Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of August 10, 2020 by and among TFF Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and the Investors identified on the signature pages
attached hereto (each an “Investor” and collectively the “Investors”).

 

RECITALS

 

A. The Company and the Investors are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Section 4(a)(2) of the 1933 Act (as defined below), and
Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the SEC (as
defined below) under the 1933 Act;

 

B. The Investors wish to purchase from the Company, and the Company wishes to
sell and issue to the Investors, upon the terms and subject to the conditions
stated in this Agreement, shares (the “Shares”) of the Company’s common stock,
par value $0.001 per share (“Common Stock”).

 

C. Contemporaneously with the sale of the Shares, the parties hereto will
execute and deliver a Registration Rights Agreement, in the form attached hereto
as Exhibit A (the “Registration Rights Agreement”), pursuant to which the
Company will agree to provide certain registration rights in respect of the
Shares under the 1933 Act and applicable state securities laws.

 

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1. Definitions. For the purposes of this Agreement, the following terms shall
have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with such Person.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Investors’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Shares, in each case,
have been satisfied or waived, but in no event later than the second (2nd)
Trading Day following the date of this Agreement.

 

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“Common Stock” has the meaning set forth in the recitals to this Agreement.

 

“Company Counsel” means Greenberg Traurig, LLP, with offices located in Irvine,
California.

 

“Company Covered Person” means, with respect to the Company as an “issuer” for
purposes of Rule 506 promulgated under the 1933 Act, any Person listed in the
first paragraph of Rule 506(d)(1).

 

“Intellectual Property” has the meaning set forth in Section 5.14.

 

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company.

 

“Control” (including the terms “controlling,” “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a
Trading Day or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time) on the
Trading Day immediately following the date hereof, unless an earlier time is
agreed to in writing by the Company and the Placement Agent, and (ii) if this
Agreement is signed between midnight (New York City time) and 9:00 a.m. (New
York City time) on any Trading Day, no later than 9:01 a.m. (New York City time)
on the date hereof, unless an earlier time is agreed to in writing by the
Company and the Placement Agent.

 

“Disqualification Event” has the meaning set forth in Section 5.33.

 

“EDGAR system” has the meaning set forth in Section 5.9.

 

“Effective Date” has the meaning set forth in Section 7.2(b).

 

“Environmental Laws” has the meaning set forth in Section 5.18.

 

“GAAP” has the meaning set forth in Section 5.17.

 

“Governmental Entity” means any national, federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board,
bureau, agency, regulatory authority or instrumentality thereof, or any court,
judicial, administrative or arbitral body or public or private tribunal.

 

“Losses” has the meaning set forth in Section 8.2.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, financial condition or business of the
Company and its subsidiaries taken as a whole, (ii) the legality or
enforceability of any of the Transaction Documents or (iii) the ability of the
Company to perform its obligations under the Transaction Documents on a timely
basis.

 

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“Material Contract” means any contract, instrument or other agreement to which
the Company is a party or by which it is bound that has been filed or was
required to have been filed as an exhibit to the SEC Filings pursuant to Item
601(b)(10) of Regulation S-K.

 

“Nasdaq” means the Nasdaq Capital Market.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Placement Agent” means Jefferies LLC.

 

“Press Release” has the meaning set forth in Section 7.7.

 

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the Nasdaq Capital Market.

 

“Registration Rights Agreement” has the meaning set forth in the recitals to
this Agreement.

 

“Regulation D” has the meaning set forth in the recitals to this Agreement.

 

“Required Investors” has the meaning set forth in the Registration Rights
Agreement.

 

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

 

“SEC Filings” has the meaning set forth in Section 5.8.

 

“Shares” has the meaning set forth in the recitals to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the 1934 Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

“Subscription Amount” has the meaning set forth in Section 3.1.

 

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
the Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by OTC Markets Group Inc. (or any similar organization or agency succeeding to
its functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) or (iii) hereof, then
Trading Day shall mean a Business Day.

 

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“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market or the OTC Bulletin Board on which the Common Stock is listed or
quoted for trading on the date in question.

 

“Transfer” means (i) to sell, offer, transfer, assign, mortgage, hypothecate,
gift, pledge or dispose of, or (ii) to enter into or agree to enter into any
contract, option or other arrangement or understanding with respect to any sale,
transfer, pledge, mortgage, hypothecation, gift, assignment or similar
disposition.

 

“Transfer Agent” has the meaning set forth in Section 7.2(a).

 

“Transaction Documents” means this Agreement and the Registration Rights
Agreement.

 

“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

2. Purchase and Sale of the Shares. On the Closing Date, upon the terms and
subject to the conditions set forth herein, the Company will issue and sell, and
each Investor will purchase, severally and not jointly, the number of Shares set
forth opposite the heading “Shares” on such Investor’s signature page attached
hereto. The purchase price per Share shall be $8.50.

 

3. Closing.

 

3.1 General. Upon the satisfaction of the conditions set forth in Section 4, the
completion of the purchase and sale of the Shares (the “Closing”) shall occur
remotely via exchange of documents and signatures on the Closing Date. On the
Closing Date, each Investor shall deliver or cause to be delivered to the
Company, via wire transfer of immediately available funds pursuant to the wire
instructions delivered to such Investor by the Company on or prior to the
Closing Date, an amount equal to the purchase price (“Subscription Amount”) to
be paid by the Investor for the Shares as set forth opposite the heading
“Subscription Amount” on such Investor’s signature page attached hereto.

 

3.2  Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to each Investor the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) a legal opinion of Company Counsel, in form and substance reasonably
acceptable to the Investors;

 

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(iii) a copy of the irrevocable instructions to the Transfer Agent instructing
the Transfer Agent to deliver, on an expedited basis, a certificate (or, if
requested by Investor, a book-entry confirmation) evidencing a number of Shares
as set forth opposite the heading “Shares” on such Investor’s signature page
attached hereto, registered in the name of such Investor;

 

(iv) the Company shall have provided each Investor with the Company’s wire
instructions, on Company letterhead and executed by the Chief Executive Officer
or Chief Financial Officer; and

 

(v) the Registration Rights Agreement duly executed by the Company.

