properties as discontinued operations in accordance with Statement of
Financial Accounting Standards No. 144) that is material to the offering of
securities of the Company in the Agent’s reasonable discretion;

 

25

 

 

(any such event, a “Triggering Event Date”), the Company shall furnish the Agent
(but in the case of clause (C) above only if the Agent reasonably determines
that the information contained in such current report on Form 8-K of the Company
is material) with a certificate as of the Triggering Event Date, in the form and
substance satisfactory to the Agent and its counsel, substantially similar to
the form previously provided to the Agent and its counsel, modified, as
necessary, to relate to the Registration Statement and the Prospectus as amended
or supplemented, (A) confirming that the representations and warranties of the
Company contained in this Agreement are true and correct, (B) confirming that
the Company has performed all of its obligations hereunder to be performed on or
prior to the date of such certificate and as to the matters set forth in
Section 5(a)(iii) hereof, and (C) containing any other certification that the
Agent shall reasonably request. The requirement to provide a certificate under
this Section 4(o) shall be waived for any Triggering Event Date occurring at a
time when no Issuance Notice is pending or a suspension is in effect, which
waiver shall continue until the earlier to occur of the date the Company
delivers instructions for the sale of Shares hereunder (which for such calendar
quarter shall be considered a Triggering Event Date) and the next occurring
Triggering Event Date. Notwithstanding the foregoing, if the Company
subsequently decides to sell Shares following a Triggering Event Date when a
suspension was in effect and did not provide the Agent with a certificate under
this Section 4(o), then before the Company delivers the instructions for the
sale of Shares or the Agent sells any Shares pursuant to such instructions, the
Company shall provide the Agent with a certificate in conformity with this
Section 4(o) dated as of the date that the instructions for the sale of Shares
are issued.

 

(p)             Legal Opinions. On or prior to the date of the first Issuance
Notice and on or prior to each Triggering Event Date with respect to which the
Company is obligated to deliver a certificate pursuant to Section 4(o) for which
no waiver is applicable and excluding the date of this Agreement, a negative
assurances letter and the written legal opinion of Mintz Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., counsel to the Company, Cooley LLP, counsel to the
Agent, Servilla-Whitney LLC, intellectual property counsel to the Company, and
Morgan, Lewis & Bockius LLP, intellectual property counsel to the Company, each
dated the date of delivery, in form and substance reasonably satisfactory to the
Agent and its counsel, substantially similar to the form previously provided to
the Agent and its counsel, modified, as necessary, to relate to the Registration
Statement and the Prospectus as then amended or supplemented, shall be furnished
to the Agent; provided, however, that the Company shall be required to furnish
no more than one of each such opinion and negative assurance letter hereunder in
connection with the filing of each of its annual reports on Form 10-K; provided
further that the negative assurances letter and written legal opinion of
Servilla-Whitney LLC and Morgan, Lewis & Bockius LLP will not be required in
connection with the filing of a quarterly report on Form 10-Q or Form 10-Q/A. In
lieu of such opinions for subsequent periodic filings, in the discretion of the
Agent, the Company may furnish a reliance letter from such counsel to the Agent,
permitting the Agent to rely on a previously delivered opinion letter, modified
as appropriate for any passage of time or Triggering Event Date (except that
statements in such prior opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented as of such Triggering
Event Date).

 

(q)             Comfort Letter. On or prior to the date of the first Issuance
Notice and on or prior to each Triggering Event Date with respect to which the
Company is obligated to deliver a certificate pursuant to Section 4(o) for which
no waiver is applicable and excluding the date of this Agreement, the Company
shall cause KPMG LLP, the independent registered public accounting firm who has
audited the financial statements included or incorporated by reference in the
Registration Statement, to furnish the Agent a comfort letter, dated the date of
delivery, in form and substance reasonably satisfactory to the Agent and its
counsel, substantially similar to the form previously provided to the Agent and
its counsel; provided, however, that any such comfort letter will only be
required on the Triggering Event Date specified to the extent that it contains
financial statements filed with the Commission under the Exchange Act and
incorporated or deemed to be incorporated by reference into a Prospectus. If
requested by the Agent, the Company shall also cause a comfort letter to be
furnished to the Agent within ten (10) Trading Days of the date of occurrence of
any material transaction or event requiring the filing of a current report on
Form 8-K containing material amended financial information of the Company,
including the restatement of the Company’s financial statements. The Company
shall be required to furnish no more than one comfort letter hereunder per each
filing of an annual report on Form 10-K or a quarterly report on Form 10-Q.

