Exhibit 10.29

BAUDAX BIO, INC.

$25,000,000

cOMMON sTOCK

SALES AGREEMENT

February 13, 2020

 

JMP Securities LLC

600 Montgomery Street, Suite 1100

San Francisco, California  94111

 

Ladies and Gentlemen:

 

Baudax Bio, Inc. (the “Company”), confirms its agreement (this “Agreement”) with
JMP Securities LLC (“JMP”), 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 or to JMP, acting as agent
and/or principal, shares (the “Placement Shares”) of the Company’s common stock,
par value $0.01 per share (the “Common Stock”), having an aggregate offering
price of up to $25,000,000. Notwithstanding anything to the contrary contained
herein, the parties hereto agree that compliance with the limitation set forth
in this Section 1 on the number of shares of Common Stock issued and sold under
this Agreement shall be the sole responsibility of the Company, and JMP shall
have no obligation in connection with such compliance.  The issuance and sale of
Common Stock through JMP will be effected pursuant to the Registration Statement
(as defined below) filed by the Company and declared effective by the Securities
and Exchange Commission (the “Commission”), although nothing in this Agreement
shall be construed as requiring the Company to use the Registration Statement
(as defined below) to issue the Common Stock.  

The Company has 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. 333-235408), 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
specifically relating to the Placement Shares (the “Prospectus Supplement”) to
the base prospectus included as part of such registration statement.  The
Company has furnished to JMP, for use by JMP, copies of the prospectus included
as part of such registration statement, as supplemented by the Prospectus
Supplement, relating to the Placement Shares.  Except where the context
otherwise requires, such registration statement, and any post-

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effective amendment thereto, as amended when it became effective, 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 462(b) of the Securities Act or any subsequent registration
statement on Form S-3 filed pursuant to Rule 415(a)(6) under the Securities Act
by the Company to cover any Placement Shares 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 defined in Rule 433 of the Securities Act
regulations (“Rule 433”), relating to the Placement Shares that (i) is required
to be filed with the Commission by the Company or (ii) is exempt from filing
pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be
filed with the Commission or, if not required to be filed, in the form retained
in the Company’s records pursuant to Rule 433(g), is herein called the
“Prospectus.” Any reference herein to the Registration Statement, the Prospectus
or any amendment or supplement thereto shall be deemed to refer to and include
the documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or to any amendment or
supplement thereto shall be deemed to include any copy filed with the Commission
pursuant to the Electronic Data Gathering Analysis and Retrieval System
(“EDGAR”).  

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

 

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obligation whatsoever with respect to a Placement or any Placement Shares unless
and until the Company delivers a Placement Notice to JMP and JMP does not
decline such Placement Notice pursuant to the terms set forth above, and then
only upon the terms specified therein and herein.  In the event of a conflict
between the terms of this Agreement and the terms of a Placement Notice, the
terms of the Placement Notice will control.

3.  Sale of Placement Shares by JMP.  Subject to the terms and conditions herein
set forth, upon the Company’s delivery of a Placement Notice, and unless the
sale of the Placement Shares described therein has been declined, suspended, or
otherwise terminated in accordance with the terms of this Agreement, JMP, 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 amount
specified, and otherwise in accordance with the terms of such Placement
Notice.  JMP will provide written confirmation to the Company (including by
email correspondence to each of the individuals of the Company set forth on
Schedule 2, if receipt of such correspondence is actually acknowledged by any of
the individuals to whom the notice is sent, other than via auto-reply) no later
than the opening of the Trading Day (as defined below) immediately following the
Trading Day on which it has made sales of Placement Shares hereunder setting
forth the number of Placement Shares sold on such day, the volume-weighted
average price of the Placement Shares sold, and the Net Proceeds (as defined
below) payable to the Company.  Subject to the terms of the Placement Notice,
JMP 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.  Notwithstanding the provisions of Section 6(ii), JMP shall not purchase
Placement Shares for its own account as principal unless expressly authorized to
do so by the Company in a Placement Notice.  The Company acknowledges and agrees
that (i) there can be no assurance that JMP will be successful in selling
Placement Shares, and (ii) JMP 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 JMP to use its commercially reasonable
efforts consistent with its normal trading and sales practices to sell such
Placement Shares as required under this Section 3.  For the purposes hereof,
“Trading Day” means any day on which the Company’s Common Stock is purchased and
sold on the principal market on which the Common Stock is listed or quoted.