 

(b) On or prior to the Closing Date, each Investor shall deliver or cause to be
delivered to the Company, the following:

 

(i) this Agreement duly executed by such Investor;

 

(ii) such Investor’s Subscription Amount by wire transfer to the account
specified in writing by the Company; and

 

(iii) the Registration Rights Agreement duly executed by such Investor.

 

4. Conditions to Closing.

 

4.1 Conditions to the Investors’ Obligations. The obligation of each Investor to
purchase Shares at the Closing is subject to the fulfillment to such Investor’s
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by such Investor (as to itself only):

 

(a) The representations and warranties made by the Company in Section 5 hereof,
as qualified by the Disclosure Schedules and the SEC Filings, shall be true and
correct in all material respects, except for those representation and warranties
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects, as of the date hereof and as of the Closing Date, as
though made on and as of such date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date. The Company shall have performed in all material respects
all obligations and covenants herein required to be performed by it on or prior
to the Closing Date.

 

(b) The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary for the consummation of the purchase and
sale of the Shares and the consummation of the other transactions contemplated
by the Transaction Documents, all of which shall be in full force and effect.

 

(c) The Company shall have delivered the items set forth in Section 3.2(a).

 

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(d) The Company shall have filed with Nasdaq a Notification Form: Listing of
Additional Shares for the listing of the Shares.

 

(e) No judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

 

(f) There shall have been no Material Adverse Effect with respect to the Company
since the date hereof.

 

(g) No stop order or suspension of trading shall have been imposed by Nasdaq,
the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock.

 

4.2 Conditions to Obligations of the Company. The Company’s obligation to sell
and issue Shares at the Closing is subject to the fulfillment to the
satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:

 

(a) The representations and warranties made by the Investors in Section 6 hereof
shall be true and correct in all material respects as of the date hereof, and
shall be true and correct as of the Closing Date with the same force and effect
as if they had been made on and as of such date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Investors shall have performed in all
material respects all obligations and covenants herein required to be performed
by them on or prior to the Closing Date.

 

(b) The Investors shall have executed and delivered this Agreement and the
Registration Rights Agreement.

 

(c) The Investors shall have paid in full its Subscription Amount to the
Company.

 

5. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investors and the Placement Agent that, except (a) as
described in the Company’s SEC Filings and (b) as set forth on the disclosure
schedules delivered herewith (which are arranged in numbered and lettered
sections corresponding to the numbered and lettered sections contained in this
Section 5) (the “Disclosure Schedules”), each of which qualify these
representations and warranties in their entirety:

 

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5.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own or lease its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and would not
reasonably be expected to have a Material Adverse Effect. The Company’s
subsidiaries are set forth on Exhibit 21.1 to its most recent Annual Report on
Form 10-K, and the Company owns 100% of the outstanding equity of all such
subsidiaries. The Company’s subsidiaries are duly organized, validly existing
and in good standing under the laws of their jurisdiction of incorporation and
have all requisite power and authority to carry on their business as now
conducted and to own or lease their properties. The Company’s subsidiaries are
duly qualified to do business as foreign corporations and are in good standing
in each jurisdiction in which the conduct of their business or their ownership
or leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and would not reasonably be expected to have a
Material Adverse Effect.

 

5.2 Authorization. The Company has the requisite corporate power and authority
and has taken all requisite corporate action necessary for, and no further
action on the part of the Company, its officers, directors and stockholders is
necessary for, (i) the authorization, execution and delivery of the Transaction
Documents, (ii) the authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Shares. The Transaction Documents
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights generally and
to general equitable principles.

 

5.3 Capitalization. The capitalization of the Company as of the date hereof is
as set forth on Schedule 5.3. All of the issued and outstanding shares of the
Company’s capital stock have been duly authorized and validly issued and are
fully paid and nonassessable; none of such shares were issued in violation of
any preemptive rights; and such shares were issued in compliance in all material
respects with applicable state and federal securities law and any rights of
third parties. No Person is entitled to preemptive or similar statutory or
contractual rights with respect to the issuance by the Company of any securities
of the Company, including, without limitation, the Shares. Except as set forth
in Schedule 5.3, there are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements of any character under
which the Company is or may be obligated to issue any equity securities of any
kind, except as contemplated by this Agreement. There are no voting agreements,
buy-sell agreements, option or right of first purchase agreements or other
similar agreements among the Company and any of the securityholders of the
Company relating to the securities of the Company held by them. Except as
provided in the Registration Rights Agreement, no Person has the right to
require the Company to register any securities of the Company under the 1933
Act, whether on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of any other
Person.

 

The issuance and sale of the Shares hereunder will not obligate the Company to
issue shares of Common Stock or other securities to any other Person (other than
the Investors) and will not result in the adjustment of the exercise,
conversion, exchange or reset price of any outstanding security.

 

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The Company does not have outstanding stockholder purchase rights or “poison
pill” or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.

 

5.4 Valid Issuance. The Shares have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, and shall be free and clear of all encumbrances and
restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.

 

5.5 Consents. Subject to the accuracy of the representations and warranties of
each Investor set forth in Section 6 hereof, the execution, delivery and
performance by the Company of the Transaction Documents and the offer, issuance
and sale of the Shares require no consent of, action by or in respect of, or
filing with, any Person, governmental body, agency, or official other than
(a) filings that have been made pursuant to applicable state securities laws,
(b) post-sale filings pursuant to applicable state and federal securities laws,
(c) filings pursuant to the rules and regulations of Nasdaq and (d) filing of
the registration statement required to be filed by the Registration Rights
Agreement, each of which the Company has filed or undertakes to file within the
applicable time. Subject to the accuracy of the representations and warranties
of each Investor set forth in Section 6 hereof, the Company has taken all action
necessary to exempt (i) the issuance and sale of the Shares and (ii) the other
transactions contemplated by the Transaction Documents from the provisions of
any stockholder rights plan or other “poison pill” arrangement, any
anti-takeover, business combination or control share law or statute binding on
the Company or to which the Company or any of its assets and properties is
subject that is or could reasonably be expected to become applicable to the
Investors as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Shares and the ownership, disposition or voting
of the Shares by the Investors or the exercise of any right granted to the
Investors pursuant to this Agreement or the other Transaction Documents.