 

26

 

 

(r)            Secretary’s Certificate. On or prior to the date of the first
Issuance Notice and on or prior to each Triggering Event Date with respect to
which the Company is obligated to deliver a certificate pursuant to
Section 4(o) for which no waiver is applicable and excluding the date of this
Agreement, the Company shall furnish the Agent a certificate executed by the
Secretary of the Company, signing in such capacity, dated the date of delivery
(i) certifying that attached thereto are true and complete copies of the
resolutions duly adopted by the Board of Directors of the Company authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation, the issuance of
the Shares pursuant to this Agreement), which authorization shall be in full
force and effect on and as of the date of such certificate, (ii) certifying and
attesting to the office, incumbency, due authority and specimen signatures of
each Person who executed this Agreement for or on behalf of the Company, and
(iii) containing any other certification that the Agent shall reasonably
request.

 

(s)            Agent’s Own Account; Clients’ Account. The Company consents to
the Agent trading, in compliance with applicable law, in the Common Shares for
the Agent’s own account and for the account of its clients at the same time as
sales of the Shares occur pursuant to this Agreement.

 

(t)            Investment Limitation. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company or any of its subsidiaries to register as an
investment company under the Investment Company Act.

 

(u)            Market Activities. The Company will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Shares or any
other reference security, whether to facilitate the sale or resale of the Shares
or otherwise, and the Company will, and shall use its reasonable best efforts to
cause each of its affiliates to, comply with all applicable provisions of
Regulation M. If the limitations of Rule 102 of Regulation M (“Rule 102”) do not
apply with respect to the Shares or any other reference security pursuant to any
exception set forth in Section (d) of Rule 102, then promptly upon notice from
the Agent (or, if later, at the time stated in the notice), the Company will,
and shall use its reasonable best efforts to cause each of its affiliates to,
comply with Rule 102 as though such exception were not available but the other
provisions of Rule 102 (as interpreted by the Commission) did apply. The Company
shall promptly notify the Agent if it no longer meets the requirements set forth
in Section (d) of Rule 102.

 

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(v)            Notice of Other Sale. Without the written consent of the Agent,
the Company will not, directly or indirectly, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any Common Shares or
securities convertible into or exchangeable for Common Shares (other than Shares
hereunder), warrants or any rights to purchase or acquire Common Shares, or
effect a reverse stock split, recapitalization, share consolidation,
reclassification or similar transaction affecting the outstanding Common Shares,
during the period beginning on the third Trading Day immediately prior to the
date on which any Issuance Notice is delivered to the Agent hereunder and ending
on the third Trading Day immediately following the Settlement Date with respect
to Shares sold pursuant to such Issuance Notice; and will not directly or
indirectly enter into any other “at the market” or continuous equity transaction
offer to sell, sell, contract to sell, grant any option to sell or otherwise
dispose of any Common Shares (other than the Shares offered pursuant to this
Agreement) or securities convertible into or exchangeable for Common Shares,
warrants or any rights to purchase or acquire, Common Shares prior to the
termination of this Agreement; provided, however, that such restrictions will
not be required in connection with the Company’s (i) issuance or sale of Common
Shares, options to purchase Common Shares or Common Shares issuable upon the
exercise of options or other equity awards pursuant to any employee or director
share option, incentive or benefit plan, share purchase or ownership plan,
long-term incentive plan, dividend reinvestment plan, inducement award under
Nasdaq rules or other compensation plan of the Company or its subsidiaries, as
in effect on the date of this Agreement, (ii) issuance or sale of Common Shares
issuable upon exchange, conversion or redemption of securities or the exercise
or vesting of warrants, options or other equity awards outstanding at the date
of this Agreement, (iii) issuance or sale of Common Shares or securities
convertible into or exchangeable for Common Shares as consideration for mergers,
acquisitions, other business combinations, joint ventures, collaborations,
licensing arrangements or strategic alliances occurring after the date of this
Agreement which are not used for capital raising purposes, provided that the
aggregate number of Common Shares issued, or issuable pursuant to the conversion
or exchange of securities convertible into or exchangeable for Common Shares,
under this subsection (iii) does not exceed 10% of the aggregate number of
Common Shares outstanding immediately prior to giving effect to such issuance or
sale and (iv) modification of any outstanding options, warrants of any rights to
purchase or acquire Common Shares.

