Exhibit 10.1

 

EXECUTION COPY

 

IMMUNIC, INC.

Shares of Common Stock

($0.0001 par value per share)

 

SALES AGREEMENT

 

July 17, 2019

 

SVB LEERINK LLC

1301 Avenue of the Americas, 12th Floor

New York, New York 10019

 

Ladies and Gentlemen:

 

IMMUNIC, INC. (formerly known as Vital Therapies, Inc. (“Vital Therapies”)), a
Delaware corporation (the “Company,” with all references in this agreement to
the “Company” also referring to Vital Therapies prior to the date on which,
pursuant to the terms of the Exchange Agreement, dated as of January 6, 2019,
among Vital Therapies, Immunic AG (“Former Immunic”) and the former shareholders
of Former Immunic, the shareholders of Former Immunic exchanged all of their
shares for shares of common stock of Vital Therapies, resulting in Former
Immunic becoming a wholly-owned subsidiary of Vital Therapies; and in connection
therewith, Vital Therapies changed its name to Immunic, Inc.), confirms its
agreement (this “Agreement”) with SVB Leerink LLC (the “Agent”), as follows:

 

1.                  Issuance and Sale of Shares. The Company agrees that, from
time to time during the term of this Agreement, on the terms and subject to the
conditions set forth herein, it may issue and sell through the Agent up to
$40,000,000 of shares of common stock, $0.0001 par value per share, of the
Company (the “Common Stock”), subject to the limitations set forth in Section
5(c) (the “Placement Shares”). Notwithstanding anything to the contrary
contained herein, the parties hereto agree that compliance with the limitation
set forth in this Section 1 on the aggregate gross sales price of Placement
Shares that may be issued and sold under this Agreement from time to time shall
be the sole responsibility of the Company, and that the Agent shall have no
obligation in connection with such compliance. The issuance and sale of
Placement Shares through the Agent will be effected pursuant to the Registration
Statement (as defined below) filed by the Company with the Securities and
Exchange Commission (the “Commission”) on May 25, 2018, as amended on June 8,
2018, and declared effective by the Commission on June 13, 2018, although
nothing in this Agreement shall be construed as requiring the Company to issue
any Placement Shares.

 

 

 

 

The Company has prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Securities Act”), with the Commission a registration
statement on Form S-3 (File No. 333-225230), including a base prospectus,
relating to certain securities, including the Common Stock, to be issued from
time to time by the Company, and which incorporates by reference documents that
the Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the “Exchange Act”). The Company has prepared a
prospectus supplement to the base prospectus included as part of such
registration statement at the time the registration statement became effective,
which prospectus supplement specifically relates to the Placement Shares to be
issued from time to time pursuant to this Agreement (the “Prospectus
Supplement”). The Company will furnish to the Agent, for use by the Agent,
copies of the base prospectus included as part of such registration statement at
the time it became effective, as supplemented by the Prospectus Supplement.
Except where the context otherwise requires, such registration statement,
including all documents filed as part thereof or incorporated by reference
therein, and including any information contained in a Prospectus (as defined
below) subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act or deemed to be a part of such registration statement pursuant to
Rule 430B or Rule 462(b) under the Securities Act, is herein called the
“Registration Statement.” The base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as it
may be supplemented by the Prospectus Supplement, in the form in which such
prospectus and/or Prospectus Supplement have most recently been filed by the
Company with the Commission pursuant to Rule 424(b) under the Securities Act,
together with any “issuer free writing prospectus” (as used herein, as defined
in Rule 433 under the Securities Act (“Rule 433”)), relating to the Placement
Shares that (i) is required to be filed with the Commission by the Company or
(ii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case, in the
form filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant to Rule 433(g), is
herein called the “Prospectus.”

 

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

 

2.                  Placements. Each time that the Company wishes to issue and
sell any Placement Shares through the Agent hereunder (each, a “Placement”), it
will notify the Agent by email notice (or other method mutually agreed to in
writing by the parties) (each such notice, a “Placement Notice”) containing the
parameters in accordance with which it desires such Placement Shares to be sold,
which at a minimum shall include the maximum number or amount of Placement
Shares to be sold, the time period during which sales are requested to be made,
any limitation on the number or amount of Placement Shares that may be sold in
any one Trading Day (as defined in Section 3) and any minimum price below which
sales may not be made, a form of which containing such minimum sales parameters
is attached hereto as Schedule 1. The Placement Notice must originate from one
of the individuals authorized to act on behalf of the Company and set forth on
Schedule 2 (with a copy to each of the other individuals from the Company listed
on such Schedule 2), and shall be addressed to each of the individuals from the
Agent set forth on Schedule 2, as such Schedule 2 may be updated by either party
from time to time by sending a written notice containing a revised Schedule 2 to
the other party in the manner provided in Section 12 (including by email
correspondence to each of the individuals of the Company set forth on Schedule
2, if receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply). The
Placement Notice shall be effective upon receipt by the Agent unless and until
(i) in accordance with the notice requirements set forth in Section 4, the Agent
declines to accept the terms contained therein for any reason, in its sole
discretion, within two Trading Days of the date the Agent receives the Placement
Notice, (ii) in accordance with the notice requirements set forth in Section 4,
the Agent suspends sales under the Placement Notice for any reason in its sole
discretion, (iii) the entire amount of the Placement Shares has been sold
pursuant to this Agreement, (iv) in accordance with the notice requirements set
forth in Section 4, the Company suspends sales under or terminates the Placement
Notice for any reason in its sole discretion, (v) the Company issues a
subsequent Placement Notice and explicitly indicates that its parameters
supersede those contained in the earlier dated Placement Notice or (vi) this
Agreement has been terminated pursuant to the provisions of Section 11. The
amount of any discount, commission or other compensation to be paid by the
Company to the Agent in connection with the sale of the Placement Shares
effected through the Agent shall be calculated in accordance with the terms set
forth in Schedule 3. It is expressly acknowledged and agreed that neither the
Company nor the Agent will have any obligation whatsoever with respect to a
Placement or any Placement Shares unless and until the Company delivers a
Placement Notice to the Agent and the Agent does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon the terms
specified therein and herein. In the event of a conflict between the terms of
this Agreement and the terms of a Placement Notice, the terms of the Placement
Notice will control with respect to the matters covered thereby.

 

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3.                  Sale of Placement Shares by the Agent. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, including Section 5(c), upon the effectiveness of a
Placement Notice as provided in Section 2, and unless the sale of the Placement
Shares described therein has been declined, suspended or otherwise terminated in
accordance with the terms of this Agreement, the Agent, for the period specified
in the Placement Notice, will use its commercially reasonable efforts consistent
with its normal trading and sales practices and applicable state and federal
laws, rules and regulations and the rules of the Nasdaq Capital Market
(“Nasdaq”) to sell such Placement Shares up to the number or amount specified
in, and otherwise in accordance with the terms of, such Placement Notice. The
Agent will provide written confirmation to the Company (including by email
correspondence to each of the individuals of the Company set forth on Schedule
2, if receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) no later than
the opening of the Trading Day (as defined below) immediately following the
Trading Day on which it has made sales of Placement Shares hereunder setting
forth the number or amount of Placement Shares sold on such Trading Day, the
volume-weighted average price of the Placement Shares sold, the Net Proceeds (as
defined below) payable to the Company and an itemization of the deductions made
by the Agent from the gross proceeds that it receives from such sales. Unless
otherwise specified by the Company in a Placement Notice, the Agent may sell
Placement Shares by any method permitted by law deemed to be an “at the market
offering” as defined in Rule 415 of the Securities Act, including sales made
directly on or through Nasdaq, on or through any other existing trading market
for the Common Stock or to or through a market maker. If expressly authorized by
the Company (including in a Placement Notice), the Agent may also sell Placement
Shares in negotiated transactions. Notwithstanding the provisions of Section
6(tt), except as may be otherwise agreed by the Company and the Agent, the Agent
shall not purchase Placement Shares on a principal basis pursuant to this
Agreement unless the Company and the Agent enter into a separate written
agreement setting forth the terms of such sale. The Company acknowledges and
agrees that (i) there can be no assurance that the Agent will be successful in
selling Placement Shares, (ii) the Agent will incur no liability or obligation
to the Company or any other person or entity if it does not sell Placement
Shares for any reason other than a failure by the Agent to use its commercially
reasonable efforts consistent with its normal trading and sales practices and
applicable state and federal laws, rules and regulations and the rules of Nasdaq
to sell such Placement Shares as required under this Agreement and (iii) the
Agent shall be under no obligation to purchase Placement Shares on a principal
basis pursuant to this Agreement unless the Company and the Agent enter into a
separate written agreement setting forth the terms of such sale. For the
purposes hereof, “Trading Day” means any day on which the Common Stock is
purchased and sold on Nasdaq.

 

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4.                  Suspension of Sales.

 

(a)       The Company or the Agent may, upon notice to the other party in
writing (including by email correspondence to each of the individuals of the
other party set forth on Schedule 2, if receipt of such correspondence is
actually acknowledged by any of the individuals to whom the notice is sent,
other than via auto-reply) or by telephone (confirmed immediately by email
correspondence to each of the individuals of the other party set forth on
Schedule 2), suspend any sale of Placement Shares; provided, however, that such
suspension shall not affect or impair either party’s obligations with respect to
any Placement Shares sold hereunder prior to the receipt of such notice. Each of
the parties agrees that no such notice under this Section 4 shall be effective
against the other party unless notice is sent by one of the individuals named on
Schedule 2 hereto to the other party in writing (including by email
correspondence to each of the individuals of the other party set forth on
Schedule 2, if receipt of such correspondence is actually acknowledged by any of
the individuals to whom the notice is sent, other than via auto-reply).

 

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

 

(c)       While a suspension is in effect pursuant to this Section 4, any
obligation under Sections 7(m), 7(n), 7(o) and 7(p) with respect to the delivery
of certificates, opinions or comfort letters to the Agent, shall be waived.

 

5.                  Settlement and Delivery of the Placement Shares.

 

(a)       Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the second Trading Day (or such earlier day as is industry practice or as is
required for regular-way trading) following the date on which such sales are
made (each, a “Settlement Date”). The amount of proceeds to be delivered to the
Company on a Settlement Date against receipt of the Placement Shares sold (the
“Net Proceeds”) will be equal to the aggregate gross sales price received by the
Agent at which such Placement Shares were sold, after deduction of (i) the
Agent’s commission, discount or other compensation for such sales payable by the
Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by
the Company to the Agent hereunder pursuant to Section 7(g) hereof and (iii) any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales.

 

(b)       Delivery of Placement Shares. On or before each Settlement Date, the
Company will issue the Placement Shares being sold on such date and will, or
will cause its transfer agent to, electronically transfer such Placement Shares
by crediting the Agent’s or its designee’s account (provided the Agent shall
have given the Company written notice of such designee prior to the Settlement
Date) at The Depository Trust Company through its Deposit and Withdrawal at
Custodian System (“DWAC”) or by such other means of delivery as may be mutually
agreed upon by the parties hereto, which in all cases shall be duly authorized,
freely tradeable, transferable, registered shares of Common Stock in good
deliverable form. On each Settlement Date, the Agent will deliver the related
Net Proceeds in same day funds to an account designated by the Company on or
prior to the Settlement Date. The Agent shall be responsible for providing DWAC
instructions or other instructions for delivery by other means with regard to
the transfer of the Placement Shares being sold. In addition to and in no way
limiting the rights and obligations set forth in Section 9(a) hereto, the
Company agrees that if the Company or its transfer agent (if applicable),
defaults in its obligation to deliver duly authorized, freely tradeable,
transferable, registered Placement Shares in good deliverable form by 2:30 P.M.,
New York City time, on a Settlement Date (other than as a result of a failure by
the Agent to provide instructions for delivery), and as a result the Agent
cancels such trade, the Company will (i) take all necessary action to cause the
full amount of any Net Proceeds that were delivered to the Company’s account
with respect to such settlement, together with any costs incurred by the Agent
and/or its clearing firm in connection with recovering such Net Proceeds, to be
immediately returned to the Agent or its clearing firm no later than 5:00 P.M.,
New York City time, on such Settlement Date, by wire transfer of immediately
available funds to an account designated by the Agent or its clearing firm, (ii)
indemnify and hold the Agent and its clearing firm harmless against any
reasonably incurred out-of-pocket loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company or its transfer agent (if
applicable) and (iii) pay to the Agent any commission, discount or other
compensation to which it would otherwise have been entitled absent such default.
Certificates for the Placement Shares, if any, shall be in such denominations
and registered in such names as the Agent may request in writing one Business
Day (as defined below) before the applicable Settlement Date. Certificates for
the Placement Shares, if any, will be made available by the Company for
examination and packaging by the Agent in New York City not later than 12:00
P.M., New York City time, on the Business Day prior to the applicable Settlement
Date.