 

5.6 Use of Proceeds. The net proceeds of the sale of the Shares hereunder shall
be used by the Company for working capital and general corporate purposes.

 

5.7 No Material Adverse Change. Since March 31, 2020, except as identified and
described in the SEC Filings filed at least one Trading Day prior to the date
hereof, there has not been:

 

(i) any change in the consolidated assets, liabilities, financial condition or
operating results of the Company from that reflected in the financial statements
included in the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020, except for changes in the ordinary course of business which have
not had and would not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;

 

(ii) any declaration or payment by the Company of any dividend, or any
authorization or payment by the Company of any distribution, on any of the
capital stock of the Company, or any redemption or repurchase by the Company of
any securities of the Company;

 

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(iii) any material damage, destruction or loss, whether or not covered by
insurance, to any assets or properties of the Company;

 

(iv) any waiver, not in the ordinary course of business, by the Company of a
material right or of a material debt owed to it;

 

(v) any satisfaction or discharge of any lien, claim or encumbrance or payment
of any obligation by the Company, except in the ordinary course of business and
which is not material to the assets, properties, financial condition, operating
results or business of the Company (as such business is presently conducted);

 

(vi) any change or amendment to the Company’s Certificate of Incorporation or
Bylaws, or material change to any material contract or arrangement by which the
Company is bound or to which any of its assets or properties is subject;

 

(vii) any material labor difficulties or, to the Company’s Knowledge, labor
union organizing activities with respect to employees of the Company;

 

(viii) any material transaction entered into by the Company other than in the
ordinary course of business;

 

(ix) the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company; or

 

(x) any other event or condition of any character that has had or would
reasonably be expected to have a Material Adverse Effect.

 

5.8 SEC Filings. The Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
1933 Act and the 1934 Act, including pursuant to Section 13(a) or 15(d) thereof,
preceding the date hereof (collectively, the “SEC Filings”). At the time of
filing thereof, the SEC Filings complied in all material respects with the
requirements of the 1933 Act or the 1934 Act, as applicable, and the rules and
regulations of the SEC thereunder.

 

5.9 No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Shares in accordance with the provisions thereof will not, except
(solely in the case of clauses (i)(b) and (ii)) for such violations, conflicts
or defaults as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, (i) conflict with or result in a
breach or violation of (a) any of the terms and provisions of, or constitute a
default under, the Company’s Certificate of Incorporation or the Company’s
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Investors through the Electronic Data Gathering,
Analysis, and Retrieval system (the “EDGAR system”)), or (b) assuming the
accuracy of the representations and warranties in Section 6, any applicable
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or its
subsidiaries, or any of their assets or properties, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any lien, encumbrance
or other adverse claim upon any of the properties or assets of the Company or
its subsidiaries or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any Material Contract. This Section does not relate to matters with respect to
tax status, which are the subject of Section 5.10, employee relations and labor
matters, which are the subject of Section 5.13, or environmental laws, which are
the subject of Section 5.15.

 

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5.10 Tax Matters. The Company and its subsidiaries have timely prepared and
filed all material tax returns required to have been filed by them with all
appropriate governmental agencies and timely paid all material taxes shown
thereon or otherwise owed by them. There are no material unpaid assessments
against the Company nor, to the Company’s Knowledge, any audits by any federal,
state or local taxing authority. All material taxes that the Company is required
to withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due. There are no tax
liens pending or, to the Company’s Knowledge, threatened against the Company or
any of its assets or property. With the exception of agreements or other
arrangements that are not primarily related to taxes entered into in the
ordinary course of business, there are no outstanding tax sharing agreements or
other such arrangements between the Company and any other corporation or entity
(other than a subsidiary of the Company).

 

5.11 Title to Properties. The Company and its subsidiaries have good and
marketable title to all real properties and all other material properties and
assets owned by them, in each case free from liens, encumbrances and defects,
except such as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions, except such as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

5.12 Certificates, Authorities and Permits. The Company possesses adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, except where
failure to so possess would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect. The Company has not received
any written notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that would reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate, on the
Company.

 

5.13 Labor Matters.

 

(a) The Company is not party to or bound by any collective bargaining agreements
or other agreements with labor organizations. To the Company’s Knowledge, the
Company has not violated in any material respect any laws, regulations, orders
or contract terms affecting the collective bargaining rights of employees or
labor organizations, or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.

 

(b) No material labor dispute with the employees of the Company, or with the
employees of any principal supplier, manufacturer, customer or contractor of the
Company, exists or, to the Company’s Knowledge, is threatened or imminent.

 

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5.14 Intellectual Property. The Company and its subsidiaries own, possess,
license or have other rights to use, all patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the “Intellectual Property”) necessary for the conduct
of the Company’s business in all material respects as now conducted or as
proposed in the SEC Filings to be conducted; and (a) there are no rights of
third parties to any such Intellectual Property, including no liens, security
interests or other encumbrances; (b) to the Company’s Knowledge, there is no
material infringement by third parties of any such Intellectual Property;
(c) there is no pending or, to the Company’s Knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s rights in or to any such
Intellectual Property; (d) such Intellectual Property that is described in the
SEC Filings has not been adjudged by a court of competent jurisdiction invalid
or unenforceable, in whole or in part; (e) there is no pending or, to the
Company’s Knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property that is
owned or licensed by the Company, including interferences, oppositions,
reexaminations or government proceedings; (f) there is no pending or, to the
Company’s Knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes, misappropriates, or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others; and
(g) to the Company’s Knowledge, each key employee of the Company and each
Company employee involved with the development of Intellectual Property has
entered into an invention assignment agreement with the Company.

 

5.15 Environmental Matters. The Company is not in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), has not released any hazardous substances
regulated by Environmental Law onto any real property that it owns or operates
and has not received any written notice or claim it is liable for
any off-site disposal or contamination pursuant to any Environmental Laws, which
violation, release, notice, claim, or liability would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and to the
Company’s Knowledge, there is no pending or threatened investigation that would
reasonably be expected to lead to such a claim.