 

Section 5.       CONDITIONS TO DELIVERY OF ISSUANCE NOTICES AND TO SETTLEMENT

 

(a)             Conditions Precedent to the Right of the Company to Deliver an
Issuance Notice and the Obligation of the Agent to Sell Shares. The right of the
Company to deliver an Issuance Notice hereunder is subject to the satisfaction,
on the date of delivery of such Issuance Notice, and the obligation of the Agent
to use its commercially reasonable efforts to place Shares during the applicable
period set forth in the Issuance Notice is subject to the satisfaction, on each
Trading Day during the applicable period set forth in the Issuance Notice, of
each of the following conditions:

 

(i)                           Accuracy of the Company’s Representations and
Warranties; Performance by the Company. The Company shall have delivered the
certificate required to be delivered pursuant to Section 4(o) on or before the
date on which delivery of such certificate is required pursuant to Section 4(o).
The Company shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to such date, including, but not
limited to, the covenants contained in ‎Section 4(p), Section 4(q) and
Section 4(r).

  

  28 

 

 

(ii)                           No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby that prohibits or directly and materially adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting or
materially adversely affecting any of the transactions contemplated by this
Agreement.

 

(iii)                          Material Adverse Changes. Except as disclosed in
the Prospectus and the Time of Sale Information, (a) in the judgment of the
Agent there shall not have occurred any Material Adverse Change; and (b) there
shall not have occurred any downgrading, nor shall any notice have been received
by the Company of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any securities of the Company or any of its subsidiaries by
any “nationally recognized statistical rating organization” as such term is
defined for purposes of Section 3(a)(62) of the Exchange Act.

 

(iv)                         No Suspension of Trading in or Delisting of Common
Shares; Other Events. The trading of the Common Shares (including without
limitation the Shares) shall not have been suspended by the Commission, the
Principal Market or FINRA and the Common Shares (including without limitation
the Shares) shall have been approved for listing or quotation on and shall not
have been delisted from the Nasdaq Stock Market, the New York Stock Exchange or
any of their constituent markets. There shall not have occurred (and be
continuing in the case of occurrences under clauses (i) and (ii) below) any of
the following: (i) trading or quotation in any of the Company’s securities shall
have been suspended or limited by the Commission or by the Principal Market or
trading in securities generally on either the Principal Market shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or FINRA; (ii) a
general banking moratorium shall have been declared by any of federal or New
York, authorities; or (iii) there shall have occurred any outbreak or escalation
of national or international hostilities or any crisis or calamity, or any
change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States’ or international political, financial or economic conditions, as
in the judgment of the Agent is material and adverse and makes it impracticable
to market the Shares in the manner and on the terms described in the Prospectus
or to enforce contracts for the sale of securities.

 

(b)            Documents Required to be Delivered on each Issuance Notice Date.
The Agent’s obligation to use its commercially reasonable efforts to place
Shares hereunder shall additionally be conditioned upon the delivery to the
Agent on or before the Issuance Notice Date of a certificate in form and
substance reasonably satisfactory to the Agent, executed by the Chief Executive
Officer, President or Chief Financial Officer of the Company, to the effect that
all conditions to the delivery of such Issuance Notice shall have been satisfied
as at the date of such certificate as required to be delivered pursuant to
Section 4(o) (which certificate shall not be required if the foregoing
representations shall be set forth in the Issuance Notice).