 

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(c)       Limitations on Offering Size. Under no circumstances shall the Company
cause or request the offer or sale of any Placement Shares if, after giving
effect to the sale of such Placement Shares, the aggregate number or gross sales
proceeds of Placement Shares sold pursuant to this Agreement would exceed the
lesser of: (i) the number or dollar amount of shares of Common Stock registered
pursuant to, and available for offer and sale under, the Registration Statement
pursuant to which the offering of Placement Shares is being made, (ii) the
number of authorized but unissued shares of Common Stock of the Company (less
shares of Common Stock issuable upon exercise, conversion or exchange of any
outstanding securities of the Company or otherwise reserved from the Company’s
authorized capital stock), (iii) the number or dollar amount of shares of Common
Stock permitted to be offered and sold by the Company under Form S-3 (including
General Instruction I.B.6. thereof, if such instruction is applicable), (iv) the
number or dollar amount of shares of Common Stock that the Company’s board of
directors or a duly authorized committee thereof is authorized to issue and sell
from time to time, and notified to the Agent in writing, or (v) the dollar
amount of shares of Common Stock for which the Company has filed the Prospectus
Supplement. Under no circumstances shall the Company cause or request the offer
or sale of any Placement Shares pursuant to this Agreement at a price lower than
the minimum price authorized from time to time by the Company’s board of
directors or a duly authorized committee thereof, and notified to the Agent in
writing. Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge and agree that compliance with the limitations set forth in
this Section 5(c) on the number or dollar amount of Placement Shares that may be
issued and sold under this Agreement from time to time shall be the sole
responsibility of the Company, and that the Agent shall have no obligation in
connection with such compliance.

 

6.       Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Agent that, except as set forth in the
Registration Statement or the Prospectus, as of the date of this Agreement, and
as of (i) each Representation Date (as defined in Section 7(m)), (ii) each date
on which a Placement Notice is given, (iii) the date and time of each sale of
any Placement Shares pursuant to this Agreement and (iv) each Settlement Date
(each such time or date referred to in clauses (i) through (iv), an “Applicable
Time”):

 

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(a)       The Company and the transactions contemplated by this Agreement meet
the requirements for and comply with the conditions for the use of Form S-3
(including General Instructions I.A and I.B.1.) under the Securities Act. The
Registration Statement has been filed with the Commission and has been declared
effective by the Commission under the Securities Act prior to the issuance of
any Placement Notices by the Company. At the time the Registration Statement
originally became effective and at the time the Company’s Annual Report on Form
10-K for the year ended December 31, 2018, was filed with the Commission, the
Company met the then-applicable requirements for use of Form S-3 (including
General Instructions I.A and I.B.1.) under the Securities Act. The Registration
Statement meets, and the offering and sale of Placement Shares as contemplated
hereby comply in all material respects with, the requirements of Rule
415(a)(1)(x) under the Securities Act. The Agent is named as the agent engaged
by the Company in the section entitled “Plan of Distribution” in the Prospectus
Supplement. The Company has not received, and has no notice from the Commission
of, any notice pursuant to Rule 401(g)(1) under the Securities Act objecting to
the use of the shelf registration statement form. No stop order of the
Commission preventing or suspending the use of the base prospectus, the
Prospectus Supplement or the Prospectus, or the effectiveness of the
Registration Statement, has been issued, and no proceedings for such purpose are
pending before or, to the knowledge of the Company, threatened by the
Commission. At the time of the initial filing of the Registration Statement, the
Company paid the required Commission filing fees relating to the securities
covered by the Registration Statement, including the Shares that may be sold
pursuant to this Agreement, in accordance with Rule 457(o) under the Securities
Act. Copies of the Registration Statement, the Prospectus, any such amendments
or supplements to any of the foregoing and all Incorporated Documents that were
filed with the Commission on or prior to the date of this Agreement have been
delivered, or are available through EDGAR, to the Agent and its counsel.

 

(b)       Each of the Registration Statement and any post-effective amendment
thereto, at the time it became or becomes effective, at each deemed effective
date with respect to the Agent pursuant to Rule 430B(f)(2) under the Securities
Act and as of each Applicable Time, complied, complies and will comply in all
material respects with the requirements of the Securities Act and did not, does
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, except that the representations and
warranties set forth in this sentence do not apply to the Agent’s Information
(as defined below). The Prospectus and any amendment or supplement thereto, when
so filed with the Commission under Rule 424(b) under the Securities Act,
complied, complies and as of each Applicable Time will comply in all material
respects with the requirements of the Securities Act, and each Prospectus
Supplement, Prospectus or issuer free writing prospectus (or any amendments or
supplements to any of the foregoing) furnished to the Agent for use in
connection with the offering of the Placement Shares was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T. Neither the Prospectus
nor any amendment or supplement thereto, as of its date and as of each
Applicable Time, included, includes or will include an untrue statement of a
material fact or omitted, omits or will 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, except that the representations and
warranties set forth in this sentence do not apply to the Agent’s Information.
Each Incorporated Document heretofore filed, when it was filed (or, if any
amendment with respect to any such document was filed, when such amendment was
filed), conformed in all material respects with the requirements of the Exchange
Act and were filed on a timely basis with the Commission, and any further
Incorporated Documents so filed and incorporated after the date of this
Agreement will be filed on a timely basis and, when so filed, will conform in
all material respects with the requirements of the Exchange Act; no such
Incorporated Document when it was filed (or, if an amendment with respect to any
such document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and no
such Incorporated Document, when it is filed, will contain an untrue statement
of a material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing shall
not apply to statements in, or omissions from, any such document made in
reliance upon, and in conformity with, information furnished to the Company by
the Agent specifically for use in the preparation thereof.

 

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(c)       (i) At the time of filing the Registration Statement and (ii) at the
time of the execution of this Agreement (with such date being used as the
determination date for purposes of this clause ii)), the Company was not and is
not an “ineligible issuer” (as defined in Rule 405), without taking account of
any determination by the Commission pursuant to Rule 405 that it is not
necessary that the Company be considered an ineligible issuer.

 

(d)       The Company is, and since April 23, 2014 has been, an “emerging growth
company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth
Company”).

 

(e)       Each issuer free writing prospectus, as of its issue date and as of
each Applicable Time, did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information contained in
the Registration Statement or the Prospectus, including any Incorporated
Document deemed to be a part thereof that has not been superseded or modified.
Each issuer free writing prospectus that the Company has filed, or is required
to file, pursuant to Rule 433 or that was prepared by or on behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act.

 

(f)       The Company has not distributed and, prior to the later to occur of
each Settlement Date and completion of the Agent’s distribution of the Placement
Shares under this Agreement, will not distribute any offering material in
connection with the offering and sale of the Placement Shares other than the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus
(as defined below).

 

(g)       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 has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto.

 

(h)       The Company is subject to and in compliance in all material respects
with the reporting requirements of Section 13 or Section 15(d) of the Exchange
Act. The Common Stock is registered pursuant to Section 12(b) of the Exchange
Act and is listed on Nasdaq, and the Company has taken no action designed to, or
reasonably likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from Nasdaq,
nor has the Company received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing. The Company is in
compliance with the current listing standards of Nasdaq. The Company has filed a
Notification of Listing of Additional Shares with Nasdaq with respect to the
Placement Shares.

 

(i)       No person (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act) has the right to act as an underwriter or
as a financial advisor to the Company in connection with the offer and sale of
the Placement Shares hereunder, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Placement Shares
as contemplated hereby or otherwise. Except for the Agent, there is no broker,
finder or other party that is entitled to receive from the Company or any of its
Subsidiaries (as defined below) any brokerage or finder’s fee or other fee or
commission as a result of any transactions contemplated by this Agreement.

 

(j)       The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to acquire, own, lease and operate its properties,
and to lease the same to others, 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 to transact
business as a foreign corporation and is in good standing in the State of
California and under the laws of each other jurisdiction that requires such
qualification, whether by reason of the ownership or leasing of property or the
conduct of business, except to the extent that the failure to be so qualified or
in good standing could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the condition (financial or
otherwise), earnings, results of operations, business, properties, operations,
assets, liabilities or prospects of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business (a “Material Adverse Effect”).

 

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(k)       Each of the Company’s “subsidiaries” (for purposes of this Agreement,
as defined in Rule 405 under the Securities Act) (each, a “Subsidiary” and
collectively, the “Subsidiaries”) has been duly organized and is validly
existing in good standing (where such concept exists) under the laws of the
jurisdiction of its organization and has full power and authority to acquire,
own, lease and operate its properties, and to conduct its business as described
in the Registration Statement and the Prospectus. Each Subsidiary is duly
qualified to transact business and is in good standing (where such concept
exists) under the laws of each jurisdiction that requires such qualification,
whether by reason of the ownership or leasing of property or the conduct of
business, except to the extent that the failure to be so qualified or in good
standing could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. All of the issued and outstanding share capital
or other equity or ownership interests of each Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable, has been issued
in compliance with federal state and securities laws and is owned by the
Company, directly or through other wholly-owned Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or adverse claim. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity, other than the Subsidiaries listed on Exhibit 21.1
to the Company’s most recent Annual Report on Form 10-K filed with the
Commission and Former Immunic. No Subsidiary is prohibited or restricted,
directly or indirectly, from paying dividends to the Company, from making any
other distribution with respect to such Subsidiary’s equity securities, from
repaying to the Company or any other Subsidiary 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.

 

(l)       The Company has the authorized and outstanding capitalization as set
forth in the Company’s quarterly report on Form 10-Q for the most recent fiscal
quarter, as of the dates referred to therein (subject, in each case, to the
issuance of Placement Shares under this Agreement, the issuance of shares of
Common Stock upon exercise of share options and warrants disclosed as
outstanding as of the date hereof in the Registration Statement and the
Prospectus and the grant of options under existing share option plans described
in the Registration Statement and the Prospectus). The Common Stock conforms in
all material respects to the description thereof contained in the Registration
Statement and the Prospectus, including under the heading “Description of
Capital Stock.” All of the issued and outstanding share capital or other equity
or ownership interest of the Company (including the Common Stock) has been duly
authorized and validly issued and is fully paid and nonassessable, has been
issued in compliance with all federal, state and local securities laws and is
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
adverse claim. None of the outstanding shares of capital stock of the Company
were 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 subscribe for, or equity
or debt securities convertible into or exchangeable or exercisable for, any
share capital of the Company or any of its Subsidiaries or to which the Company
or any of its Subsidiaries is a party or by which any of them may be bound. The
descriptions of the Company’s equity incentive plan, stock option plans and
other stock plans or arrangements described in the Prospectus and in effect as
of the date hereof (collectively, the “Stock Plans”) and the options or other
rights granted thereunder, set forth in the Registration Statement and the
Prospectus accurately and fairly present the information required to be shown
with respect to such Stock Plans and the options or other rights granted
thereunder.

 

8 

 

 

(m)       The Placement 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 will conform in all material respects to the description
thereof contained in the Prospectus. The issuance and sale of the Placement
Shares as contemplated hereby shall not be subject to any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase the
Placement Shares. When issued and delivered by the Company against payment
therefor pursuant to this Agreement, the purchasers of the Placement Shares
issued and sold hereunder will acquire good, marketable and valid title to such
Placement Shares, free and clear of all pledges, liens, security interests,
charges, claims or encumbrances. The issuance and sale of the Placement Shares
as contemplated hereby will not cause any holder of any share capital,
securities convertible into or exchangeable or exercisable for share capital or
options, warrants or other rights to purchase share capital or any other
securities of the Company to have any right to acquire any preferred shares of
the Company. There are no restrictions upon the voting or transfer of the Common
Stock under the Company’s amended and restated certificate of incorporation or
amended and restated bylaws or any agreement or other instrument to which the
Company is a party or otherwise filed as an exhibit to the Registration
Statement.