4.  Suspension of Sales.  

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

(b)Notwithstanding any other provision of this Agreement, during any period in
which the Company is in possession of material non-public information, the
Company and JMP agree

 

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that (i) no sale of Placement Shares will take place, (ii) the Company shall not
request the sale of any Placement Shares, and (iii) JMP shall not be obligated
to sell or offer to sell any Placement Shares.

 

5.  Settlement.

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

(b) Delivery of Placement Shares.  On or before each Settlement Date, the
Company will, or will cause its transfer agent to, electronically transfer the
Placement Shares being sold by crediting JMP’s or its designee’s account
(provided JMP shall have given the Company written notice of such designee at
least one (1) Trading Day prior to the Settlement Date) at The Depository Trust
Company through its Deposit and Withdrawal at Custodian System or by such other
means of delivery as may be mutually agreed upon by the parties hereto which in
all cases shall be freely tradeable, transferable, registered shares in good
deliverable form.  On each Settlement Date, JMP will deliver the related Net
Proceeds in same day funds to an account designated by the Company on, or prior
to, the Settlement Date.  The Company agrees that if the Company, or its
transfer agent (if applicable), defaults in its obligation to deliver duly
authorized Placement Shares on a Settlement Date, the Company agrees that in
addition to and in no way limiting the rights and obligations set forth in
Section 9(a) (Indemnification and Contribution) hereto, it will (i) hold JMP
harmless against any loss, claim, damage, or reasonable and documented expense
(including reasonable and documented legal fees and expenses), as incurred,
arising out of or in connection with such default by the Company and (ii) pay to
JMP (without duplication) any commission, discount, or other compensation to
which it would otherwise have been entitled absent such default.

6.  Representations and Warranties of the Company.  The Company represents and
warrants to, and agrees with, JMP that as of the date of this Agreement, each
Representation Date (as defined in Section 7(m)), each date on which a Placement
Notice is given, and any date on which Placement Shares are sold hereunder:

(a) Compliance with Registration Requirements. The Registration Statement and,
if applicable, any Rule 462(b) Registration Statement, have been declared
effective by the Commission under the Securities Act.  The Company has complied
to the Commission’s satisfaction with all requests of the Commission for
additional or supplemental information.  No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the knowledge of the Company, contemplated or threatened
by the Commission.  

 

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The Company meets the requirements for use of Form S‑3 under the Securities
Act.  The sale of the Placement Shares hereunder meets the requirements or
General Instruction I.B.1 of Form S-3.

(b)  No Misstatement or Omission.  The Prospectus when filed complied and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act.  Each of the Registration Statement, any Rule 462(b)
Registration Statement, the Prospectus and any post-effective amendments or
supplements thereto, at the time it became effective or its date, as applicable,
complied and as of each of the Settlement Dates, if any, will comply in all
material respects with the Securities Act and did not and, as of each Settlement
Date, if any, did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date, did not and, as of each of the Settlement Dates,
if any, will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to JMP
furnished to the Company in writing by JMP expressly for use therein.  There are
no contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required.

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

(d) Not an Ineligible Issuer. The Company currently is not an “ineligible
issuer,” as defined in Rule 405 under the Securities Act.  The Company agrees to
notify JMP promptly upon the Company becoming an “ineligible issuer.”

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

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

(g) Authorization of the Common Stock. The Placement Shares, when issued and
delivered, will be duly authorized for issuance and sale pursuant to this
Agreement and, when

 

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issued and delivered by the Company against payment therefor pursuant to this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.

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

(i) No Material Adverse Change.  Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in 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, or in the earnings, business
or operations, whether or not arising from transactions in the ordinary course
of business, of the Company and its subsidiaries, considered as one entity (any
such change is called a “Material Adverse Change”); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material liability
or obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, dividends
paid to the Company or other subsidiaries, by any of its subsidiaries on any
class of capital stock or repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock.

(j) Independent Accountants.  KPMG LLP, who has expressed its opinion with
respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission or incorporated by reference as a part of the Registration Statement
and included in the Prospectus, is an independent registered public accounting
firm as required by the Securities Act and the Exchange Act.  

(k) Preparation of the Financial Statements. The financial statements filed with
the Commission as a part of or incorporated by reference in the Registration
Statement and included in the Prospectus present fairly in all material respects
the consolidated financial position of the Company and its subsidiaries as of
and at the dates indicated and the results of their operations and cash flows
for the periods specified.  The supporting schedules, if any, included in or
incorporated in the Registration Statement present fairly the information
required to be stated therein.  Such financial statements and supporting
schedules, if any, have been prepared in conformity with generally accepted
accounting principles as applied in the United States applied on a consistent
basis throughout the periods involved, except as may be expressly stated in the
related notes thereto.  No other financial statements or supporting schedules
are required to be included in or incorporated in the Registration Statement.  