 

29

 

 

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

 

(d)             Agent Counsel Legal Opinion. Agent shall have received from
Cooley LLP, counsel for Agent, such opinion or opinions, on or before the date
on which the delivery of the Company counsel legal opinion is required pursuant
to Section 4(p), with respect to such matters as Agent may reasonably require,
and the Company shall have furnished to such counsel such documents as they
reasonably request for enabling them to pass upon such matters.

 

Section 6.       INDEMNIFICATION AND CONTRIBUTION

 

(a)              Indemnification of the Agent. The Company agrees to indemnify
and hold harmless the Agent, its officers and employees, and each person, if
any, who controls the Agent within the meaning of the Securities Act or the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which the Agent or such officer, employee or controlling person may become
subject, under the Securities Act, the Exchange Act, other federal or state
statutory law or regulation, or the laws or regulations of foreign jurisdictions
where Shares have been offered or sold or at common law or otherwise (including
in settlement of any litigation), insofar as such loss, claim, damage, liability
or expense (or actions in respect thereof as contemplated below) arises out of
or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430B
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Free Writing Prospectus that the Company has
used, referred to or filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading and to reimburse the Agent and each such
officer, employee and controlling person for any and all expenses (including the
fees and disbursements of counsel chosen by the Agent) as such expenses are
reasonably incurred and documented by the Agent or such officer, employee or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Agent
expressly for use in the Registration Statement, any such Free Writing
Prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the Agent to
the Company consists of the information described in subsection (b) below. The
indemnity agreement set forth in this ‎Section 6(a) shall be in addition to any
liabilities that the Company may otherwise have.

 

30

 

 

(b)             Indemnification of the Company, its Directors and Officers. The
Agent agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who signed the Registration Statement and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which the Company or any such director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Shares have been offered or sold or at common law or
otherwise (including in settlement of any litigation), that arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430B
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Free Writing Prospectus that the Company has
used, referred to or filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; but, for each of (i) and (ii) above, only
to the extent arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Agent
expressly for use in the Registration Statement, any such Free Writing
Prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the Agent to
the Company consists of the information set forth in the first sentence of the
ninth paragraph under the caption “Plan of Distribution” in the Prospectus, and
to reimburse the Company and each such director, officer and controlling person
for any and all expenses (including the fees and disbursements of one counsel
chosen by the Company) as such expenses are reasonably incurred by the Company
or such officer, director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The indemnity agreement set forth in this
Section 6(b) shall be in addition to any liabilities that the Agent or the
Company may otherwise have.

 

(c)             Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this ‎Section 6 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this ‎Section 6,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this ‎Section 6 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it shall elect, jointly with all other indemnifying parties similarly notified,
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party’s election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for
the fees and expenses of more than one separate counsel (together with local
counsel), representing the indemnified parties who are parties to such action),
which counsel (together with any local counsel) for the indemnified parties
shall be selected by the indemnified party (in the case of counsel for the
indemnified parties referred to in ‎Section 6(a) and Section 6(b) above),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at the
expense of the indemnifying party, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party and shall be paid
as they are incurred.

 

31

 

 

(d)             Settlements. The indemnifying party under this ‎Section 6 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 6(c) hereof, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request; and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.

 

(e)             Contribution. If the indemnification provided for in this
‎Section 6 is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Agent, on
the other hand, from the offering of the Shares pursuant to this Agreement; or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Agent, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Agent,
on the other hand, in connection with the offering of the Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total gross proceeds from the offering of the Shares (before deducting expenses)
received by the Company bear to the total commissions received by the Agent. The
relative fault of the Company, on the one hand, and the Agent, on the other
hand, shall be determined by reference to, among other things, whether any such
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, on the one hand, or the Agent, on the other hand, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

32

 

 

The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in ‎Section 6(c), any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim. The provisions set forth in ‎Section 6(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this ‎Section 6(e); provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under ‎Section 6(c) for purposes of indemnification.