 

(n)       There is no statute, regulation, contract, agreement or other document
required to be described in the Registration Statement, Prospectus or in any
Incorporated Document, or to be filed as an exhibit to the Registration
Statement or any Incorporated Document which is not described or filed as
required. The statements set forth or incorporated by reference in the
Prospectus, insofar as they purport to constitute summaries of the terms of the
statutes, regulations, contracts, agreements or other documents described and
filed, constitute accurate summaries of the terms thereof in all material
respects. The statements set forth or incorporated by reference in the
Prospectus under the headings “Risk Factors,” “Business—Intellectual Property,”
“Business—Government Regulation” and “Description of Capital Stock,” insofar as
such statements summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings. Neither the Company nor any of its
Subsidiaries has sent or received any communication regarding termination of, or
intent not to renew or render performance under, any of the contracts or
agreements referred to or described in the Prospectus or any free writing
prospectus, or referred to or described in, or filed as an exhibit to, the
Registration Statement, or any Incorporated Document, and no such termination or
non-renewal has been threatened by the Company or any of its Subsidiaries or, to
the Company’s knowledge, any other party to any such contract or agreement,
which threat of termination or non-renewal has not been rescinded as of the date
hereof.

 

(o)       This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability, including rights of indemnification, may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally and by
general principles of equity. This Agreement conforms in all material respects
to the descriptions thereof in the Registration Statement and the Prospectus.

 

(p)       The Company is not and, after giving effect to the offering and sale
of the Placement Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended.

 

(q)       No consent, approval, license, permit, qualification, authorization or
other order or decree of, or registration or filing with, any court or other
governmental, taxing or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement or consummation
of the transactions contemplated hereby or by the Registration Statement and the
Prospectus (including the issuance and sale of the Placement Shares hereunder),
except such as have been already obtained or made or as may be required under
the Securities Act, applicable state securities or Blue Sky laws, applicable
rules of Nasdaq, or applicable rules of the Financial Industry Regulatory
Authority, Inc. (“FINRA”).

 

9 

 

 

(r)       Neither the execution and delivery by the Company of, nor the
performance of the Company of its obligations under, this Agreement will
conflict with, result in a breach or violation of, 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: (i) the certificate or articles
of incorporation, charter, bylaws, articles of association, limited liability
company agreement, certificate or agreement of limited or general partnership or
other similar organizational documents, as the case may be, of such entity, (ii)
the terms of any indenture, contract, license, lease, mortgage, deed of trust,
note agreement, agreement or other instrument, obligation, condition, covenant
or instrument to which it is a party or bound or to which its property or assets
is subject or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or any of its Subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, any of its Subsidiaries or any
of their respective properties or assets, as applicable, except, in the case of
clauses (ii) and (iii) above, for any such conflict, breach, violation or
default that would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(s)       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 could reasonably be expected to result
in a material adverse change, in the condition (financial or otherwise),
earnings, results of operations, business, properties, operations, assets,
liabilities or prospects of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business;
(ii) neither the Company nor its Subsidiaries has (A) incurred any material
liability or obligation, indirect, direct or contingent, including without
limitation any losses or interference with its 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, (B) entered into any
material transactions not in the ordinary course of business or (C) issued or
granted any shares of the Company’s capital stock or securities convertible into
or exchangeable or exercisable for or that represent the right to receive shares
of the Company’s capital stock other than under the Stock Plans; and (iii) there
has not been any material decrease in the share capital or any material increase
in any short-term or long-term indebtedness of the Company or any of 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 another Subsidiary, by any Subsidiary on any class of shares, or any
repurchase or redemption by the Company or any of its Subsidiaries of any class
of shares.

 

(t)       There are no persons (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act) with registration or other
similar rights to have any equity or debt securities of the Company 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
in a writing previously furnished to the Agent.

 

10 

 

 

(u)       The financial statements of the Company and Former Immunic included or
incorporated by reference in the Registration Statement and the Prospectus,
together with the related notes and schedules, present fairly the consolidated
financial position of the Company and the Subsidiaries and Former Immunic and
its subsidiaries, respectively, as of the dates indicated and the consolidated
results of operations, cash flows and changes in stockholders’ equity of the
Company and the Subsidiaries and Former Immunic and its subsidiaries,
respectively, for the periods specified and have been prepared in compliance in
all material respects with the requirements of the Securities Act and Exchange
Act and in conformity with United States generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved.
To the extent applicable, any pro forma financial statements, information or
data included or incorporated by reference in the Registration Statement and the
Prospectus comply with the requirements of Regulation S-X of the Securities Act,
including, without limitation, Article 11 thereof, fairly present the
information set forth therein, and the assumptions used in the preparation of
such pro forma financial statements and data are reasonable, the pro forma
adjustments used therein are appropriate to give effect to the circumstances
referred to therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements and data. The
other financial data set forth or incorporated by reference in the Registration
Statement and the Prospectus is accurately and fairly presented in all material
respects and prepared on a basis consistent with the financial statements and
books and records of the Company and Former Immunic. There are no financial
statements (historical or pro forma) that are required to be included or
incorporated by reference in the Registration Statement or the Prospectus that
are not included or incorporated by reference therein as required. The Company
and the Subsidiaries do not have any material liabilities or obligations, direct
or contingent (including any off-balance sheet obligations or any “variable
interest entities” as that term is used in Accounting Standards Codification
Paragraph 810-10-25-20), not disclosed in the Registration Statement and the
Prospectus. All disclosures contained in the Registration Statement or the
Prospectus that contain “non-GAAP financial measures” (as such term is defined
by the rules and regulations of the Commission) comply, in all material
respects, with Regulation G under the Exchange Act and Item 10 of Regulation S-K
under the Securities Act, to the extent applicable. The statistical,
industry-related and market-related data included or incorporated by reference
in the Registration Statement and the Prospectus were obtained or derived from
sources which the Company reasonably and in good faith believes are reliable and
accurate, such data agree with the sources from which they are derived, and the
Company has obtained the written consent to the use of such data from such
sources to the extent required. 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 Public Company Accounting Oversight Board (“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.

 

(v)       There are no actions, suits, claims, investigations or proceedings
pending or, to the Company’s knowledge, threatened to which the Company or any
of the Subsidiaries is or would be a party, or of which any of the respective
properties or assets of the Company and the Subsidiaries is or would be subject,
at law or in equity, before any court or arbitral body or by or before any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency, that (i) are required to be described in the
Registration Statement or the Prospectus and are not so described, (ii) could
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or on the consummation
of any of the transactions contemplated hereby or (iii) could reasonably be
expected to have a Material Adverse Effect. The aggregate of all pending legal
or governmental proceedings to which the Company or any of its Subsidiaries is a
party or of which any of their respective properties or assets is the subject
which are not described in the Prospectus, including ordinary routine litigation
incidental to the Company’s business, could not reasonably be expected to (A)
result in a Material Adverse Effect or (B) have a material adverse effect on the
ability of the Company to perform its obligations under this Agreement or the
consummation of any of the transactions contemplated hereby.

 

(w)       The Company owns or leases all such real properties as are necessary
to the conduct of its operations as presently conducted in all material
respects.

 

11 

 

 

(x)       Neither the Company nor any Subsidiary is in violation or default of
(i) any provision of its certificate or articles of incorporation, charter,
bylaws, articles of association, limited liability company agreement,
certificate or agreement of limited or general partnership, or other similar
organizational documents, as the case may be, of such entity; (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property or assets is subject; or
(iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company, any of its Subsidiaries or
any of their respective properties or assets, as applicable, except, in the case
of clauses (ii) and (iii) above, for any such default or violation that would
not, individually or in the aggregate, have a Material Adverse Effect.

 

(y)       Baker Tilly Virchow Krause LLP (“Baker Tilly”), whose report on the
consolidated financial statements of Former Immunic is filed with the Commission
as part of the Company’s Current Report on Form 8-K/A filed with the Commission
on June 21, 2019 and incorporated by reference in 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 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. Baker Tilly has not been engaged by
the Company to perform any “prohibited activities” or provided to the Company
any “non-audit services” (as defined in Section 10A of the Exchange Act).
PricewaterhouseCoopers LLP (“PwC”), whose report on the consolidated financial
statements of Vital Therapies is filed with the Commission as part of the
Company’s most recent annual report on Form 10-K filed with the Commission and
incorporated by reference in 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 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. PwC has not been engaged by the Company to perform any “prohibited
activities” or provided to the Company any “non-audit services” (as defined in
Section 10A of the Exchange Act).

 

(z)       There are no transfer taxes or other similar fees or charges under
federal law, the laws of any state, any foreign law, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale by the Company
of the Placement Shares.

 

(aa) All United States federal income tax returns of the Company and its
Subsidiaries required by law to be filed have been filed or extensions thereof
have been requested, and all taxes shown by such returns or otherwise assessed,
which are due and payable, have been paid, except assessments that are being
contested in good faith and as to which adequate reserves have been provided
under GAAP. The Company has no knowledge of any material tax deficiency which
has been or is likely to be threatened or asserted against the Company or its
Subsidiaries. Each of the Company and its Subsidiaries has filed all foreign,
state, provincial, local or other tax returns that are required to have been
filed pursuant to applicable foreign, state, provincial, local or other law
except insofar as the failure to file such returns would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
and paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its Subsidiaries, except for such taxes, if any, as
are being contested in good faith and as to which adequate reserves have been
provided and except for such taxes or assessments the nonpayment of which would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of any income or other tax liability for
any years not finally determined are adequate to meet any assessments or
re-assessments for additional tax for any years not finally determined, except
to the extent of any inadequacy that would not reasonably be expected to result
in a Material Adverse Effect. All material taxes which the Company and its
Subsidiaries are required by law to withhold or to collect for payment have been
duly withheld and collected and have been paid to the appropriate governmental
authority or agency or have been accrued, reserved against and entered on the
books of the Company and its Subsidiaries.

 

12 

 

 

(bb) No labor dispute with the employees of the Company or any of its
Subsidiaries exists or, to the Company’s knowledge, is threatened or imminent,
and the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its or any of its Subsidiaries’ principal
suppliers, manufacturers, contractors or customers, in each case that would have
a Material Adverse Effect. None of the employees of the Company or any of its
Subsidiaries is represented by a union and, to the knowledge of the Company, no
union organizing activities are taking place. Neither the Company nor any of its
Subsidiaries has violated (or received notice of any violation of) any federal,
state or local law or foreign law relating to the discrimination in hiring,
promotion or pay of employees, nor any applicable wage or hour laws, or the
rules and regulations thereunder, or analogous foreign laws and regulations,
which would, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

 

(cc) Each of the Company and its Subsidiaries are insured by recognized 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 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 could
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has been denied any material insurance
coverage which it has sought or for which it has applied.

 

(dd) The Company and each of its Subsidiaries has good and marketable title in
fee simple to all real property owned by them and good and marketable title to
all personal property owned by them that is material to their business (except
with respect to intellectual property, which is addressed exclusively in Section
6(pp) and Section 6(ggg) below), in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company or any Subsidiary; and any real property and
buildings held under lease by the Company or any of its Subsidiaries are held by
them under valid, subsisting and enforceable leases (subject to the effects of
(A) bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the
rights or remedies of creditors generally; (B) the application of general
principles of equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether enforcement
is considered in proceedings at law or in equity); and (C) applicable law and
public policy with respect to rights to indemnity and contribution) with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company or such
Subsidiary.

 

13 

 

 

(ee) The Company and its Subsidiaries possess and are operating in compliance in
all material respects with such valid and current material certificates,
authorizations or permits required by United States federal, state or foreign
regulatory agencies or bodies to conduct their respective businesses as
currently conducted and as described in the Registration Statement and the
Prospectus (collectively, “Permits”). Neither the Company nor any of its
Subsidiaries is in violation of, or in default under, any of the Permits or has
received any written notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit, which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to result
in a Material Adverse Effect.