 

5.16 FDA. As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as
amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its
Subsidiaries (each such product, a “Pharmaceutical Product”), such
Pharmaceutical Product is being manufactured, packaged, labeled, tested,
distributed, sold and/or marketed by the Company in compliance with all
applicable requirements under FDCA and similar laws, rules and regulations
relating to registration, investigational use, premarket clearance, licensure,
or application approval, good manufacturing practices, good laboratory
practices, good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the failure to
be in compliance would not have a Material Adverse Effect. There is no pending,
completed or, to the Company's knowledge, threatened, action (including any
lawsuit, arbitration, or legal or administrative or regulatory proceeding,
charge, complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other
governmental entity, which (i) contests the premarket clearance, licensure,
registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Pharmaceutical Product, (ii) withdraws its approval of,
requests the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of its Subsidiaries, (iv) enjoins production
at any facility of the Company or any of its Subsidiaries, (v) enters or
proposes to enter into a consent decree of permanent injunction with the Company
or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material Adverse Effect.
The properties, business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of the FDA.  The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by the Company nor
has the FDA expressed any concern as to approving or clearing for marketing any
product being developed or proposed to be developed by the Company.

 

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5.17 Legal Proceedings. There are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending or, to the Company’s
Knowledge, threatened to which the Company or its subsidiaries are a party or to
which any property of the Company or its subsidiaries are the subject that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

5.18 Financial Statements. The financial statements included in each SEC Filing
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing (or to the extent corrected by a subsequent restatement) and present
fairly, in all material respects, the consolidated financial position of the
Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, subject in the case of unaudited financial
statements to normal, immaterial year-end audit adjustments, and such
consolidated financial statements have been prepared in conformity with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”) (except as may be disclosed therein or in
the notes thereto, and except that the unaudited financial statements may not
contain all footnotes required by GAAP, and, in the case of quarterly financial
statements, except as permitted by Form 10-Q under the 1934 Act). Except as set
forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, the Company has not incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect.

 

5.19 Insurance Coverage. The Company maintains in full force and effect
insurance coverage that is customary for comparably situated companies for the
business being conducted and properties owned or leased by the Company, and the
Company reasonably believes such insurance coverage to be adequate against all
liabilities, claims and risks against which it is customary for comparably
situated companies to insure.

 

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5.20 Compliance with Nasdaq Continued Listing Requirements. The Company is in
compliance with applicable Nasdaq continued listing requirements. There are no
proceedings pending or, to the Company’s Knowledge, threatened against the
Company relating to the continued listing of the Common Stock on Nasdaq and the
Company has not received any notice of, nor to the Company’s Knowledge is there
any reasonable basis for, the delisting of the Common Stock from Nasdaq.

 

5.21 Brokers and Finders. Except as set forth in Schedule 5.21, no Person will
have, as a result of the transactions contemplated by the Transaction Documents,
any valid right, interest or claim against or upon the Company or an Investor
for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Company. No
Investor shall have any obligation with respect to any fees, or with respect to
any claims made by or on behalf of other Persons for fees, in each case of the
type contemplated by this Section 5.21 that may be due in connection with the
transactions contemplated by this Agreement or the Transaction Documents.

 

5.22 No Directed Selling Efforts or General Solicitation. Neither the Company
nor any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Shares.

 

5.23 No Integrated Offering. Neither the Company nor its subsidiaries nor any
Person acting on their behalf has, directly or indirectly, made any offers or
sales of any Company security or solicited any offers to buy any Company
security, under circumstances that would adversely affect reliance by the
Company on Section 4(a)(2) and Regulation D for the exemption from registration
for the transactions contemplated hereby or would require registration of the
Shares under the 1933 Act, nor will the Company take any action or steps that
would adversely affect reliance by the Company on Section 4(a)(2) and Regulation
D for the exemption from registration for the transactions contemplated hereby
or require registration of the Shares under the 1933 Act.

 

5.24 Private Placement. Assuming the accuracy of the representations and
warranties of the Investors set forth in Section 6, the offer and sale of the
Shares to the Investors as contemplated hereby is exempt from the registration
requirements of the 1933 Act. The issuance and sale of the Shares does not
contravene the rules and regulations of Nasdaq.

 

5.25 Questionable Payments. Neither the Company nor its subsidiaries nor, to the
Company’s Knowledge, any of their current or former directors, officers,
employees, agents or other Persons acting on behalf of the Company or its
subsidiaries, has on behalf of the Company or its subsidiaries in connection
with their business: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(b) made any direct or indirect unlawful payments to any governmental officials
or employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets which is in violation of
law; (d) made any false or fictitious entries on the books and records of the
Company; or (e) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment of any nature.

 

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5.26 Transactions with Affiliates. None of the executive officers or directors
of the Company and, to the Company’s Knowledge, none of the employees of the
Company is presently a party to any transaction with the Company (other than as
holders of stock options, restricted stock units, warrants and/or restricted
stock, and for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

 

5.27 Internal Controls. The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-15 and 15d-15 under the 1934
Act), which (a) are designed to ensure that material information relating to the
Company, including its subsidiaries, is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities; (b) have been evaluated by management of the Company for effectiveness
as of the end of the Company’s most recent fiscal quarter; and (c) are effective
in all material respects to perform the functions for which they were
established. Since the end of the Company’s most recent audited fiscal year,
there have been no material weaknesses in the Company’s internal control over
financial reporting (whether or not remediated) and no change in the Company’s
internal control over financial reporting that has materially affected, or would
reasonably be expected to materially affect, the Company’s internal control over
financial reporting. The Company is not aware of any change in its internal
controls over financial reporting that has occurred during its most recent
fiscal quarter that has materially affected, or would reasonably be expected to
materially affect, the Company’s internal control over financial reporting.

 

5.28 Disclosures. Neither the Company nor any Person acting on its behalf has
provided the Investors or their agents or counsel with any information that
constitutes or would reasonably be expected to constitute material nonpublic
information concerning the Company or its subsidiaries, other than with respect
to the transactions contemplated hereby, which will be disclosed in the Press
Release (as defined below). The SEC Filings do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. The Company understands and confirms that the
Investors will rely on the foregoing representations in effecting transactions
in securities of the Company.

 

5.29 Required Filings. Except for the transactions contemplated by this
Agreement, including the acquisition of the Shares contemplated hereby, no event
or circumstance has occurred or information exists with respect to the Company
or its business, properties, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the SEC Filings are being incorporated by
reference into an effective registration statement filed by the Company under
the 1933 Act).