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

(m)       Incorporation and Good Standing of the Company and its Subsidiaries.
The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Pennsylvania and has corporate
power and authority to own, lease

 

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and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement.
Baudax Bio N.A. LLC and Baudax Bio Limited are the Company’s only subsidiaries
(the “Subsidiaries”).  Each of the Subsidiaries has been duly incorporated or
organized (as the case may be) and is validly existing and in good standing
under the laws of the jurisdiction of its organization and has the requisite
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.  Each of the Company and the
Subsidiaries is duly qualified as a foreign corporation or foreign partnership
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not reasonably be expected
to, individually or in the aggregate, result in a Material Adverse
Change.  Except as described in the Prospectus, all of the issued and
outstanding equity interests of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the Company
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
claim.  The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the most recently
ended fiscal year and other than (i) those subsidiaries not required to be
listed on Exhibit 21.1 by Item 601 of Regulation S-K under the Exchange Act and
(ii) those subsidiaries formed since the last day of the most recently ended
fiscal year.

(n) Capital Stock Matters. The Common Stock conforms in all material respects to
the description thereof contained in the Prospectus.  All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws.  None of the outstanding shares of Common Stock 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 equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in all
material respects in the Prospectus.  The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents in all material respects the information required to be shown
with respect to such plans, arrangements, options and rights.  

(o) Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required.   Neither the Company nor any of its subsidiaries is in
violation of its charter, by-laws, operating agreement or similar organization
document, as applicable, or is in default (or, with the giving of notice or
lapse of time, would be in default) (“Default”) under any indenture, mortgage,
loan or credit agreement, note, contract, franchise, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the material property or assets of the
Company or any of its subsidiaries is subject (each, an “Existing Instrument”),
except for such Defaults as would not, reasonably be expected to, individually
or in the aggregate, result in a Material Adverse Change.  The Company’s
execution, delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter, by-laws,

 

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operating agreement or similar organization document, as applicable, of the
Company or any subsidiary, (ii) will not conflict with or constitute a breach
of, or Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, reasonably be expected to, individually or
in the aggregate, result in a Material Adverse Change and (iii) will not result
in any violation of any law, administrative regulation or administrative or
court decree having jurisdiction over the Company or any subsidiary except for
such violations that would not, individually or in the aggregate, result in a
Material Adverse Change.  No consent, approval, authorization or other order of,
or registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby and by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws and from the Financial Industry Regulatory
Authority (“FINRA”).  

(p) No Material Actions or Proceedings.  Except as disclosed in the Prospectus,
there are no legal or governmental actions, suits or proceedings pending or, to
the Company’s knowledge, threatened (i) to which the Company or any of its
subsidiaries is a party, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters, where
in any such case (A) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or such subsidiary and
(B) any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement.  No material labor dispute with the employees of
the Company or any of its subsidiaries exists or, to the Company’s knowledge, is
threatened or imminent.

(q) All Necessary Permits, etc.  Except as otherwise disclosed in the
Prospectus, the Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, other than those the failure to possess or own would not reasonably
be expected to, individually or in the aggregate, result in a Material Adverse
Change, and neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, would reasonably be
expected to singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, result in a Material Adverse Change.  

(r) Tax Law Compliance.  The Company and its consolidated subsidiaries have
filed all federal, state and foreign income, property and franchise tax returns
required to be filed or have properly requested extensions thereof, except
insofar as the failure to file such returns would, individually or in the
aggregate, be expected to result in a Material Adverse Change, and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be
being contested in good faith and by appropriate proceedings except where the
failure to pay such taxes, assessments, fines or penalties would not
individually or in the aggregate, be expected to result in a Material Adverse

 

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Change.   There is no pending dispute with any taxing authority relating to any
of such returns, and the Company has no knowledge of any proposed liability for
any tax to be imposed upon the properties or assets of the Company for which
there is not an adequate reserve reflected in the Company’s financial statements
included in the Registration Statement and the Prospectus.

(s) Company Not an “Investment Company”. The Company is not, and after receipt
of payment for the Common Stock will not be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

(t) Insurance.  Except as otherwise described in the Prospectus, each of the
Company and its subsidiaries are insured by insurers of recognized financial
responsibility with policies in such amounts and with such deductibles and
covering such risks as the Company believes are customary for the business for
which it is engaged.  The Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not reasonably be expected to, individually
or in the aggregate, result in a Material Adverse Change.  