 

(ff) The Company and each of its Subsidiaries make and keep accurate books and
records and maintain a system of internal accounting controls sufficient 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 GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the interactive data in eXtensible Business
Reporting Language 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.

 

(gg) The Company and each of its Subsidiaries have established and maintain
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 has been
no material weakness 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, including any corrective actions with regard to significant
deficiencies or material weaknesses. 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.

 

(hh) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of
the Company, any of its or their respective directors, officers or controlling
persons has taken, directly or indirectly, without giving effect to any actions
taken by the Agent, (i) any action designed to or that might constitute or
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Placement Shares or (ii) any
action designed to or that might constitute or reasonably be expected to cause
or result in a violation of Regulation M under the Exchange Act.

 

14 

 

 

(ii)       Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) neither the Company nor any of
its Subsidiaries is in violation of any United States federal, state or local,
or any 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 emissions, discharges, release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, “Hazardous
Materials”) or otherwise related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, “Environmental Laws”), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or any of its
Subsidiaries under applicable Environmental Laws, or noncompliance with the
terms and conditions thereof, nor has the Company or any of its Subsidiaries
received any written communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Company or any of
its Subsidiaries is in violation of any Environmental Law; (ii) the Company and
its Subsidiaries have all material permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance with
their requirements; (iii) there are no pending or, to the Company’s knowledge,
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, or any investigation with respect to which
the Company or any of its Subsidiaries has received written notice or any
written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys’ fees or
penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Hazardous Materials at any location owned, leased
or operated by the Company or any of its Subsidiaries, now or in the past; and
(iv) to the Company’s knowledge, there are no past or present actions,
activities, events, conditions, incidents or circumstances that might reasonably
be expected to result in a violation of any Environmental Law or form the basis
of an order for clean-up or remediation, or an action, suit, investigation 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.

 

(jj) The Company 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, or its “ERISA Affiliates” (as defined below) are in
compliance in all material respects with ERISA. “ERISA Affiliates” means, with
respect to the Company, 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 is a member. No “reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by the Company, or any of its
ERISA Affiliates. No “employee benefit plan” established or maintained by the
Company or any of its ERISA Affiliates, if such “employee benefit plan” were
terminated, would have any “amount of unfunded benefit liabilities” (as defined
under ERISA). Neither the Company nor any of its 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 or any of its ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification.

 

(kk) The Company is in compliance with, and there is and has been no failure on
the part of the Company and, to the Company’s knowledge, 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 and all rules and
regulations promulgated thereunder or implementing the provisions thereof (the
“Sarbanes-Oxley Act”) and the rules and regulations promulgated in connection
therewith, including Section 402 relating to loans.

 

15 

 

 

(ll) Neither the Company, any of its Subsidiaries, nor, to the knowledge of the
Company, any of their respective directors, officers, agents, employees or
affiliates, has taken or will take any action in furtherance of an offer,
payment, promise to pay, or authorization or approval of the unlawful payment or
giving of money, property, gifts or anything else of value, directly or
indirectly, to any “government official” (including any officer or employee of a
government or government-owned or controlled entity or of a public international
organization, or any person acting in an official capacity for or on behalf of
any of the foregoing, or any political party or party official or candidate for
political office) to influence official action or secure an improper advantage;
and the Company, each of its Subsidiaries and, to the Company’s knowledge, each
of their respective affiliates have conducted their businesses in compliance
with applicable anti-corruption laws.

 

(mm) None of the Company, any Subsidiary, affiliate, director, officer or
employee thereof or, to the best of the Company’s knowledge, any agent,
representative or other person acting on behalf of the Company or any of its
Subsidiaries or affiliates, is aware of or has taken any action, directly or
indirectly, that would result in a violation by such persons of any applicable
anti-corruption laws, including the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office or otherwise took any action (or failed to fully disclose any action) in
contravention of the FCPA; and the Company, its Subsidiaries and each of their
respective affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain, and will continue to maintain, policies
and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.

 

(nn) The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance in all material respects with applicable
financial recordkeeping and reporting requirements and the money laundering
statutes and the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action,
suit, investigation 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 of the Company’s knowledge, threatened.

 

(oo)       Neither the Company nor any of its Subsidiaries, nor any director or
officer thereof, nor, to the Company’s knowledge, any employee, agent, affiliate
or representative of the Company or any of its Subsidiaries, is currently or is
owned or controlled by an individual or entity that is subject to any sanctions
administered or enforced by the United States government (including, without
limitation, the Office of Foreign Assets Control of the United States Department
of the Treasury), the United Nations Security Council, the European Union, Her
Majesty’s Treasury or other relevant sanctions authority (collectively,
“Sanctions”) or is located, organized or resident in a country or territory that
is the subject or target of Sanctions; and the Company will not directly or
indirectly use the proceeds of the sale of the Placement Shares, 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 or
facilitating the activities of or business of any person or entity, or in any
country or territory, that currently or at the time of such financing or
facilitation is the subject of any Sanctions or in any other manner that will
result in a violation by any person or entity (including any person
participating in the transactions contemplated by this Agreement) of any
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 or entity, or in any country or territory, that at
the time of the dealing or transaction is or was the subject of Sanctions.

 

16 

 

 

(pp) The Company and its Subsidiaries own or possess the right to use all
inventions, patent applications, patents, trademarks, trade names, service
names, domain names, copyrights, trade secrets, know-how and other intellectual
property (collectively, “Intellectual Property”) as are (i) necessary or
material for the conduct of their respective businesses as currently conducted
or as currently proposed to be conducted and as described in the Registration
Statement and the Prospectus and (ii) necessary or material for the
commercialization of the products described in the Registration Statement and
the Prospectus as being under development. There is no pending or, to the
Company’s knowledge, threatened (i) action, suit, proceeding, or claim by others
challenging the rights of the Company or any of its Subsidiaries in or to any
such Intellectual Property that, if decided adversely to the Company or such
Subsidiary would, individually or in the aggregate, have a Material Adverse
Effect, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (ii) action, suit, proceeding, or claim by others that
the Company or any of its Subsidiaries infringes, misappropriates, or otherwise
violates any Intellectual Property of others that, if decided adversely to the
Company or such Subsidiary would, individually or in the aggregate, have a
Material Adverse Effect, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; or (iii) action, suit, proceeding,
or claim by others challenging the validity, scope, or enforceability of any
such Intellectual Property owned or licensed by the Company or its Subsidiaries
and the Company is unaware of any facts which would form a reasonable basis for
any such claim. To the best of the Company’s knowledge, the operation of the
business of the Company and its Subsidiaries as now conducted, and as described
in the Prospectus, and in connection with the development and commercialization
of the products described in the Prospectus does not infringe, misappropriate,
conflict with or otherwise violate any claim of any patent or published patent
application of any other person or entity. There is no prior art of which the
Company or any of its Subsidiaries is aware that may render any patent owned or
licensed by the Company or its Subsidiaries invalid or any patent application
owned or licensed by the Company or its Subsidiaries unpatentable which has not
been disclosed to the applicable government patent office. The Company’s granted
or issued patents, registered trademarks and registered copyrights have been
duly maintained and are in full force and effect, and none of the patents,
trademarks and copyrights have been adjudged invalid or unenforceable in whole
or in part. The Company knows of no infringement, misappropriation or violation
by others of any Intellectual Property owned or licensed by the Company or its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to or bound
by any options, licenses or agreements with respect to the Intellectual Property
of any other person or entity that are required to be set forth in the
Prospectus and that are not described therein in all material respects. The
Company and its Subsidiaries have taken all reasonable steps necessary to secure
their interests in the Intellectual Property of the Company and its Subsidiaries
from their employees and contractors and to protect the confidentiality of all
of their confidential information and trade secrets. None of the technology or
intellectual property used by the Company and its Subsidiaries in its business
has been obtained or is being used by the Company or its Subsidiaries in
violation of any contractual obligation binding on the Company or its
Subsidiaries, or, to the Company’s knowledge, any of its officers, directors or
employees or otherwise in violation of the rights of any persons. No third party
has been granted by the Company or its Subsidiaries rights to the Intellectual
Property of the Company or its Subsidiaries, including any rights that, if
exercised, could enable such party to develop products competitive to those of
the Company as described in the Registration Statement and the Prospectus. All
Intellectual Property owned or exclusively licensed by the Company or its
Subsidiaries are free and clear of all liens, encumbrances, defects or other
restrictions (other than non-exclusive licenses granted in the ordinary course
of business), except those that could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. The Company and its
Subsidiaries are not subject to any judgment, order, writ, injunction or decree
of any court or any federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any arbitrator, nor has it entered into or is it a party to any
agreement made in settlement of any pending or threatened litigation, which
materially restricts or impairs their use of any Intellectual Property.

 

17 

 

 

(qq) The Company and each of its Subsidiaries (i) are and have at all times been
in material compliance with all laws, statutes, rules, regulations or guidance
applicable to the Company and its Subsidiaries and the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing,
advertising, labeling, promotion, sale, offer for sale, storage, import, export
or disposal of any pharmaceuticals or biohazardous substances, materials or any
other products developed, manufactured or distributed by the Company (including,
without limitation, from the United States Food and Drug Administration (“FDA”),
European Medicines Agency (“EMA”) and any local or other governmental or
regulatory authority performing functions similar to those performed by the FDA
or EMA) (collectively, “Applicable Laws”), except as could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
(ii) have not received any notice of adverse finding, warning letter, untitled
letter or other correspondence or notice from the FDA or any other federal,
state or foreign governmental authority having authority over the Company, any
of its Subsidiaries or their activities alleging or asserting noncompliance with
any Applicable Laws or any licenses, certificates, approvals, clearances,
authorizations, permits and supplements or amendments thereto required by any
such Applicable Laws (collectively, the “Governmental Permits”), (iii) have made
all filings with, the appropriate local, or other governmental or regulatory
agencies or bodies that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described
in the Registration Statement and the Prospectus, except where any failures to
possess or make the same would not, singularly or in the aggregate, have a
Material Adverse Effect, (iv) possess all material Governmental Permits
necessary to conduct their respective businesses as described in the
Registration Statement and the Prospectus, and such Governmental Permits are
valid and in full force and effect and are not in violation of any term of any
such Governmental Permits, (v) have filed, obtained, maintained or submitted all
material reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Governmental Permits and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and correct in all material respects on the date filed (or were
corrected or supplemented by a subsequent submission), and (vi) are not a party
to any corporate integrity agreements, monitoring agreements, consent decrees,
settlement orders or similar agreements with or imposed by any governmental
authority. All Governmental Permits are valid and in full force and effect,
except where the validity or failure to be in full force and effect would not,
singularly or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received notification of any revocation,
modification, suspension, termination or invalidation (or proceedings related
thereto) of any such Governmental Permit and the Company has no reason to
believe that any such Governmental Permit will not be renewed. Neither the
Company, any of its Subsidiaries nor, to the Company’s knowledge, any of their
respective directors, officers, employees or agents has been convicted of any
crime under any Applicable Laws or has been the subject of an FDA debarment
proceeding. Neither the Company nor any of its Subsidiaries has been nor is now
subject to the FDA’s Application Integrity Policy. To the Company’s knowledge,
neither the Company, any of its Subsidiaries nor any of its directors, officers,
employees or agents has made, or caused the making of, any false statements on,
or material omissions from, any other records or documentation prepared or
maintained to comply with the requirements of the FDA or any other governmental
authority.

 

18 

 

 

(rr) There is no legal or governmental proceeding to which the Company or any of
its Subsidiaries is a party or of which any property or assets of the Company or
any of its Subsidiaries is the subject, including any proceeding before the FDA,
the EMA or any foreign, local, national or other governmental agency with
jurisdiction over the types of products being developed by the Company that is
required to be described in the Registration Statement or the Prospectus and is
not described therein, or which, singularly or in the aggregate, if determined
adversely to the Company or any of its Subsidiaries, could reasonably be
expected to have a Material Adverse Effect; and no such proceedings are
threatened or contemplated by governmental or regulatory authorities or
threatened by others. The Company and its Subsidiaries (i) have not received
notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any governmental authority or
third party alleging that any product operation or activity is in violation of
any Applicable Laws or Governmental Permits and have no knowledge that any such
governmental authority or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding and (ii) have not
received notice that any governmental authority has taken, is taking or intends
to take action to limit, suspend, modify or revoke any Governmental Permits and
the Company has no knowledge that any such governmental authority is considering
such action.