 

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5.30 Investment Company. The Company is not required to be registered as, and
immediately following the Closing will not be required to register as, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

5.31 Regulation M Compliance.  The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Shares, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Placement Agent in connection with the placement of the Shares.

 

5.32 Anti-Bribery and Anti-Money Laundering Laws. Each of the Company, its
subsidiaries and any of their respective officers, directors, supervisors,
managers, agents, or employees are and have at all times been in compliance with
and its participation in the offering will not violate: (A) anti-bribery laws,
including but not limited to, any applicable law, rule, or regulation of any
locality, including but not limited to any law, rule, or regulation promulgated
to implement the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, signed December 17, 1997,
including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K.
Bribery Act 2010, or any other law, rule or regulation of similar purposes and
scope or (B) anti-money laundering laws, including, but not limited to,
applicable federal, state, international, foreign or other laws, regulations or
government guidance regarding anti-money laundering, including, without
limitation, Title 18 US. Code sections 1956 and 1957, the Patriot Act, the Bank
Secrecy Act, and international anti-money laundering principles or procedures by
an intergovernmental group or organization, such as the Financial Action Task
Force on Money Laundering, of which the United States is a member and with which
designation the United States representative to the group or organization
continues to concur, all as amended, and any Executive order, directive, or
regulation pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder.

 

5.33 No Bad Actors. No “bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the 1933 Act (a “Disqualification Event”) is applicable
to the Company or, to the Company’s Knowledge, any Company Covered Person,
except (i) for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3) is applicable and (ii) no such representation is made with respect to the
Placement Agent, or any of their respective general partners, managing members,
directors, executive officers or other officers. There are no matters to be
disclosed by the Company under Rule 506(e).

 

5.34 No Additional Agreements. The Company has no other agreements or
understandings (including, without limitation, side letters) with any Investor
to purchase Shares on terms more favorable to such Investor than as set forth
herein.

 

5.35 Shell Company Status. The Company is not, and has never been, an issuer
identified in Rule 144(i)(1).

 

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5.36 Investor Representations. The Company acknowledges and agrees that the
Investors’ representations contained in Section 6 below shall not modify, amend
or affect any such Investor’s right to rely on the Company’s representations and
warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument
executed and/or delivered by or on behalf of the Company in connection with this
Agreement or the consummation of the transactions contemplated hereby

 

6. Representations and Warranties of the Investors. Each of the Investors hereby
severally, and not jointly, represents and warrants to the Company that:

 

6.1 Organization and Existence. Such Investor is a duly incorporated or
organized and validly existing corporation, limited partnership, limited
liability company or other legal entity, has all requisite corporate,
partnership or limited liability company power and authority to enter into and
consummate the transactions contemplated by the Transaction Documents and to
carry out its obligations hereunder and thereunder, and to invest in the Shares
pursuant to this Agreement, and is in good standing under the laws of the
jurisdiction of its incorporation or organization.

 

6.2 Authorization. The execution, delivery and performance by such Investor of
the Transaction Documents to which such Investor is a party have been duly
authorized and each has been duly executed and when delivered will constitute
the valid and legally binding obligation of such Investor, enforceable against
such Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights generally, and
general principles of equity.

 

6.3 Purchase Entirely for Own Account. The Shares to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, for the purpose of investment and not with a view to the
resale or distribution of any part thereof in violation of the 1933 Act, and
such Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same in violation of the 1933 Act without
prejudice, however, to such Investor’s right at all times to sell or otherwise
dispose of all or any part of such Shares in compliance with applicable federal
and state securities laws. The Shares are being purchased by such Investor in
the ordinary course of its business. Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period of
time. Such Investor is not a broker-dealer registered with the SEC under the
1934 Act or an entity engaged in a business that would require it to be so
registered.

 

6.4 Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Shares and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

 

6.5 Disclosure of Information. Such Investor has had an opportunity to receive,
review and understand all information related to the Company requested by it and
to ask questions of and receive answers from the Company regarding the Company,
its business and the terms and conditions of the offering of the Shares, and has
conducted and completed its own independent due diligence. Such Investor
acknowledges that copies of the SEC Filings are available on the EDGAR system.
Based on the information such Investor has deemed appropriate, and without
reliance upon the Placement Agent, it has independently made its own analysis
and decision to enter into the Transaction Documents. Such Investor is relying
exclusively on its own investment analysis and due diligence (including
professional advice it deems appropriate) with respect to the execution,
delivery and performance of the Transaction Documents, the Shares and the
business, condition (financial and otherwise), management, operations,
properties and prospects of the Company, including but not limited to all
business, legal, regulatory, accounting, credit and tax matters. Such Investor
has not relied on any information or advice furnished by or on behalf of the
Placement Agent in connection with the transactions contemplated hereby. Neither
such inquiries nor any other due diligence investigation conducted by such
Investor shall modify, limit or otherwise affect such Investor’s right to rely
on the Company’s representations and warranties contained in this Agreement.

 

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6.6 Restricted Securities. Such Investor understands that the Shares are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

 

6.7 Legends. It is understood that, except as provided below, certificates
evidencing the Shares may bear the following or any similar legend:

 

(a) “These securities represented hereby have not been registered with the
Securities and Exchange Commission or the securities commission of any state but
have been issued in reliance upon an exemption from registration under the
Securities Act of 1933, as amended, and, accordingly, may not be transferred
unless (i) such securities have been registered for sale pursuant to the
Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to
Rule 144, (iii) the Company has received an opinion of counsel reasonably
satisfactory to it that such transfer may lawfully be made without registration
under the Securities Act of 1933, as amended, or (iv) the securities are
transferred without consideration to an affiliate of such holder or a custodial
nominee (which for the avoidance of doubt shall require neither consent nor the
delivery of an opinion).”

 

(b) If required by the authorities of any state in connection with the issuance
of sale of the Shares, the legend required by such state authority.