(u) No Price Stabilization or Manipulation.  The Company has not taken and will
not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Placement Shares.  

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

(w) Exchange Act Compliance.  The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the Settlement Dates, will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.  

(x) No Unlawful Contributions or Other Payments.  Neither the Company nor any of
its subsidiaries nor, to the Company’s knowledge, any director, officer,
employee or agent of the Company or any subsidiary has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.  

(y) Compliance with Money Laundering Laws.  The operations of the Company and
its subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting

 

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Act of 1970, as amended, the money laundering statutes of all jurisdictions, 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 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 knowledge of the Company, threatened.

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

(aa) Company’s Accounting System.  The Company maintains a system of “internal
control over financial reporting” (as such term is defined in Rule 13a-15(f) of
the General Rules and Regulations under the Exchange Act (the “Exchange Act
Rules”)) that complies with the requirements of the Exchange Act and has been
designed by the principal executive and principal financial officers, or under
their supervision, to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with U.S. GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.  The Company’s internal control
over financial reporting is effective.  Except as described in the Prospectus,
since the end of the Company’s most recent audited fiscal year, there has been
(A) no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (B) no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.  

(bb) Disclosure Controls. The Company maintains disclosure controls and
procedures (as such is defined in Rule 13a-15(e) of the Exchange Act Rules) that
comply with the requirements of the Exchange Act; such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established.  The Company has conducted evaluations of the
effectiveness of its disclosure controls as required by Rule 13a-15 of the
Exchange Act.  

(cc) Compliance with Environmental Laws. Except as otherwise described in the
Prospectus, and except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change: (i) neither the
Company nor any of its subsidiaries is in violation of any federal, state, local
or foreign law or regulation relating to pollution or protection of human health
or 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 emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”), or otherwise relating

 

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to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern (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 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) there is no claim, action or cause of
action filed with a court or governmental authority, no investigation with
respect to which the Company has received written notice, and no 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
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries or any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law; and (iii) to
the Company’s knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law.

(dd) Intellectual Property.  The Company and its subsidiaries own or possess the
valid right to use all (i) patents, patent applications, trademarks, trademark
registrations, service marks, service mark registrations, Internet domain name
registrations, copyrights, copyright registrations, licenses, trade secret
rights (“Intellectual Property Rights”) and (ii) inventions, software, works of
authorships, trademarks, service marks, trade names, databases, formulae, know
how, Internet domain names and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary confidential
information, systems, or procedures) (collectively, “Intellectual Property
Assets”) necessary to conduct their respective businesses as currently
conducted, except where the failure to possess or acquire such rights would not
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change. All licenses for the use of the Intellectual Property
Rights described in the Prospectus are valid, binding upon, and enforceable by
or against the parties thereto in accordance to its terms.  Except as described
in the Prospectus, (A) to the Company’s knowledge, there is no infringement,
misappropriation or violation by third parties of any such Intellectual Property
Rights, except as such infringement, misappropriation or violation would not
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change; (B) there is no pending or, to the Company’s knowledge,
threatened, action, suit, proceeding or claim by others challenging the
Company’s or any of its subsidiaries’ rights in or to any such Intellectual
Property Rights, and the Company is unaware of any objective facts which would
form a reasonable basis for any such claim; (C) the Intellectual Property Rights
and Intellectual Property Assets owned by the Company and its subsidiaries, and
to the Company’s knowledge, the Intellectual Property Rights and Intellectual

 

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Property Assets licensed to the Company and its subsidiaries, has not been
adjudged invalid or unenforceable, in whole or in part, and 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
Rights or Intellectual Property Assets; (D) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that
the Company or any of its subsidiaries infringes, misappropriates or otherwise
violates any Intellectual Property Rights or other proprietary rights of others,
and neither the Company or any of its subsidiaries has received any written
notice of such claim; and (E) to the Company’s knowledge, no employee of the
Company or any of its subsidiaries is in or has ever been in violation of any
term of any employment contract, patent disclosure agreement, invention
assignment agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a former employer
where the basis of such violation relates to such employee’s employment with the
Company or any of its subsidiaries or actions undertaken by the employee while
employed with the Company or any of its subsidiaries, except as such violation
would not reasonably be expected to, individually or in the aggregate, result in
a Material Adverse Change.  The Company has taken all reasonable steps to
protect, maintain and safeguard its Intellectual Property Rights, including the
execution of appropriate nondisclosure and confidentiality agreements.  The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of or payment of any additional amounts with respect
to, nor require the consent of any other person in respect of, the Company’s
right to own, use, or hold for use any of the Intellectual Property Rights as
owned, used or held for use in the conduct of the business as currently
conducted.  