 

(ss) The research, non-clinical pre-clinical studies and clinical studies and
tests conducted or being conducted by or on behalf of the Company or any of its
Subsidiaries or in which any of their respective product candidates have
participated and, to the Company’s knowledge, the preclinical studies and
clinical trials directed or sponsored by the Company’s collaborators
(collectively, the “Studies”) that are described in, or the results of which are
referred to in, the Registration Statement and the Prospectus were and, if still
pending, are being conducted with reasonable care and in all material respects
in accordance with the protocols, procedures and controls pursuant to all
Applicable Laws and Governmental Permits 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 research, non-clinical studies or tests the results of
which are inconsistent with, or otherwise call into question, the results
described or referred to in the Registration Statement and the Prospectus; the
Company and its Subsidiaries have made all such filings and obtained all such
approvals as may be required by the EMA, the FDA or any committee thereof or
from any other United States or foreign government agency with jurisdiction over
the types of products being developed by the Company; neither the Company nor
any of its Subsidiaries has received any notice of, or correspondence from, any
governmental authority requiring the termination, suspension or modification of
any Study; 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 all governmental authorities. There have been no
material serious adverse events resulting from any Study. To the Company’s
knowledge, the manufacturing facilities and operations of its suppliers are
operated in compliance in all material respects with all Applicable Laws and
Governmental Permits.

 

(tt) The Company acknowledges and agrees that the Agent has informed the Company
that the Agent may, to the extent permitted under the Securities Act and the
Exchange Act, purchase and sell shares of Common Stock for its own account while
this Agreement is in effect; provided, that (i) no such purchase or sales shall
take place while a Placement Notice is in effect (except to the extent the Agent
may engage in sales of Placement Shares purchased or deemed purchased from the
Company as a “riskless principal” or in a similar capacity) and (ii) the Company
shall not be deemed to have authorized or consented to any such purchases or
sales by the Agent, except as may be otherwise agreed by the Company and the
Agent.

 

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

 

19 

 

 

(vv) The Company is not required to register as a “broker” or “dealer” in
accordance with the provisions of the Exchange Act and does not, directly or
indirectly through one or more intermediaries, control or have any other
association with (within the meaning of Article I of the By-laws of FINRA) any
member firm of FINRA. No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers or shareholders
of the Company, on the other hand, which is required by the rules of FINRA to be
described in the Registration Statement and the Prospectus, which is not so
described. All of the information (including, but not limited to, information
regarding affiliations, security ownership and trading activity) provided to the
Agent or its counsel by the Company, its officers and directors and the holders
of any securities (debt or equity) or warrants, options or rights to acquire any
securities of the Company in connection with the filing to be made and other
supplemental information to be provided to FINRA pursuant to FINRA Rule 5110 in
connection with the transactions contemplated by this Agreement is true,
complete and correct.

 

(ww) As of the close of trading on Nasdaq on June 24, 2019, the aggregate market
value of the outstanding voting and non-voting common equity (as defined in Rule
405) of the Company held by persons other than affiliates of the Company
(pursuant to Rule 144 of the Securities Act, those that directly, or indirectly
through one or more intermediaries, control, or are controlled by, or are under
common control with, the Company) (the “Non-Affiliate Shares”), was
approximately $78,575,114.25 (calculated by multiplying (x) the price at which
the common equity of the Company was last sold on Nasdaq on June 24, 2019 by (y)
the number of Non-Affiliate Shares outstanding on June 24, 2019). The Company is
not a shell company (as defined in Rule 405) and has not been a shell company
for at least 12 calendar months previously.

 

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

 

(yy) Each of the independent directors (or independent director nominees, once
appointed, if applicable) named in the Registration Statement and Prospectus
satisfies the independence standards established by Nasdaq and, with respect to
members of the Company’s audit committee, the enhanced independence standards
contained in Rule 10A-3(b)(1) promulgated by the Commission under the Exchange
Act.

 

(zz) Neither the Company nor, to the Company’s knowledge, any of its affiliates
(within the meaning of Rule 144 under the Securities Act) has, prior to the date
hereof, made any offer or sale of any securities which could be “integrated”
(within the meaning of the Securities Act) with the offer and sale of the
Placement Shares hereunder.

 

(aaa) Neither the Company nor any of its Subsidiaries has (i) failed to pay any
dividend or sinking fund installment on preferred stock or (ii) defaulted on any
installment or payment due on indebtedness for borrowed money or on any rental
on one or more long-term leases, which defaults, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(bbb) Each financial or operational projection or other “forward-looking
statement” (as defined by Section 27A of the Securities Act or Section 21E of
the Exchange Act) contained in the Registration Statement or the Prospectus (i)
was so included by the Company in good faith and with reasonable basis after due
consideration by the Company of the underlying assumptions, estimates and other
applicable facts and circumstances and (ii) as required, is accompanied by
meaningful cautionary statements identifying those factors that could cause
actual results to differ materially from those in such forward-looking
statement. No such statement was made with the knowledge of a director or senior
manager of the Company that was false or misleading.

 

(ccc) There are no relationships, direct or indirect, or related party
transactions involving the Company or any of its Subsidiaries or any other
person (including any director, officer, stockholder, customer or supplier of
the Company or any of its Subsidiaries) required to be described in the
Registration Statement or the Prospectus that have not been described as
required. There are no material outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company or any of its Subsidiaries to or for the benefit
of any of the officers or directors of the Company or any of its Subsidiaries,
or any of the family members of any of such persons.

 

20 

 

 

(ddd) The Company is not in or subject to a bankruptcy or insolvency proceeding
in any jurisdiction.

 

(eee) The Company and its Subsidiaries (i) are in compliance, in all material
respects, with any and all applicable foreign, federal, state and local laws,
rules, regulations, treaties, statutes and codes promulgated by any and all
governmental authorities (including pursuant to the Occupational Health and
Safety Act) relating to the protection of human health and safety the workplace
(“Occupational Laws”); (ii) have received all material permits, licenses or
other approvals required of it under applicable Occupational Laws to conduct
their respective businesses as currently conducted; and (iii) are in compliance,
in all material respects, with all terms and conditions of such permit, license
or approval. No action, proceeding, revocation proceeding, writ, injunction or
claim is pending or, to the Company’s knowledge, threatened against the Company
or any of its Subsidiaries relating to Occupational Laws, and the Company does
not have knowledge of any facts, circumstances or developments relating to its
operations or cost accounting practices that could reasonably be expected to
form the basis for or give rise to such actions, suits, investigations or
proceedings.

 

(fff) No director or officer of the Company or any of its Subsidiaries is
subject to any non-competition agreement or non-solicitation agreement with any
employer or prior employer which could materially affect each director’s or
officer’s ability to be and act in the capacity of a director or officer of the
Company or a Subsidiary.

 

(ggg) The Company has duly and properly filed or caused to be filed with the
U.S. Patent and Trademark Office (the “PTO”) and applicable foreign and
international patent and trademark authorities all patents, trademarks,
copyrights and applications relating to the same owned by the Company and its
Subsidiaries (the “Company Patent and Trademark Applications”). To the knowledge
of the Company, the Company has complied with the PTO’s duty of candor and
disclosure for the Company Patent and Trademark Applications and has made no
material misrepresentation in the Company Patent and Trademark Applications. To
the Company’s knowledge, the Company Patent and Trademark Applications disclose
patentable subject matter. The Company has not been notified of any inventorship
challenges nor has any interference been declared or provoked nor is any
material fact known by the Company that would preclude the issuance of patents
with respect to the Company Patent and Trademark Applications or would render
such patents, if issued, invalid or unenforceable. Except as would not have a
Material Adverse Effect, neither the Company nor any of its Subsidiaries has
breached and is currently in breach of any provision of any license, contract or
other agreement governing the use by the Company or its Subsidiaries of
Intellectual Property owned by third parties (collectively, the “Licenses”) and
no third party has alleged any such breach and the Company is unaware of any
facts that would form a reasonable basis for such a claim. To the Company’s
knowledge, no other party to the Licenses has breached or is currently in breach
of any provision of the Licenses. Each of the Licenses is in full force and
effect and constitutes a valid and binding agreement between the parties
thereto, enforceable in accordance with its terms, and there has not occurred
any breach or default under any such Licenses or any event that, with the giving
of notice or lapse of time, would constitute a breach or default thereunder.
Except as would not have a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has been and is currently involved in any disputes regarding
the Licenses. To the Company’s knowledge, all patents licensed to the Company
pursuant to the Licenses are valid, enforceable and being duly maintained. To
the Company’s knowledge, all patent applications licensed to the Company
pursuant to the Licenses are being duly prosecuted.

 

21 

 

 

Any certificate signed by any officer of the Company and delivered to the Agent
or its counsel in connection with the offering of the Placement Shares shall be
deemed a representation and warranty by the Company, as to matters covered
thereby, to the Agent.

 

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

 

(a)       Registration Statement Amendments. After the date of this Agreement
and during any period in which the Prospectus relating to any Placement Shares
is required to be delivered by the Agent under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act or a similar rule); (i) the Company will notify the Agent
promptly of the time when any subsequent amendment to the Registration
Statement, other than Incorporated Documents, has been filed with the Commission
and/or has become effective or any subsequent supplement to the Prospectus,
other than Incorporated Documents, has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or
Prospectus or for additional information; (ii) the Company will prepare and file
with the Commission, promptly upon the Agent’s request, any amendments or
supplements to the Registration Statement or Prospectus that, in the Agent’s
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Placement Shares by the Agent (provided, however, that the
failure of the Agent to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect the Agent’s right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy the Agent shall have with respect to the
failure by the Company to make such filing (but without limiting the Agent’s
rights under Section 9 hereof) will be to cease making sales under this
Agreement until such amendment or supplement is filed); (iii) the Company will
not file any amendment or supplement to the Registration Statement or
Prospectus, other than Incorporated Documents, relating to the Placement Shares
or a security convertible into or exchangeable or exercisable for the Placement
Shares unless a copy thereof has been submitted to the Agent within a reasonable
period of time before the filing and the Agent has not reasonably objected
thereto (provided, however, that the failure of the Agent to make such objection
shall not relieve the Company of any obligation or liability hereunder, or
affect the Agent’s right to rely on the representations and warranties made by
the Company in this Agreement and provided, further, that the only remedy the
Agent shall have with respect to the Company’s making such filing
notwithstanding the Agent’s objection (but without limiting the Agent’s rights
under Section 9 hereof) will be to cease making sales under this Agreement) and
the Company will furnish to the Agent at the time of filing thereof a copy of
any Incorporated Document, except for those documents available via EDGAR; and
(iv) the Company will cause each amendment or supplement to the Prospectus,
other than Incorporated Documents, to be filed with the Commission as required
pursuant to the applicable paragraph of Rule 424(b) of the Securities Act and,
in the case of any Incorporated Document, to be filed with the Commission as
required pursuant to the Exchange Act, within the time period prescribed.

 

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

 

22 

 

 

(c)       Delivery of Prospectus; Subsequent Changes. During any period in which
the Prospectus relating to the Placement Shares is required to be delivered by
the Agent under the Securities Act with respect to the offer and sale of the
Placement Shares (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act or a similar rule), the
Company will comply in all material respects with all requirements imposed upon
it by the Securities Act, as from time to time in force, and will file on or
before their respective due dates (taking into account any extensions available
under the Exchange Act) all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange
Act. If during such period any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances then existing, not misleading, or if during
such period it is necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Securities Act, the Company will promptly notify
the Agent to suspend the offering of Placement Shares during such period and the
Company will promptly amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement or
omission or effect such compliance. If the Company has omitted any information
from the Registration Statement pursuant to Rule 430B under the Securities Act,
it will use its best efforts to comply with the provisions thereof and make all
requisite filings with the Commission pursuant to said Rule 430B and to notify
the Agent promptly of all such filings if not available on EDGAR.