 

6.8 Accredited Investor. Such Investor is (a) an “accredited investor” within
the meaning of Rule 501(a) of Regulation D. Such investor is a sophisticated
investor with sufficient knowledge and experience in investing in private equity
transactions to properly evaluate the risks and merits of its purchase of the
Shares. Such Investor has determined based on its own independent review and
such professional advice as it deems appropriate that its purchase of the Shares
and participation in the transactions contemplated by the Transaction Documents
(i) are fully consistent with its financial needs, objectives and condition,
(ii) comply and are fully consistent with all investment policies, guidelines
and other restrictions applicable to such Investor, (iii) have been duly
authorized and approved by all necessary action, (iv) do not and will not
violate or constitute a default under such Investor’s charter, bylaws or other
constituent document or under any law, rule, regulation, agreement or other
obligation by which such Investor is bound and (v) are a fit, proper and
suitable investment for such Investor, notwithstanding the substantial risks
inherent in investing in or holding the Shares.

 

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6.9 No General Solicitation. Such Investor did not learn of the investment in
the Shares as a result of any general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature,
including (a) any advertisement, article, notice or other communication
published in any newspaper, magazine, website, or similar media, or broadcast
over television or radio, or (b) any seminar or meeting to which such Investor
was invited by any of the foregoing means of communications.

 

6.10 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.

 

6.11 Short Sales and Confidentiality Prior to the Date Hereof. Other than
consummating the transactions contemplated hereunder, such Investor has not, nor
has any Person acting on behalf of or pursuant to any understanding with such
Investor, directly or indirectly executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Investor was first contacted by the Company, the Placement
Agent or any other Person regarding the transactions contemplated hereby and
ending immediately prior to the date hereof. Notwithstanding the foregoing, in
the case of an Investor that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Investor’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Investor’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Shares covered by this Agreement. Other than to other
Persons party to this Agreement and other than to such Person’s outside
attorney, accountant, auditor or investment advisor only to the extent necessary
to permit evaluation of the investment, and the performance of the necessary or
required tax, accounting, financial, legal, or administrative tasks and services
and other than as may be required by law, such Investor has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future.

 

6.12 No Government Recommendation or Approval. Such Investor understands that no
United States federal or state agency, or similar agency of any other country,
has reviewed, approved, passed upon, or made any recommendation or endorsement
of the Company or the purchase of the Shares.

 

6.13 No Intent to Effect a Change of Control. Such Investor has no present
intent to effect a “change of control” of the Company as such term is understood
under the rules promulgated pursuant to Section 13(d) of the 1934 Act.

 

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6.14 Residency. Such Investor’s office in which its investment decision with
respect to the Shares was made is located at the address immediately below such
Investor’s name on its signature page hereto.

 

6.15 No Conflicts. The execution, delivery and performance by such Investor of
the Transaction Documents and the consummation by such Investor of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Investor or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Investor, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Investor to perform its
obligations hereunder.

 

7. Covenants and Agreements of the Parties.

 

7.1 Nasdaq Listing. The Company will use commercially reasonable efforts to
continue the listing and trading of its Common Stock on Nasdaq and, in
accordance therewith, will use commercially reasonable efforts to comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of such market or exchange, as applicable.

 

7.2 Removal of Legends.

 

(a) In connection with any sale, assignment, transfer or other disposition of
the Shares by an Investor pursuant to Rule 144 or pursuant to any other
exemption under the 1933 Act such that the purchaser acquires freely tradable
shares and upon compliance by the Investor with the requirements of this
Agreement, if requested by the Investor, the Company shall request the transfer
agent for the Common Stock (the “Transfer Agent”) to remove any restrictive
legends related to the book entry account holding such shares and make a new,
unlegended entry for such book entry shares sold or disposed of without
restrictive legends within two (2) Trading Days of any such request therefor
from such Investor, provided that the Company has timely received from the
Investor customary representations and other documentation reasonably acceptable
to the Company in connection therewith.

 

(b) Subject to receipt from the Investor by the Company and the Transfer Agent
of customary representations and other documentation reasonably acceptable to
the Company and the Transfer Agent in connection therewith, upon the earliest of
such time as the Shares (i) have been registered under the 1933 Act pursuant to
an effective registration statement, (ii) have been sold pursuant to Rule 144,
or (iii) are eligible for resale under Rule 144(b)(1) or any successor provision
(such earliest date, the “Effective Date”), the Company shall, in accordance
with the provisions of this Section 7.2(b) and within two (2) Trading Days of
any request therefor from an Investor accompanied by such customary and
reasonably acceptable documentation referred to above, (A) deliver to the
Transfer Agent irrevocable instructions that the Transfer Agent shall make a
new, unlegended entry for such book entry shares, and (B) cause its counsel to
deliver to the Transfer Agent one or more opinions to the effect that the
removal of such legends in such circumstances may be effected under the 1933 Act
if required by the Transfer Agent to effect the removal of the legend in
accordance with the provisions of this Agreement. Any shares subject to legend
removal under this Section 7 may be transmitted by the Transfer Agent to the
Investor by crediting the account of the Investor’s prime broker with the DTC
System as directed by such Investor. The Company shall be responsible for the
fees of its Transfer Agent and all DTC fees associated with such issuance.

 

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7.3 Transfer Restrictions. Each Investor, severally and not jointly with the
other Investors, agrees with the Company that such Investor will sell any Shares
pursuant to either the registration requirements of the 1933 Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Shares are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Shares
as set forth in this Section 7.3 is predicated upon the Company’s reliance upon
this understanding.

 

7.4 Subsequent Equity Sales by the Company. The Company shall not, and shall use
its commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the 1933 Act) that will be
integrated with the offer or sale of the Shares in a manner that would require
the registration under the 1933 Act of the sale of the Shares to the Investors,
or that will be integrated with the offer or sale of the Shares for purposes of
the rules and regulations of any trading market such that it would require
stockholder approval prior to the closing of such other transaction unless
stockholder approval is obtained before the closing of such subsequent
transaction.

 

7.5 Fees. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or broker’s commissions (other than for
Persons engaged by any Investor) relating to or arising out of the transactions
contemplated hereby, including, without limitation, any fees or commissions
payable to the Placement Agent.

 

7.6 Short Sales and Confidentiality After the Date Hereof. Each Investor
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company, such Investor will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction), other than
to such Person’s outside attorney, accountant, auditor or investment advisor
only to the extent necessary to permit evaluation of the investment, and the
performance of the necessary or required tax, accounting, financial, legal, or
administrative tasks and services and other than as may be required by law.