(ee) FDA. Except as described in the Prospectus, 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
“Product”), such 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 reasonably be expected to, individually or in the
aggregate, have a Material Adverse Change. Except as described in the
Prospectus, 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 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
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

 

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the Company or any of its subsidiaries, and which, in each of clauses (i)
through (vi) either individually or in the aggregate, would have a Material
Adverse Change. 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.  

(ff) Listing.  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.

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

(hh) No Outstanding Loans or Other Indebtedness.  Except as described in the
Prospectus, there are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of any of them.

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

(jj) JMP Purchases.  The Company acknowledges and agrees that JMP has informed
the Company that JMP 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 JMP may engage in sales of Placement Shares purchased or deemed to be
purchased from the Company as a “riskless principal” or similar capacity) and
(ii) the Company shall not be deemed to have authorized or consented to any such
purchases or sales by JMP.

(kk) Compliance with Laws.  The Company and each of its subsidiaries is
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, except
where failure to be so in compliance would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Change.

Any certificate signed by an officer of the Company and delivered to JMP or to
counsel for JMP shall be deemed to be a representation and warranty by the
Company to JMP as to the matters set forth therein.

 

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

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

(a) Registration Statement Amendments.  After the date of this Agreement and
during any period in which a Prospectus relating to any Placement Shares is
required to be delivered by JMP under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), (i) the Company will notify JMP promptly of the time when
any subsequent amendment to the Registration Statement, other than documents
incorporated by reference, has been filed with the Commission and/or has become
effective or any subsequent supplement to the Prospectus has been filed and of
any request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or for additional information, (ii) the
Company will prepare and file with the Commission, promptly upon JMP’s
reasonable request, any amendments or supplements to the Registration Statement
or Prospectus that, in JMP’s reasonable opinion, may be necessary or advisable
in connection with the distribution of the Placement Shares by JMP (provided,
however, that the failure of JMP to make such request shall not relieve the
Company of any obligation or liability hereunder, or affect JMP’s right to rely
on the representations and warranties made by the Company in this Agreement; and
provided, further, that the only remedy JMP shall have with respect to the
failure to make such filing (other than JMP’s rights under Section 9 hereof)
will be to cease making sales under this Agreement); (iii) the Company will not
file any amendment or supplement to the Registration Statement or Prospectus,
other than documents incorporated by reference, relating to the Placement Shares
or a security convertible into the Placement Shares unless a copy thereof has
been submitted to JMP within a reasonable period of time before the filing and
JMP has not reasonably objected thereto (provided, however, that the failure of
JMP to make such objection shall not relieve the Company of any obligation or
liability hereunder, or affect JMP’s right to rely on the representations and
warranties made by the Company in this Agreement; and provided, further, that
the only remedy JMP shall have with respect to the failure to make such filing
(other than JMP’s rights under Section 9 hereof) will be to cease making sales
under this Agreement) and the Company will furnish to JMP at the time of filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference into the Registration Statement or Prospectus, except for those
documents available via EDGAR; and (iv) the Company will cause each amendment or
supplement to the Prospectus, other than documents incorporated by reference, to
be filed with the Commission as required pursuant to the applicable paragraph of
Rule 424(b) of the Securities Act.

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

(c) Delivery of Prospectus; Subsequent Changes.  During any period in which a
Prospectus relating to the Placement Shares is required to be delivered by JMP
under the Securities

 

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Act with respect to a pending sale of the Placement Shares, (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will comply with all requirements imposed upon
it by the Securities Act, as from time to time in force, and to file on or
before their respective due dates (taking into account any extensions available
under the Exchange Act that would permit the Company to continue to meet the
eligibility requirements of Form S-3) 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 JMP to suspend the offering of Placement Shares
during such period and the Company will promptly amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance; provided, however,
that the Company may delay any such amendment or supplement if, as a result of a
pending transaction or other development with respect to the Company, in the
reasonable judgement of the Company, it is in the best interest of the Company
to do so, provided that no Placement Notice is in effect during such time.