 

(d)       Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by the Agent under
the Securities Act with respect to the offer and sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act or a similar rule), the Company will use its
commercially reasonable efforts to cause the Placement Shares to be listed on
Nasdaq. The Company will timely file with Nasdaq all material documents and
notices required by Nasdaq of companies that have or will issue securities that
are traded on Nasdaq.

 

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

 

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

 

23 

 

 

(g)       Expenses. The Company will pay all expenses incident to the
performance of its obligations hereunder, including expenses relating to (i) the
preparation, printing and filing of the Registration Statement and each
amendment and supplement thereto, of the Prospectus and of each amendment and
supplement thereto and of this Agreement and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Placement Shares, (ii) the preparation, issuance, sale and delivery of
the Placement Shares and any taxes due or payable in connection therewith, (iii)
the qualification of the Placement Shares under securities laws in accordance
with the provisions of Section 7(w) of this Agreement, including filing fees
(provided, however, that any fees or disbursements of counsel for the Agent in
connection therewith shall be paid by the Agent except as set forth in clauses
(vii) and (viii) below), (iv) the printing and delivery to the Agent and its
counsel of copies of the Prospectus and any amendments or supplements thereto,
and of this Agreement, (v) the fees and expenses incurred in connection with the
listing or qualification of the Placement Shares for trading on Nasdaq, (vi) the
filing fees and expenses, if any, owed to the Commission or FINRA and the fees
and expenses of any transfer agent or registrar for the Shares, (vii) the fees
and associated expenses of the Agent’s outside legal counsel for filings with
the FINRA Corporate Financing Department in an amount not to exceed $15,000
(excluding FINRA filing fees referred to in clause (vi) above and in addition to
the fees and disbursements referred to in clause (viii) below), and (viii) the
reasonable fees and disbursements of the Agent’s outside legal counsel in an
amount not to exceed $50,000 (in addition to the fees and associated expenses
referred to in clause (vii) above).

 

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

 

(i)       Notice of Other Sales. Without the prior 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 shares of Common
Stock (other than the Placement Shares offered pursuant to this Agreement) or
securities convertible into or exchangeable or exercisable for shares of Common
Stock, warrants or any rights to purchase or acquire shares of Common Stock
during the period beginning on the fifth Trading Day immediately prior to the
date on which any Placement Notice is delivered to Agent hereunder and ending on
the second Trading Day immediately following the final Settlement Date with
respect to Placement Shares sold pursuant to such Placement Notice (or, if the
Placement Notice has been terminated or suspended prior to the sale of all
Placement Shares covered by a Placement Notice, the date of such suspension or
termination); and will not directly or indirectly in any other “at the market
offering” or continuous equity transaction offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any shares of Common
Stock (other than the Placement Shares offered pursuant to this Agreement) or
securities convertible into or exchangeable or exercisable for shares of Common
Stock, warrants or any rights to purchase or acquire, shares of Common Stock
prior to the later of the termination of this Agreement and the sixtieth day
immediately following the final Settlement Date with respect to Placement Shares
sold pursuant to such Placement Notice; provided, however, that such
restrictions will not be required in connection with the Company’s issuance or
sale of (i) shares of Common Stock, options to purchase shares of Common Stock,
other securities under the Company’s existing equity incentive plans, or shares
of Common Stock issuable upon the exercise of options or vesting of other
securities, pursuant to any employee or director stock option or benefits plan,
stock ownership plan or dividend reinvestment plan (but not shares of Common
Stock subject to a waiver to exceed plan limits in its dividend reinvestment
plan) of the Company whether now in effect or hereafter implemented, (ii) shares
of Common Stock issuable upon conversion of securities or the exercise of
warrants, options or other rights in effect or outstanding, and disclosed in
filings by the Company available on EDGAR or otherwise in writing to the Agent
and (iii) shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock as consideration for mergers, acquisitions, other
business combinations or strategic alliances occurring after the date of this
Agreement which are not issued for capital raising purposes.

 

24 

 

 

(j)       Change of Circumstances. The Company will, at any time during a fiscal
quarter in which the Company intends to tender a Placement Notice or sell
Placement Shares, advise the Agent promptly after it shall have received notice
or obtained knowledge of any information or fact that would alter or affect in
any material respect any opinion, certificate, letter or other document provided
or required to be provided to the Agent pursuant to this Agreement.

 

(k)       Due Diligence Cooperation. During the term of this Agreement, the
Company will cooperate with any reasonable due diligence review conducted by the
Agent, its affiliates agents and counsel from time to time in connection with
the transactions contemplated hereby, including providing information and making
available documents and senior corporate officers, during regular business hours
and at the Company’s principal offices, as the Agent may reasonably request.

 

(l)       Required Filings Relating to Placement of Placement Shares. The
Company agrees that on or prior to such dates as the Securities Act shall
require, the Company will (i) file a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) under the Securities Act, which
prospectus supplement will set forth, within the relevant period, the number or
amount of Placement Shares sold through the Agent, the Net Proceeds to the
Company and the compensation payable by the Company to the Agent with respect to
such Placement Shares, and (ii) deliver such number of copies of each such
prospectus supplement to each exchange or market on which such sales were
effected as may be required by the rules or regulations of such exchange or
market; provided, that, unless a prospectus supplement containing such
information is required to be filed under the Securities Act, the requirement of
this Section 7(l) may be satisfied by Company’s inclusion in the Company’s Form
10-K or Form 10-Q, as applicable, of the number or amount of Placement Shares
sold through the Agent, the Net Proceeds to the Company and the compensation
payable by the Company to the Agent with respect to such Placement Shares during
the relevant period.

 

(m)       Representation Dates; Certificate. On or prior to the date on which
the Company first delivers a Placement Notice pursuant to this agreement (the
“First Placement Notice Date”) and each time the Company:

 

(i)       amends or supplements the Registration Statement or the Prospectus
relating to the Placement Shares (other than a prospectus supplement filed in
accordance with Section 7(l) of this Agreement) by means of a post-effective
amendment, sticker or supplement but not by means of incorporation of
document(s) by reference into the Registration Statement or the Prospectus
relating to the Placement Shares;

 

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

 

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

 

(iv)       files a current report on Form 8-K containing amended financial
information (other than an earnings release that is “furnished” pursuant to Item
2.02 or Item 7.01 of Form 8-K) under the Exchange Act (each date of filing of
one or more of the documents referred to in clauses (i) through (iv) shall be a
“Representation Date”),

 

25 

 

 

the Company shall furnish the Agent (but in the case of clause (iv) above only
if (1) a Placement Notice is pending or in effect and (2) the Agent requests
such certificate within three Business Days after the filing of such Form 8-K
with the Commission) with a certificate, in the form attached hereto as Exhibit
7(m) (modified, as necessary, to relate to the Registration Statement and the
Prospectus as then amended or supplemented), within two Trading Days of any
Representation Date. The requirement to provide a certificate under this Section
7(m) shall be waived for any Representation Date occurring at a time at which no
Placement Notice is pending or in effect, which waiver shall continue until the
earlier to occur of (1) the date the Company delivers a Placement Notice
hereunder (which for such calendar quarter shall be considered a Representation
Date) and (2) the next occurring Representation Date. Notwithstanding the
foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date on which the Company relied on the waiver
referred to in the previous sentence and did not provide the Agent with a
certificate under this Section 7(m), then before the Company delivers a
Placement Notice or the Agent sells any Placement Shares pursuant thereto, the
Company shall provide the Agent with a certificate, in the form attached hereto
as Exhibit 7(m), dated the date of such Placement Notice. Within two Trading
Days of each Representation Date, the Company shall have furnished to the Agent
such further information, certificates and documents as the Agent may reasonably
request.

 

(n)       Legal Opinions. On or prior to the First Placement Notice Date and on
any date which the Company is obligated to deliver a certificate pursuant to
Section 7(m) for which no waiver is applicable, the Company shall cause to be
furnished to the Agent the written opinion and negative assurance letter of each
of Dentons US LLP (“U.S. Company Counsel”) and Dentons Europe LLP (“German
Company Counsel”), each counsel to the Company, or such other counsel
satisfactory to the Agent, each in form and substance satisfactory to the Agent
and its counsel, dated the date that each such opinion and negative assurance
letter are required to be delivered, modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented;
provided, however, that the Company shall be required to furnish to the Agent no
more than one opinion from each of U.S. Company Counsel and German Company
Counsel in connection with each Annual Report on Form 10-K and Quarterly Report
on Form 10-Q filing; and provided further, that in lieu of such opinion and
negative assurance letter for subsequent Representation Dates, each of U.S.
Company Counsel and German Company Counsel may furnish the Agent with a letter
to the effect that the Agent may rely on a prior opinion or negative assurance
letter delivered by such counsel under this Section 7(n) to the same extent as
if it were dated the date of such letter (except that statements in such prior
opinion or negative assurance letter shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented at such
Representation Date).

 

(o)       Intellectual Property Opinion. On or prior to the First Placement
Notice Date and on any date which the Company is obligated to deliver a
certificate pursuant to Section 7(m) for which no waiver is applicable, the
Company shall cause to be furnished to the Agent the written opinion of Boehmert
& Boehmert, counsel for the Company with respect to intellectual property
matters, or such other intellectual property counsel reasonably satisfactory to
the Agent (“Intellectual Property Counsel”), in form and substance reasonably
satisfactory to the Agent and its counsel, dated the date that the opinion
letter is required to be delivered, modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented;
provided, however, that in lieu of such written opinion for subsequent
Representation Dates, Intellectual Property Counsel may furnish the Agent with a
letter to the effect that the Agent may rely on a prior opinion letter delivered
by such counsel under this Section 7(o) to the same extent as if it were dated
the date of such opinion letter (except that statements in such prior opinion
letter shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date).

 

26 

 

 

(p)       Comfort Letter. On or prior to the First Placement Notice Date and on
any date which the Company is obligated to deliver a certificate pursuant to
Section 7(m) for which no waiver is applicable, the Company shall cause Baker
Tilly to furnish the Agent a letter (the “Comfort Letter”), dated the date the
Comfort Letter is delivered, which shall meet the requirements set forth in this
Section 7(p); provided, that if requested by the Agent, the Company shall cause
a Comfort Letter to be furnished to the Agent within 10 Trading Days of the
occurrence of any material transaction or event that necessitates the filing of
additional, pro forma, amended or revised financial statements (including any
restatement of previously issued financial statements). Each Comfort Letter from
Baker Tilly shall be in form and substance reasonably satisfactory to the Agent
and each Comfort Letter from Baker Tilly shall (i) confirm that they are an
independent registered public accounting firm within the meaning of the
Securities Act and the PCAOB, (ii) state, as of such date, the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants’ “comfort letters” to underwriters in
connection with registered public offerings (the first such letter, the “Initial
Comfort Letter”) and (iii) update the Initial Comfort Letter with any
information that would have been included in the Initial Comfort Letter had it
been given on such date and modified as necessary to relate to the Registration
Statement and the Prospectus, as amended and supplemented to the date of such
letter. In addition, on or prior to the First Placement Notice Date, the Company
shall cause PwC to furnish the Agent a Comfort Letter, dated the date the
Comfort Letter is delivered, which shall meet the requirements set forth in this
Section 7(p). The Company shall also be required to furnish a Comfort Letter
from PwC in connection with the filing of each of the Company’s annual reports
on Form 10-K if such reports include financial information audited by PwC. Each
Comfort Letter from PwC shall be in form and substance reasonably satisfactory
to the Agent and each Comfort Letter from PwC shall (A) confirm that they are an
independent registered public accounting firm within the meaning of the
Securities Act and the PCAOB and (B) state, as of such date, the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants’ “comfort letters” to underwriters in
connection with registered public offerings.

 

(q)       Market Activities. The Company will not, directly or indirectly, and
will cause its officers, directors and Subsidiaries not to (i) take any action
designed to cause or result in, or that constitutes or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of shares of Common
Stock or (ii) sell, bid for, or purchase shares of Common Stock in violation of
Regulation M, or pay anyone any compensation for soliciting purchases of the
Placement Shares other than the Agent; provided, however, that the Company may
bid for and purchase shares of Common Stock in accordance with Rule 10b-18 under
the Exchange Act.