 

The Company and the Agent agree that it would not be just and equitable if
contribution pursuant to this ‎Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this ‎‎Section 6(e).

 

Notwithstanding the provisions of this ‎‎Section 6(e), the Agent shall not be
required to contribute any amount in excess of the Selling Commission received
by the Agent in connection with the offering contemplated hereby. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
‎‎Section 6(e), each officer and employee of the Agent and each person, if any,
who controls the Agent within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Agent, and each director
of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Company.

 

Section 7.       TERMINATION & SURVIVAL

 

(a)              Term. Subject to the provisions of this ‎Section 7, the term of
this Agreement shall continue from the date of this Agreement until the end of
the Agency Period, unless earlier terminated by the parties to this Agreement
pursuant to this ‎Section 7.

 

33

 

 

(b)             Termination; Survival Following Termination.

 

(i)               Either party may terminate this Agreement prior to the end of
the Agency Period, by giving written notice as required by this Agreement, upon
ten (10) Trading Days’ notice to the other party; provided that, (A) if the
Company terminates this Agreement after the Agent confirms to the Company any
sale of Shares, the Company shall remain obligated to comply with
‎Section 3(b)(v) with respect to such Shares and (B) ‎Section 2, ‎Section 3(d),
Section 6, Section 7 and Section 8 shall survive termination of this Agreement.
If termination shall occur prior to the Settlement Date for any sale of Shares,
such sale shall nevertheless settle in accordance with the terms of this
Agreement.

 

(ii)              In addition to the survival provision of ‎Section 7(b)(i), the
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Agent or the Company or any of its
or their partners, officers or directors or any controlling person, as the case
may be, and, anything herein to the contrary notwithstanding, will survive
delivery of and payment for the Shares sold hereunder and any termination of
this Agreement.

 

Section 8.       MISCELLANEOUS

 

(a)              Press Releases and Disclosure. The Company may issue a press
release describing the material terms of the transactions contemplated hereby as
soon as practicable following the date of this Agreement, and may file with the
Commission a Current Report on Form 8 K, with this Agreement attached as an
exhibit thereto, describing the material terms of the transactions contemplated
hereby, and the Company shall consult with the Agent prior to making such
disclosures, and the parties hereto shall use all commercially reasonable
efforts, acting in good faith, to agree upon a text for such disclosures that is
reasonably satisfactory to all parties hereto. No party hereto shall issue
thereafter any press release or like public statement (including, without
limitation, any disclosure required in reports filed with the Commission
pursuant to the Exchange Act) related to this Agreement or any of the
transactions contemplated hereby without the prior written approval of the other
party hereto, except as may be necessary or appropriate in the reasonable
opinion of the party seeking to make disclosure to comply with the requirements
of applicable law or stock exchange rules. If any such press release or like
public statement is so required, the party making such disclosure shall consult
with the other party prior to making such disclosure, and the parties shall use
all commercially reasonable efforts, acting in good faith, to agree upon a text
for such disclosure that is reasonably satisfactory to all parties hereto.

 

(b)              No Advisory or Fiduciary Relationship. The Company acknowledges
and agrees that (i) the transactions contemplated by this Agreement, including
the determination of any fees, are arm’s-length commercial transactions between
the Company and the Agent, (ii) when acting as a principal under this Agreement,
the Agent is and has been acting solely as a principal and is not the agent or
fiduciary of the Company, or its stockholders, creditors, employees or any other
party, (iii) the Agent has not assumed nor will assume an advisory or fiduciary
responsibility in favor of the Company with respect to the transactions
contemplated hereby or the process leading thereto (irrespective of whether the
Agent has advised or is currently advising the Company on other matters) and the
Agent does not have any obligation to the Company with respect to the
transactions contemplated hereby except the obligations expressly set forth in
this Agreement, (iv) the Agent and its affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Company, and (v) the Agent has not provided any legal, accounting, regulatory or
tax advice with respect to the transactions contemplated hereby and the Company
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it deemed appropriate.