 

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7.7 Securities Laws Disclosure; Publicity. The Company shall (a) by the
Disclosure Time, issue a press release (“Press Release”) disclosing the material
terms of the transactions contemplated hereby, and (b) file a Current Report on
Form 8-K, including the Transaction Documents as exhibits thereto, with the
Commission within the time required by the 1934 Act. From and after the issuance
of such Press Release, the Company represents to the Investors that it shall
have publicly disclosed all material, non-public information delivered to any of
the Investors by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In addition, effective
upon the issuance of such Press Release, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of
their respective officers, directors, agents, employees or Affiliates on the one
hand, and any of the Investors or any of their Affiliates on the other hand,
shall terminate. The Company and each Investor shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Investor shall issue any such press
release nor otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of any Investor, or without
the prior consent of each Investor, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Investor, except (a) as required by federal
securities law in connection with (i) any registration statement contemplated by
the Registration Rights Agreement and (ii) the filing of final Transaction
Documents with the Commission, (b) as required by Trading Market regulations,
and (c) to the extent such disclosure is otherwise required by law, in which
case the Company shall provide the Investors with prior notice of such
disclosure permitted under this clause (c).

 

7.8 Equal Treatment of Investors. No consideration (including any modification
of any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration is also offered to all of the parties to this Agreement.
For clarification purposes, this provision constitutes a separate right granted
to each Investor by the Company and negotiated separately by each Investor, and
is intended for the Company to treat the Investors as a class and shall not in
any way be construed as the Investors acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

 

8. Survival and Indemnification.

 

8.1 Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement for the applicable statute of limitations.

 

8.2 Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates, and their respective directors, officers, trustees,
members, managers, employees, investment advisers and agents, from and against
any and all losses, claims, damages, liabilities and expenses (including without
limitation reasonable and documented attorney fees and disbursements and other
documented out-of-pocket expenses reasonably incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such Person solely to
the extent such amounts have been finally judicially determined not to have
resulted from such Person’s fraud or willful misconduct.

 

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8.3 Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a) the indemnifying party has agreed in writing to pay such fees or expenses,
(b) the indemnifying party shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such person or (c) in the
reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person);
and provided, further, that the failure of any indemnified party to give written
notice as provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to give notice
shall materially adversely affect the indemnifying party in the defense of any
such claim or litigation. It is understood that the indemnifying party shall
not, in connection with any proceeding in the same jurisdiction, be liable for
fees or expenses of more than one separate firm of attorneys at any time for all
such indemnified parties. No indemnifying party will, except with the consent of
the indemnified party, which consent shall not be unreasonably withheld,
conditioned or delayed, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. No indemnified party will,
except with the consent of the indemnifying party, which consent shall not be
unreasonably withheld, conditioned or delayed, consent to entry of any judgment
or enter into any settlement.

 

9. Miscellaneous.

 

9.1 Termination.  This Agreement may be terminated by any Investor, as to such
Investor’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Investor’s, by written notice to
the other parties, if the Closing has not been consummated on or before the
fifth (5th) Trading Day following the date hereof; provided, however, that no
such termination will affect the right of any party to sue for any breach by any
other party (or parties).

 

9.2 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or each of the Investors, as
applicable. The provisions of this Agreement shall inure to the benefit of and
be binding upon the respective permitted successors and assigns of the parties.
Without limiting the generality of the foregoing, in the event that the Company
is a party to a merger, consolidation, share exchange or similar business
combination transaction in which the Common Stock is converted into the equity
securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term “Company” shall be
deemed to refer to such Person and the term “Shares” shall be deemed to refer to
the securities received by the Investors in connection with such transaction.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective permitted successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

 

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9.3 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via
facsimile, electronic mail (including pdf or any electronic signatures complying
with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other
transmission method and any counterpart so delivered shall be deemed to have
been duly and validly delivered and be valid and effective for all purposes.

 

9.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

9.5 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
as hereinafter described (i) if given by personal delivery, then such notice
shall be deemed given upon such delivery, (ii) if given by facsimile
or e-mail, then such notice shall be deemed given upon receipt of confirmation
of complete facsimile transmittal or confirmation of receipt of
an e-mail transmission, (iii) if given by mail, then such notice shall be deemed
given upon the earlier of (A) receipt of such notice by the recipient or
(B) three days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one Business Day after delivery
to such carrier. All notices shall be addressed to the party to be notified at
the address as follows, or at such other address as such party may designate by
ten days’ advance written notice to the other party:

 

If to the Company:

 

TFF Pharmaceuticals, Inc.

2600 Via Fortuna, Suite 360

Austin, Texas 78746

Attention: Glenn A. Mattes, Chief Executive Officer

Email: gmattes@tffpharma.com

 

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

 

Greenberg Traurig, LLP

18565 Jamboree Road, Suite 500

Irvine, California 92612

Attention: Daniel K. Donahue

Email: donahued@gtlaw.com

 

If to the Investors:

 

Only to the addresses set forth on the signature pages hereto.

 

 23 

 

 

9.6 Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith regardless of whether the transactions contemplated hereby
are consummated.

 

9.7 Amendments and Waivers. Prior to Closing, no amendment or waiver of any
provision of this Agreement will be effective with respect to any party unless
made in writing and signed by a duly authorized representative of such party.
Following the Closing, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Required Investors. Notwithstanding the
foregoing, this Agreement may not be amended and the observance of any term of
this Agreement may not be waived with respect to any Investor without the
written consent of such Investor unless such amendment or waiver applies to all
Investors in the same fashion. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon (i) prior to Closing, each Investor
that signed such amendment or waiver and (ii) following the Closing, each holder
of any Shares purchased under this Agreement at the time outstanding, and in
each case, each future holder of all such Shares and the Company.

 

9.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

9.9 Entire Agreement. This Agreement, including the signature pages, Exhibits,
the other Transaction Documents and any confidentiality agreement between the
Company and each Investor constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof and thereof.

 

9.10 Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

9.11 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement.