 

(r)       Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor any of its Subsidiaries
will be or become, at any time prior to the termination of this Agreement, an
“investment company,” as such term is defined in the Investment Company Act.

 

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

 

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

 

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

 

27 

 

 

(v)       Sarbanes-Oxley Act. The Company will maintain and keep accurate books
and records reflecting its assets and maintain internal accounting controls in a
manner designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP and including those policies and procedures
that (i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of
the Company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of the Company’s financial statements in
accordance with GAAP, (iii) that receipts and expenditures of the Company are
being made only in accordance with management’s and the Company’s directors’
authorization, and (iv) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on its financial statements.
The Company will maintain such controls and other procedures, including, to the
extent applicable to the Company, those required by Sections 302 and 906 of the
Sarbanes-Oxley Act, and the applicable regulations thereunder that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms, including, without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive
officer and principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure and to ensure that material information relating to the Company is
made known to it by others within the Company, particularly during the period in
which such periodic reports are being prepared.

 

(w)       Emerging Growth Company. The Company will promptly notify the Agent if
the company ceases to be an Emerging Growth Company at any time prior to the
completion of the Agent’s distribution of the Placement Shares pursuant to this
Agreement.

 

(x)       Renewal of Registration Statement. If, immediately prior to the third
anniversary of the initial effective date of the Registration Statement (the
“Renewal Date”), any of the Placement Shares remain unsold and this Agreement
has not been terminated, the Company will, prior to the Renewal Date, file a new
shelf registration statement or, if applicable, an automatic shelf registration
statement relating to the Common Stock that may be offered and sold pursuant to
this Agreement (which shall include a prospectus reflecting the number or amount
of Placement Shares that may be offered and sold pursuant to this Agreement), in
a form reasonably satisfactory to the Agent and its counsel, and, if such
registration statement is not an automatic shelf registration statement, will
use its best efforts to cause such registration statement to be declared
effective within 180 days after the Renewal Date. The Company will take all
other reasonable actions necessary or appropriate to permit the public offer and
sale of the Placement Shares to continue as contemplated in the expired
registration statement and this Agreement. From and after the effective date
thereof, references herein to the “Registration Statement” shall include such
new shelf registration statement or such new automatic shelf registration
statement, as the case may be.

 

28 

 

 

(y)       Form S-3. If, from and after the date of this Agreement, the Company
is no longer eligible to use Form S-3 pursuant to General Instruction I.B.1. at
the time it files with the Commission an annual report on Form 10-K or any
post-effective amendment to the Registration Statement, then it shall promptly
notify the Agent and, within two Business Days prior to the date of filing of
such annual report on Form 10-K or amendment to the Registration Statement, the
Company shall, if still eligible to use Form S-3 pursuant to General Instruction
I.B.6., file a new prospectus supplement with the Commission reflecting the
number of shares of Common Stock available to be offered and sold by the Company
under this Agreement pursuant to General Instruction I.B.6. of Form S-3;
provided, however, that the Company may delay the filing of any such prospectus
supplement for up to 30 days if, in the reasonable judgment of the Company, it
is in the best interest of the Company to do so, provided that no Placement
Notice is in effect or pending during such time. Until such time as the Company
shall have corrected such misstatement or omission or effected such compliance,
the Company shall not notify the Agent to resume the offering of Placement
Shares.

 

(z)       Tax Indemnity. The Company will indemnify and hold harmless the Agent
against any documentary, stamp or similar issue tax, including any interest and
penalties, on the issue and sale of the Placement Shares.

 

(aa) Transfer Agent. The Company has engaged and will maintain, at its sole
expense, a transfer agent and registrar for the Common Stock.

 

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

 

(a)       Registration Statement Effective. The Registration Statement shall be
effective and shall be available for all offers and sales of Placement Shares
(i) that have been issued pursuant to all prior Placement Notices and (ii) that
will be issued pursuant to any Placement Notice.

 

(b)       Prospectus Supplement. The Company shall have filed with the
Commission the Prospectus Supplement pursuant to Rule 424(b) under the
Securities Act not later than the Commission’s close of business on the second
Business Day following the date of this Agreement.

 

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

 

29 

 

 

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

 

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

 

(f)       Company Counsel Legal Opinions. The Agent shall have received the
opinions and negative assurance letters, as applicable, of U.S. Company Counsel,
German Company Counsel and Intellectual Property Counsel required to be
delivered pursuant to Section 7(n) and Section 7(o), as applicable, on or before
the date on which such delivery of such opinions and negative assurance letters
are required pursuant to Section 7(n) and Section 7(o), as applicable.

 

(g)       Agent’s Counsel Legal Opinion. The Agent shall have received from
Covington & Burling LLP, counsel for the Agent, such opinion or opinions, on or
before the date on which the delivery of the legal opinions of U.S. Company
Counsel and German Company Counsel is required pursuant to Section 7(n), with
respect to such matters as the Agent may reasonably require, and the Company
shall have furnished to such counsel such documents as they may request to
enable them to pass upon such matters.

 

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

 

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

 

(j)       Secretary’s Certificate. On or prior to the First Placement Notice
Date, the Agent shall have received a certificate, signed on behalf of the
Company by the Secretary of the Company and attested to by an executive officer
of the Company, dated as of such date and in form and substance satisfactory to
the Agent and its counsel, certifying as to (i) the amended and restated
certificate of incorporation of the Company, (ii) the amended and restated
bylaws of the Company, (iii) the resolutions of the board of directors of the
Company or duly authorized committee thereof authorizing the execution, delivery
and performance of this Agreement and the issuance and sale of the Placement
Shares and (iv) the incumbency of the officers of the Company duly authorized to
execute this Agreement and the other documents contemplated by this Agreement
(including each of the officers set forth on Schedule 2).

 

30 

 

 

(k)       No Suspension. The Common Stock shall be duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on Nasdaq.
Trading in the Common Stock shall not have been suspended on, and the Common
Stock shall not have been delisted from, Nasdaq.

 

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

 

(m)       Securities Act Filings Made. All filings with the Commission required
by Rule 424(b) or Rule 433 under the Securities Act to have been filed prior to
the issuance of any Placement Notice hereunder shall have been made within the
applicable time period prescribed for such filing by Rule 424(b) (without
reliance on Rule 424(b)(8) of the Securities Act) or Rule 433, as applicable.

 

(n)       Approval for Listing. Either (i) the Placement Shares shall have been
approved for listing on Nasdaq, subject only to notice of issuance, or (ii) the
Company shall have filed an application for listing of the Placement Shares on
Nasdaq at, or prior to, the First Placement Notice Date and Nasdaq shall have
reviewed such application and not provided any objections thereto.

 

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

 

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

 

9.       Indemnification and Contribution.

 

(a)       Company Indemnification. The Company agrees to indemnify and hold
harmless the Agent, its affiliates and their respective partners, members,
directors, officers, employees and agents, and each person, if any, who (i)
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act or (ii) is controlled by or is under common
control with the Agent, in each case from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses) reasonably incurred in connection with, and any and
all amounts paid in settlement (in accordance with this Section 9) of, any
action, suit, investigation or proceeding between any of the indemnified parties
and any indemnifying parties or between any indemnified party and any third
party (including any governmental or self-regulatory authority, or otherwise, or
any claim asserted or threatened), as and when incurred, to which the Agent, or
any such other person may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based, directly or indirectly, on (x) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (or any amendment or supplement to the Registration
Statement or the Prospectus) or in any free writing prospectus or in any
application or other document executed by or on behalf of the Company or based
on written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Common Stock under the securities laws
thereof or filed with the Commission, (y) the omission or alleged omission to
state in any such document a material fact required to be stated therein or
necessary to make the statements therein (solely with respect to the Prospectus,
in light of the circumstances under which they were made) not misleading or (z)
any breach by any of the indemnifying parties of any of their respective
representations, warranties or agreements contained in this Agreement; provided,
however, that this indemnity agreement shall not apply to the extent that such
loss, claim, liability, expense or damage arises from the sale of the Placement
Shares pursuant to this Agreement and is caused, directly or indirectly, by an
untrue statement or omission, or alleged untrue statement or omission, made in
reliance upon and in conformity with the Agent’s Information. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.

 

31 

 

 

(b)       Agent Indemnification. The Agent agrees to indemnify and hold harmless
the Company and its directors and each officer of the Company that signed the
Registration Statement, and each person, if any, who (i) controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act or (ii) is controlled by or is under common control with the
Company against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 9(a), as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendments thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
the Agent’s Information.

 

(c)       Procedure. Any party that proposes to assert the right to be
indemnified under this Section 9 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 9, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 9 and (ii) any
liability that it may have to any indemnified party under the foregoing
provision of this Section 9 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any other legal expenses except as provided below and except for the reasonable
costs of investigation subsequently incurred by the indemnified party in
connection with the defense. The indemnified party will have the right to employ
its own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing by
the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm (plus local counsel) admitted to practice in such jurisdiction at
any one time for all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly after the indemnifying party receives a written invoice relating to
such fees, disbursements and other charges in reasonable detail. An indemnifying
party will not, in any event, be liable for any settlement of any action or
claim effected without its written consent. No indemnifying party shall, without
the prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated by this Section 9 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent (1) includes an unconditional release of each indemnified
party, in form and substance reasonably satisfactory to such indemnified party,
from all liability arising out of such claim, action or proceeding and (2) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.

 

32 

 

 

(d)       Settlement Without Consent if Failure to Reimburse. If an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel for which it is entitled to be
reimbursed under this Section 9, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 9(a) effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.

 

(e)       Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable or insufficient from the Company or the
Agent, the Company and the Agent will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit, investigation or proceeding or any claim
asserted, but after deducting any contribution received by the Company from
persons other than the Agent, such as persons who control the Company within the
meaning of the Securities Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) to which the Company and the Agent may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and the Agent on the other hand. The relative
benefits received by the Company on the one hand and the Agent on the other hand
shall be deemed to be in the same proportion as the total Net Proceeds from the
sale of the Placement Shares (before deducting expenses) received by the Company
bear to the total compensation received by the Agent from the sale of Placement
Shares on behalf of the Company. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Agent, on the other
hand, with respect to the statements or omission that resulted in such loss,
claim, liability, expense or damage, or action, suit, investigation or
proceeding in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Agent, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Agent agree that it would not be just and equitable if contributions
pursuant to this Section 9(e) were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action,
suit, investigation or proceeding in respect thereof, referred to above in this
Section 9(e) shall be deemed to include, for the purpose of this Section 9(e),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, suit, investigation,
proceeding or claim to the extent consistent with this Section 9.
Notwithstanding the foregoing provisions of this Section 9(e), the Agent shall
not be required to contribute any amount in excess of the commissions received
by it under this Agreement and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9(e), any person who
controls a party to this Agreement within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, any affiliates of the Agent,
any partners, members, directors, officers, employees and agents of the Agent
and each person that is controlled by or under common control with the Agent
will have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 9(e), will notify any such party or parties from
whom contribution may be sought, but the omission to so notify will not relieve
that party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 9(e) except to the extent that
the failure to so notify such other party materially prejudiced the substantive
rights or defenses of the party from whom contribution is sought. Except for a
settlement entered into pursuant to the last sentence of Section 9(c) hereof or
pursuant to Section 9(d) hereof, no party will be liable for contribution with
respect to any action or claim settled without its written consent if such
consent is required pursuant to Section 9(c) hereof.

 

33 

 

 

10.       Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 9 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of the Agent, any
controlling persons, or the Company (or any of their respective officers,
directors, employees or controlling persons), (ii) delivery and acceptance of
the Placement Shares and payment therefor or (iii) any termination of this
Agreement.