 

34

 

 

(c)              Research Analyst Independence. The Company acknowledges that
the Agent’s research analysts and research departments are required to and
should be independent from their respective investment banking divisions and are
subject to certain regulations and internal policies, and as such the Agent’s
research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company or
the offering that differ from the views of their respective investment banking
divisions. The Company understands that the Agent is a full service securities
firm and as such from time to time, subject to applicable securities laws, may
effect transactions for its own account or the account of its customers and hold
long or short positions in debt or equity securities of the companies that may
be the subject of the transactions contemplated by this Agreement.

 

(d)              Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:

 

If to the Agent: 

 

Jefferies LLC   520 Madison Avenue   New York, NY 10022   Facsimile: (646)
619-4437   Attention: General Counsel 

 

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

 

 Cooley LLP   55 Hudson Yards   New York, NY 10001   Facsimile: (212) 479-6275 
 Attention: Daniel I. Goldberg, Esq. 

 

 If to the Company: 

 

 Bellerophon Therapeutics, Inc.   184 Liberty Corner Road, Suite 302   Warren,
New Jersey 07059   Attention: Fabian Tenenbaum, Chief Executive Officer 

 

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

 

 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.   666 Third Avenue   New
York, New York 10017   Facsimile: 212-983-3115   Attention: Jeffrey
Schultz, Esq. 

 

35

 

 

Any party hereto may change the address for receipt of communications by giving
written notice to the others in accordance with this Section 8(d).

 

(e)              Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 6, and in each case
their respective successors, and no other person will have any right or
obligation hereunder. The term “successors” shall not include any purchaser of
the Shares as such from the Agent merely by reason of such purchase.

 

(f)              Partial Unenforceability. The invalidity or unenforceability of
any Article, Section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other Article, Section, paragraph or
provision hereof. If any Article, Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.

 

(g)              Governing Law Provisions. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal courts of the
United States of America located in the Borough of Manhattan in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the “Specified Courts”), and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court, as to which such jurisdiction is non-exclusive) of such courts in any
such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.

 

(h)             General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and may be delivered by facsimile transmission or by electronic delivery of a
portable document format (PDF) file. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Article and Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

 

[Signature Page Immediately Follows]

 

36

 

 

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms

 

Very truly yours,      

Bellerophon Therapeutics, Inc. 

     By: /s/ Fabian Tenenbaum   Name:  Fabian Tenenbaum   Title: Chief Executive
Officer

 

The foregoing Agreement is hereby confirmed and accepted by the Agent in New
York, New York as of the date first above written.

 

JEFFERIES LLC      By:/s/ Matthew Kim   Name: Matthew Kim   Title: Managing
Director
         Joint US Head of Biopharmaceuticals 

 

[Signature Page to Open Market Sale AgreementSM]

 

 

 

EXHIBIT A

 

ISSUANCE NOTICE

 

[Date]

 

Jefferies LLC

 

520 Madison Avenue

 

New York, New York 10022

 

Attn: [__________]

 

Reference is made to the Open Market Sale AgreementSM between Bellerophon
Therapeutics, Inc. (the “Company”) and Jefferies LLC (the “Agent”) dated as of
July 17, 2020. The Company confirms that all conditions to the delivery of this
Issuance Notice are satisfied as of the date hereof.

 

Date of Delivery of Issuance Notice (determined pursuant to Section 3(b)(i)):

 

_______________________

 

Issuance Amount (equal to the total Sales Price for such Shares):

 

 $     Number of days in selling period:       First date of selling period:  
    Last date of selling period:       Settlement Date(s) if other than standard
T+2 settlement:  

 

Floor Price Limitation (in no event less than $1.00 without the prior written
consent of the Agent, which consent may be withheld in the Agent’s sole
discretion): $ ____ per share

 

Comments:  

 

By:    Name:   Title:

 

 

 

Schedule A

 

Notice Parties

 

The Company

 

Fabian Tenenbaum

 

Assaf Korner

 

The Agent

 

Michael Magarro

 

Don Lynaugh

 

James O’Hara