(d) Listing of Placement Shares.  During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by JMP under the
Securities Act with respect to a pending sale of the Placement Shares (including
in circumstances where such requirement may be satisfied pursuant to Rule 172
under the Securities Act), the Company will use its commercially reasonable
efforts to cause the Placement Shares to continue to be listed on Nasdaq and to
qualify the Placement Shares for sale under the securities laws of such
jurisdictions as JMP reasonably designates and to continue such qualifications
in effect so long as required for the distribution of the Placement Shares;
provided, however, that the Company shall not be required in connection
therewith to qualify as a foreign corporation or dealer in securities or file a
general consent to service of process in any jurisdiction.

(e) Delivery of Registration Statement and Prospectus.  The Company will furnish
to JMP and its counsel (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein) and all amendments and supplements to the Registration
Statement or Prospectus that are filed with the Commission during any period in
which a Prospectus relating to the Placement Shares is required to be delivered
under the Securities Act (including all documents filed with the Commission
during such period that are deemed to be incorporated by reference therein), in
each case as soon as reasonably practicable and in such quantities as JMP may
from time to time reasonably request and, at JMP’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 JMP or its
counsel to the extent such document is available on EDGAR.  

(f) Earnings Statement.  The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the

 

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Company’s current fiscal quarter, an earnings statement covering a 12-month
period that satisfies the provisions of Section 11(a) and Rule 158 of the
Securities Act.

(g) Expenses.  The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, in accordance with
the provisions of Section 11 hereunder, will pay the following expenses all
incident to the performance of its obligations hereunder, including, but not
limited to, expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each
Prospectus and of each amendment and supplement thereto, (ii) the preparation,
issuance and delivery of the Placement Shares, (iii) the qualification of the
Placement Shares under securities laws in accordance with the provisions of
Section 7(d) of this Agreement, including filing fees (provided, however, that
any fees or disbursements of counsel for JMP in connection therewith shall be
paid by JMP except as set forth in (vii) below), (iv) the printing and delivery
to JMP of copies of the Prospectus and any amendments or supplements thereto,
and of this Agreement, (v) the fees and expenses incurred in connection with the
listing or qualification of the Placement Shares for trading on Nasdaq, (vi) the
filing fees and expenses, if any, of the Commission, (vii) the filing fees and
associated legal expenses of JMP’s outside counsel for filings with the FINRA
Corporate Financing Department, such legal expense reimbursement not to exceed
$12,500 and, (viii) the reasonable fees and disbursements of JMP’s counsel in an
amount not to exceed $50,000.    

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

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

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

 

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promptly after it shall have received notice or obtained knowledge thereof, of
any information or fact that would alter or affect in any material respect any
opinion, certificate, letter or other document provided to JMP 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 JMP or its
agents in connection with the transactions contemplated hereby, including,
without limitation, providing information and making available documents and
senior corporate officers, during regular business hours and at the Company’s
principal offices, as JMP may reasonably request.

(l) Required Filings Relating to Placement of Placement Shares.  The Company
agrees that on such dates as the Securities Act shall require, the Company will
either (i) include in its quarterly reports on Form 10-Q and its annual reports
on Form 10-K, a summary detailing, within the relevant period, the amount of
Placement Shares sold through JMP, the Net Proceeds to the Company and the
compensation payable by the Company to JMP with respect to such Placement Shares
or (ii) file a prospectus supplement with the Commission under the applicable
paragraph of Rule 424(b) under the Securities Act (each and every filing under
Rule 424(b), a “Filing Date”), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold through JMP, the
Net Proceeds to the Company and the compensation payable by the Company to JMP
with respect to such Placement Shares, and deliver such number of copies of each
such prospectus supplement to each exchange or market on which such sales were
effected as may be required by the rules or regulations of such exchange or
market.

(m) Representation Dates; Certificate.  On or prior to the First Delivery Date
and each time during the term of this Agreement the Company (i) files the
Prospectus relating to the Placement Shares or 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 to the Registration
Statement or the Prospectus relating to the Placement Shares; (ii) files an
annual report on Form 10-K under the Exchange Act; (iii) files its quarterly
reports on Form 10-Q under the Exchange Act; or (iv) files a report on Form 8-K
containing amended financial information (other than an earnings release or
other information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K) under
the Exchange Act (each date of filing of one or more of the documents referred
to in clauses (i) through (iv) shall be a “Representation Date”); the Company
shall furnish JMP with a certificate, in the form attached hereto as Exhibit
7(m) within three (3) Trading Days of any Representation Date if requested by
JMP.  The requirement to provide a certificate under this Section 7(m) shall be
automatically waived for any Representation Date occurring at a time at which no
Placement Notice is pending, which waiver shall continue until the earlier to
occur of the date the Company delivers a Placement Notice hereunder (which for
such calendar quarter shall be considered a Representation Date) and the next
occurring Representation Date.  Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a Representation Date
when the Company relied on such waiver and did not provide JMP with a
certificate under this Section 7(m), then before the Company delivers the
Placement Notice or JMP sells any Placement Shares, the Company shall provide
JMP with a certificate, in the form attached hereto as Exhibit 7(m), dated the
date of the Placement Notice.