 

11.       Termination.

 

(a)       The Agent shall have the right, by giving notice as hereinafter
specified, at any time to terminate this Agreement if (i) any Material Adverse
Effect, or any development that could reasonably be expected to result in a
Material Adverse Effect, has occurred that, in the judgment of the Agent, may
materially impair the ability of the Agent to sell the Placement Shares
hereunder, (ii) the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed hereunder; provided, however, in the
case of any failure of the Company to deliver (or cause another person to
deliver) any certification, opinion or letter required under Section 7(m),
Section 7(n), Section 7(o) or Section 7(p), the Agent’s right to terminate shall
not arise unless such failure to deliver (or cause to be delivered) continues
for more than 15 calendar days from the date such delivery was required, (iii)
any other condition of the Agent’s obligations hereunder is not fulfilled, (iv)
any suspension or limitation of trading in the Placement Shares or in securities
generally on Nasdaq shall have occurred, (v) a general banking moratorium shall
have been declared by any of United States federal or New York authorities, or
(vi) 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 that, in the judgment
of the Agent, may materially impair the ability of the Agent to sell the
Placement Shares hereunder or to enforce contracts for the sale of securities.
Any such termination shall be without liability of any party to any other party
except that the provisions of Section 7(g), Section 9, Section 10, Section 16
and Section 17 hereof shall remain in full force and effect notwithstanding such
termination. If the Agent elects to terminate this Agreement as provided in this
Section 11(a), the Agent shall provide the required notice as specified in
Section 12.

 

34 

 

 

(b)       The Company shall have the right, by giving 10 days’ prior notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of Section
7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such termination.

 

(c)       The Agent shall have the right, by giving 10 days’ prior notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of
Section 7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17
hereof shall remain in full force and effect notwithstanding such termination.

 

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

 

(e)       This Agreement shall remain in full force and effect unless terminated
pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however, that any such termination by mutual
agreement shall in all cases be deemed to provide that Section 7(g), Section 9,
Section 10, Section 11(f), Section 16 and Section 17 shall remain in full force
and effect.

 

(f)       Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by the Agent or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement. Upon termination of this Agreement, the Company shall not be
required to pay to the Agent any discount or commission with respect to any
Placement Shares not otherwise sold by the Agent under this Agreement; provided,
however, that the Company shall remain obligated to reimburse the Agent’s
expenses pursuant to Section 7(g).

 

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

 

SVB Leerink LLC

1301 Avenue of the Americas, 12th Floor

New York, New York 10019

Attention: Gabriel Cavazos

E-mail: gabriel.cavazos@leerink.com

 

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

 

SVB Leerink LLC

1301 Avenue of the Americas, 12th Floor

New York, New York 10019

Attention: Stuart R. Nayman, Esq.

E-mail: stuart.nayman@svbleerink.com

 

35 

 

 

and

 

Covington & Burling LLP

620 8th Avenue

New York, New York 10018

Attention: Brian K. Rosenzweig

E-mail: brosenzweig@cov.com

 

and if to the Company, shall be delivered to:

 

Immunic, Inc.

11440 West Bernardo Court, Suite 300

San Diego, California 92127

Attention: Dr. Daniel Vitt

E-mail: daniel.vitt@immunic.de

 

with copies (which shall not constitute notice) to:

 

Dentons US LLP

1221 Avenue of the Americas

New York, New York 10020

Attention: Ilan Katz

E-mail: ilan.katz@dentons.com

 

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

 

An electronic communication (“Electronic Notice”) shall be deemed written notice
for purposes of this Section 12 if sent to the electronic mail address specified
by the receiving party in Section 12. Electronic Notice shall be deemed received
at the time the party sending Electronic Notice receives actual acknowledgment
of receipt from the person whom the notice is sent, other than via auto-reply.
Any party receiving Electronic Notice may request and shall be entitled to
receive the notice on paper, in a nonelectronic form (“Nonelectronic Notice”),
which shall be sent to the requesting party within 10 days of receipt of the
written request for Nonelectronic Notice.

 

13.       Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and the Agent and their respective successors
and the affiliates, controlling persons, officers, directors and other persons
referred to in Section 9 hereof. References to any of the parties contained in
this Agreement shall be deemed to include the successors and permitted assigns
of each such party. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto, the persons referred to
in the preceding sentence and their respective successors and permitted assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party; provided, however, that the Agent may assign its
rights and obligations hereunder to an affiliate of the Agent without obtaining
the Company’s consent, so long as such affiliate is a registered broker-dealer.

 

36 

 

 

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

 

15.       Entire Agreement; Amendment; Severability; Waiver. This Agreement
(including all schedules (as amended pursuant to this Agreement) and exhibits
attached hereto and Placement Notices issued pursuant hereto) constitutes the
entire agreement and supersedes all other prior and contemporaneous agreements
and undertakings, both written and oral, among the parties hereto with regard to
the subject matter hereof. Neither this Agreement nor any term hereof may be
amended except pursuant to a written instrument executed by the Company and the
Agent; provided, however, that Schedule 2 of this Agreement may be amended by
either party from time to time by sending a notice containing a revised Schedule
2 to the other party in the manner provided in Section 12 and, upon such
amendment, all references herein to Schedule 2 shall automatically be deemed to
refer to such amended Schedule 2. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement. No implied waiver by a party shall arise
in the absence of a waiver in writing signed by such party. No failure or delay
in exercising any right, power, or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power, or privilege
hereunder.

 

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

 

17.       Consent to Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection with any of the transactions contemplated hereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum,
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy (certified
or registered mail, return receipt requested) to such party at the address in
effect for notices under Section 12 of this Agreement and agrees that such
service shall constitute good and sufficient notice of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

 

37 

 

 

18.       Construction.

 

(a)       The section and exhibit headings herein are for convenience only and
shall not affect the construction hereof.

 

(b)       Words defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.

 

(c)       The words “hereof,” “hereto,” “herein” and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

 

(d)       Wherever the word “include,” “includes” or “including” is used in this
Agreement, it shall be deemed to be followed by the words “without limitation.”

 

(e)       References herein to any gender shall include each other gender.

 

(f)       References herein to any law, statute, ordinance, code, regulation,
rule or other requirement of any governmental authority shall be deemed to refer
to such law, statute, ordinance, code, regulation, rule or other requirement of
any governmental authority as amended, reenacted, supplemented or superseded in
whole or in part and in effect from time to time and also to all rules and
regulations promulgated thereunder.

 

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

 

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

 

(a)       the Agent has been retained to act as sales agent in connection with
the sale of the Placement Shares, the Agent has acted at arms’ length and no
fiduciary or advisory relationship between the Company or any of its respective
affiliates, stockholders (or other equity holders), creditors or employees or
any other party, on the one hand, and the Agent, on the other hand, has been or
will be created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Agent has advised or is advising the
Company on other matters and the Agent has no duties or obligations to the
Company with respect to the transactions contemplated by this Agreement except
the obligations expressly set forth herein;

 

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

 

38 

 

 

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

 

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

 

(e)       the Company waives, to the fullest extent permitted by law, any claims
it may have against the Agent or its affiliates for breach of fiduciary duty or
alleged breach of fiduciary duty in connection with the transactions
contemplated by this Agreement and agrees that the Agent and its affiliates
shall have no liability (whether direct or indirect) to the Company in respect
of such a fiduciary claim or to any person asserting a fiduciary duty claim on
behalf of or in right of the Company, including stockholders (or other equity
holders), creditors or employees of the Company.

 

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

 

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

 

23.       Agent’s Information. As used in this Agreement, “Agent’s Information”
means solely the following information in the Registration Statement and the
Prospectus: the tenth paragraph under the heading “Plan of Distribution” in the
Prospectus Supplement.

 

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

 

All references in this Agreement to “supplements” to the Prospectus shall
include any supplements, “wrappers” or similar materials prepared in connection
with any offering, sale or private placement of any Placement Shares by the
Agent outside of the United States.

 

[Remainder of Page Intentionally Blank]

 

39 

 

 

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

 

  Very truly yours,                   IMMUNIC, INC.           By: /s/ Dr. Daniel
Vitt     Name: Dr. Daniel Vitt     Title:    Chief Executive Officer            
      ACCEPTED as of the date   first-above written:           SVB LEERINK LLC  
        By:  /s/ Gabriel P. Cavazos     Name:   Gabriel P. Cavazos     Title:
Managing Director

 

 

 

 

SCHEDULE 1

 

FORM OF PLACEMENT NOTICE

 

From: [                                     ]   [TITLE]   Immunic, Inc. Cc:
[                                     ] To: SVB Leerink LLC Subject: SVB
Leerink—At the Market Offering—Placement Notice

 

Ladies and Gentlemen:

 

Pursuant to the terms and subject to the conditions contained in the Sales
Agreement, dated July 17, 2019 (the “Agreement”), by and between Immunic Inc., a
Delaware corporation (the “Company”), and SVB Leerink LLC (“SVB Leerink”), I
hereby request on behalf of the Company that SVB Leerink sell up to [ ] shares
of common stock, $0.0001 par value per share, of the Company (the “Shares”), at
a minimum market price of $      per share[; provided that no more than [ ]
Shares shall be sold in any one Trading Day (as such term is defined in Section
3 of the Agreement)]. Sales should begin [on the date of this Placement Notice]
and end on [DATE] [until all Shares that are the subject of this Placement
Notice are sold].

 

 

 

 

SCHEDULE 2

 

The Company

 

Daniel Vitt

Manfred Groeppel

 

SVB Leerink

 

Gabriel Cavazos

Brian Swanson

Oren Karsen

Rahul Chaudhary

Patrick Morley

Sam Spector

Stuart Nayman

Eric Olson

 

 

 

 

SCHEDULE 3

 

Compensation

 

The Company shall pay SVB Leerink compensation in cash equal to 3.0% of the
gross proceeds from the sales of Placement Shares pursuant to the terms of the
Sales Agreement of which this Schedule 3 forms a part.

 

 

 

 

Exhibit 7(m)

 

OFFICERS’ CERTIFICATE

 

Each of Daniel Vitt, the duly qualified and elected Chief Executive Officer of
Immunic, Inc., a Delaware corporation (the “Company”), and Sanjay S. Patel, the
duly qualified and elected Chief Financial Officer of the Company, does hereby
certify in his or her respective capacity and on behalf of the Company, pursuant
to Section 7(m) of the Sales Agreement, dated July 17, 2019 (the “Sales
Agreement”), by and between the Company and SVB Leerink LLC, that, after due
inquiry, to the best of the knowledge of the undersigned:

 

(i)       The representations and warranties of the Company in Section 6 of the
Sales Agreement (A) to the extent such representations and warranties are
subject to qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, are true and correct on and as of the
date hereof with the same force and effect as if expressly made on and as of the
date hereof, and (B) to the extent such representations and warranties are not
subject to any qualifications or exceptions relating to materiality or Material
Adverse Effect, are true and correct in all material respects as of the date
hereof as if made on and as of the date hereof with the same force and effect as
if expressly made on and as of the date hereof.

 

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

 

(iii)       As of the date hereof, (A) the Registration Statement complies in
all material respects with the requirements of the Securities Act and does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, (B) the Prospectus complies in all material respects
with the requirements of the Securities Act does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (C) no event
has occurred as a result of which it is necessary to amend or supplement the
Registration Statement or the Prospectus in order to make the statements therein
not untrue or misleading or for clauses (A) and (B) above, to be true and
correct.

 

(iv)       There has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in the
condition (financial or otherwise), earnings, results of operations, business,
properties, operations, assets, liabilities or prospects of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, since the date as of which information is given in
the Prospectus, as amended or supplemented to the date hereof.

 

(v)       The Company does not possess any material non-public information.

 

(vi)       The maximum amount of Placement Shares that may be sold pursuant to
the Sales Agreement has been duly authorized by the Company’s board of directors
or a duly authorized committee thereof pursuant to a resolution or unanimous
written consent in accordance with the Company’s amended and restated articles
of incorporation, amended and restated bylaws and applicable law.

 

 

 

 

Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Sales Agreement.

 

IN WITNESS WHEREOF, each of the undersigned, in such individual’s respective
capacity as Chief Executive Officer or Chief Financial Officer of the Company,
has executed this Officers’ Certificate on behalf of the Company.

 

  By:        Name: Daniel Vitt     Title: Chief Executive Officer     Date:    
          By:       Name: Sanjay S. Patel     Title: Chief Financial Officer    
Date:

 

[Company Signature Page to Officers’ Certificate]