 

 24 

 

 

9.12 Independent Nature of Investors’ Obligations and Rights. The obligations of
each Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Document. The decision of each Investor to purchase Shares pursuant
to the Transaction Documents has been made by such Investor independently of any
other Investor. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Investor acknowledges that no
other Investor has acted as agent for such Investor in connection with making
its investment hereunder and that no Investor will be acting as agent of such
Investor in connection with monitoring its investment in the Shares or enforcing
its rights under the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Investors has been provided with the same Transaction Documents
for the purpose of closing a transaction with multiple Investors and not because
it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement is between
the Company and an Investor, solely, and not between the Company and the
Investors collectively and not between and among the Investors.

 

9.13 Exculpation of the Placement Agent. Each party acknowledges that it has
read the notices attached hereto as Schedule 9.13 and hereto agrees for the
express benefit of each of the Placement Agent, their affiliates and their
representatives that:

 

(a) Neither the Placement Agent nor any of their affiliates or any of their
representatives (1) has any duties or obligations other than those specifically
set forth herein or in the engagement letter, dated as of August 10, 2020,
between the Company and Jefferies LLC (the “Engagement Letter”); (2) shall be
liable for any improper payment made in accordance with the information provided
by the Company; (3) makes any representation or warranty, or has any
responsibilities as to the validity, accuracy, value or genuineness of any
information, certificates or documentation delivered by or on behalf of the
Company pursuant to this Agreement or the Transaction Documents or in connection
with any of the transactions contemplated hereby and thereby; or (4) shall be
liable (x) for any action taken, suffered or omitted by any of them in good
faith and reasonably believed to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement or any Transaction Document
or (y) for anything which any of them may do or refrain from doing in connection
with this Agreement or any Transaction Document, except for such party’s own
gross negligence, willful misconduct or bad faith.

 

(b) The Placement Agent, their affiliates and their representatives shall be
entitled to (1) rely on, and shall be protected in acting upon, any certificate,
instrument, notice, letter or any other document or security delivered to any of
them by or on behalf of the Company, including the representations made by the
Company and the Investors herein, and (2) be indemnified by the Company for
acting as the Placement Agent hereunder pursuant the indemnification provisions
set forth in the Engagement Letter.

 

[remainder of page intentionally left blank]

 

 25 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  COMPANY       TFF PHARMACEUTICALS, INC.       By:       Glenn A. Mattes,    
Chief Executive Officer

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR INVESTOR FOLLOWS]

 

 26 

 

 

[INVESTOR SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Investor: ___________________________________________________________

 

Signature of Authorized Signatory of Investor:
_____________________________________

 

Name of Authorized Signatory: __________________________________________________

 

Title of Authorized Signatory:
____________________________________________________

 

Email Address of Authorized Signatory:
____________________________________________

 

Facsimile Number of Authorized Signatory:
_________________________________________

 

Address for Notice to Investor:

 

Address for Delivery of Shares to Investor (if not same as address for notice):

 

Subscription Amount: $_________________

 

Shares: _________________

 

EIN Number: _______________________

 

[INVESTOR SIGNATURE PAGES CONTINUE]

 

 

 

 

EXHIBIT A

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

 

 

TFF PHARMACEUTICALS, INC.

 

DISCLOSURE SCHEDULES

 

These Disclosure Schedules are being furnished by TFF Pharmaceuticals, Inc., a
Delaware corporation (“Company”), in connection with Securities Purchase
Agreement dated August 10, 2020 (the “Purchase Agreement”) by and among the
Company and the Investors signatory thereto (“Investors”). Unless the context
otherwise requires, all capitalized terms used in these Disclosure Schedules
shall have the respective meanings assigned to them in the Purchase Agreement.
The schedule numbers in these Disclosure Schedules correspond to the section
numbers in the Purchase Agreement.

 

Schedule 5.3

 

Authorized common stock, $0.001 par value per share:   45,000,000         Equity
currently outstanding:      Issued and outstanding common shares:   18,671,658 
Shares issuable pursuant to outstanding options   2,437,123  Shares issuable
pursuant to outstanding warrants   1,476,463  Total TFF common stock currently
outstanding on a FDB:   22,585,244 

 

The Company has granted certain demand and piggyback registration rights to
National Securities Corporation with respect to placement agent warrants issued
in March 2018 and underwriter warrants issued in October 2019. The Company has
also granted certain demand and piggyback registration rights to Liquid Patent
Consulting, LLC with respect to advisory warrants issued in January 2018.

 

Schedule 5.21

 

The Company has agreed to pay the Placement Agent sales commissions in the
amount of six percent (6%) of the aggregate Subscription Amount paid by all
Investors. The Company has also agreed to pay National Securities Corporation an
advisory fee of one percent (1%) of the aggregate Subscription Amount paid by
all Investors.

 

Schedule 5.26

 

As disclosed in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019, management had determined that there was not adequate
segregation of duties due to a small number of employees conducting various
accounting, payment and billing functions and, as a result, the Company’s
disclosure controls and procedures were not effective as of December 31, 2019.
During the first six months of 2020, the Company began to remediate this issue
by adding an additional person in its accounting department, strengthening its
billing and payment procedures and upgrading its accounting, billing and payment
software. As of June 30, 2020, the implementation of these improvements in the
Company’s internal control over financing reporting have enabled it to conclude
that the Company has adequate segregation of duties and that the Company’s
disclosure controls and procedures were effective as of June 30, 2020.

 

Schedule 9.13

 

On February 2, 2016, pursuant to an offer of settlement by Jefferies LLC, the
SEC entered an administrative order, pursuant to its Municipalities Continuing
Disclosure Cooperation (“MCDC”) initiative, finding that Jefferies LLC, in
connection with its underwriting of certain municipal securities offerings,
willfully violated Section 17(a)(2) of the Securities Act of 1933. The
administrative order requires Jefferies LLC to cease and desist from committing
or causing any violations or any future violations of Section 17(a)(2), to pay a
civil penalty, and to complete certain undertakings. Jefferies LLC received
waivers from the SEC of any disqualifications under Regulations A (Rule 262), D
(Rule 505 and 506), and E arising from the settlement, effective as of February
2, 2016. The SEC Order is available at
https://www.sec.gov/rules/other/2016/33-10030.pdf.