 

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(n) Legal Opinion.  On or prior to the First Delivery Date and within three (3)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(m)
for which no waiver is applicable, the Company shall cause to be furnished to
JMP a written opinion of Pepper Hamilton LLP (“Company Counsel”), or other
counsel satisfactory to JMP, in form and substance satisfactory to JMP and its
counsel, dated the date that the opinion is required to be delivered; provided,
however, that in lieu of such opinions for subsequent Representation Dates,
counsel may furnish JMP with a letter (a “Reliance Letter”) to the effect that
JMP may rely on a prior opinion delivered under this Section 7(n) to the same
extent as if it were dated the date of such letter (except that statements in
such prior opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended or supplemented at such Representation Date).  

(o) Comfort Letter.  On or prior to the First Delivery Date and within three (3)
Trading Days of each Representation Date with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(m)
for which no waiver is applicable, the Company shall cause KPMG LLP, and
PricewaterhouseCoopers LLP, if at the time of such Representation Date the
audited financial statements related to the DARA acquisition prepared by
PricewaterhouseCoopers LLP are incorporated into the Registration Statement, to
furnish JMP letters (the “Comfort Letters”), dated the date the applicable
Comfort Letter is delivered, in form and substance satisfactory to JMP, (i)
confirming that they are an independent registered public accounting firm within
the meaning of the Securities Act and the PCAOB, (ii) stating, as of such date,
the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to JMP in connection with registered public offerings (the first such
letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort
Letter with any information that would have been included in the Initial Comfort
Letter had it been given on such date and modified as necessary to relate to the
Registration Statement and the Prospectus, as amended and supplemented to the
date of such letter. In connection with any such comfort letter issued by
PricewaterhouseCoopers LLP, the Company will also deliver to JMP a CFO
certificate in form and substance satisfactory to JMP and its counsel, dated the
date of such comfort letter.

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

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

(r) Compliance with Laws.  The Company and each of its subsidiaries shall use
commercially reasonable efforts to maintain, or cause to be maintained, all
material environmental permits, licenses and other authorizations required by
federal, state and local law in order to conduct their businesses as described
in the Prospectus, and the Company and each of its subsidiaries shall conduct
their businesses, or cause their businesses to be conducted, in substantial

 

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compliance with such permits, licenses and authorizations and with applicable
environmental laws, except where the failure to maintain or be in compliance
with such permits, licenses and authorizations would not reasonably be expected
to, individually or in the aggregate, result in a Material Adverse Change.

(s) Investment Company Act.  The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor 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,
assuming no change in the Commission’s current interpretation as to entities
that are not considered an investment company.

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

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

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

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

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

(b) No Material Notices.  None of the following events shall have occurred and
be continuing:  (i) receipt by the Company 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 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

 

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occurrence of any event that makes any material statement made in the
Registration Statement or the Prospectus or any material document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in the Registration Statement,
related Prospectus or such documents so that, in the case of the Registration
Statement, it will not contain any materially untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, that in the case of
the Prospectus, it will not contain any materially untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

(c) No Misstatement or Material Omission.  JMP 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 JMP’s
reasonable opinion is material, or omits to state a fact that in JMP’s
reasonable opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

(d) Material Changes.  Except as contemplated in the Prospectus, or disclosed in
the Company’s reports filed with the Commission, there shall not have been any
material adverse change, on a consolidated basis, in the authorized capital
stock of the Company or any Material Adverse Change or any development that
could reasonably be expected to result in a Material Adverse Change, or any
downgrading in or withdrawal of the rating assigned to any of the Company’s
securities (other than asset backed securities) 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), the effect of which, in the case of any such action by a rating
organization described above, in the reasonable judgment of JMP (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.

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

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

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

(h) Representation Certificate.  JMP 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).

 

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

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

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

(l) Securities Act Filings Made.  All filings with the Commission required by
Rule 424 under the Securities Act to have been filed prior to the issuance of
any Placement Notice hereunder shall have been made within the applicable time
period prescribed for such filing by Rule 424.

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

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

9.  Indemnification and Contribution.

(a) Company Indemnification.  The Company agrees to indemnify and hold harmless
JMP, the directors, officers, partners, employees and agents of JMP and each
person, if any, who (i) controls JMP 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 JMP from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
reasonable investigative, legal and other expenses  incurred in connection with,
and any and all amounts paid in settlement (in accordance with Section 9(c)) of,
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), as and when incurred, to which JMP, or any
such person, may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of or
are based, 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 in it or necessary to make the statements in
it not misleading or (z) any breach by the Company of any of its
representations, warranties and

 

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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.

(b) JMP Indemnification. JMP 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) or in any free writing prospectus 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 legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (1) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or

 

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parties. It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred after the indemnifying party receives a written invoice relating to
fees, disbursements and other charges in reasonable detail. An indemnifying
party will not, in any event, be liable for any settlement of any action or
claim effected without its written consent.  No indemnifying party shall,
without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated by this Section
9 (whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding.

(d) Contribution.  In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or JMP, the Company and
JMP will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than JMP, 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 JMP may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and JMP on the other. The relative benefits received
by the Company on the one hand and JMP 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 JMP (before deducting expenses) from the sale of
Placement Shares on behalf of the Company.  If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and JMP, on the other,
with respect to the statements or omission that resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or JMP, 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 JMP agree that it would not be just and equitable if
contributions pursuant to this Section 9(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense, or
damage, or action in respect thereof, referred to above in this Section 9(d)
shall be deemed to include, for the purpose of this Section 9(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim to the extent consistent
with Section 9(c) hereof.  Notwithstanding the foregoing provisions of this
Section 9(d),

 

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JMP shall not be required to contribute any amount in excess of the commissions
received by it under this Agreement and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9(d), any person who
controls a party to this Agreement within the meaning of the Securities Act, and
any officers, directors, partners, employees or agents of JMP, will have the
same rights to contribution as that party, and each director and 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(d), will notify any such party or parties from
whom contribution may be sought, but the omission to so notify will not relieve
that party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 9(d) except to the extent that
the failure to so notify such other party materially prejudiced the substantive
rights or defenses of the party from whom contribution is sought. Except for a
settlement entered into pursuant to the last sentence of Section 9(c) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent if such consent is required pursuant to
Section 9(c) hereof.

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 JMP, any controlling
persons, or the Company (or any of their respective officers, directors or
controlling persons), (ii) delivery and acceptance of the Placement Shares and
payment therefor or (iii) any termination of this Agreement.

11.  Termination.

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

 

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(b) The Company shall have the right, by giving two (2) days’ notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement.  Any such termination shall be without
liability of any party to any other party except that the provisions of Section
7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in
full force and effect notwithstanding such termination.

(c) JMP shall have the right, by giving two (2) days’ notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after
the date of this Agreement.  Any such termination shall be without liability of
any party to any other party except that the provisions of Section 7(g), Section
9, Section 10, Section 16 and Section 17 hereof shall remain in full force and
effect notwithstanding such termination.

(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 JMP on the terms and subject to the conditions set forth herein;
provided that the provisions of Section 7(g), Section 9, Section 10, Section 16
and Section 17 hereof shall remain in full force and effect notwithstanding such
termination.

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

(f) Any termination of this Agreement shall be effective on the date specified
in such notice of termination; provided, however, that such termination shall
not be effective until the close of business on the date of receipt of such
notice by JMP 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.

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 JMP, shall be delivered to JMP at 600 Montgomery Street, Suite 1100, San
Francisco, California  94111, Facsimile:  (415) 835-8920, Attention:  Equity
Securities, Attention:  General Counsel with a copy to Duane Morris LLP,
attention: James T. Seery, e-mail jtseery@duanemorris.com; or if sent to the
Company, shall be delivered to Baudax Bio, Inc. attention: Gerri Henwood,
e-mail: ghenwood@baudaxbio.com with a copy to Pepper Hamilton LLP, 3000 Two
Logan Square, Eighteenth and Arch Streets, Philadelphia, PA 19103-2799,
attention:  Rachael Bushey, e-mail: busheyr@pepperlaw.com. Each party to this
Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose.  Each such notice or
other communication shall be deemed given (i) when delivered personally or by
verifiable facsimile transmission (with an original to follow) on or before 4:30
p.m., New York City time, on a Business Day (as defined below), or, if such day
is not a Business Day on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized overnight courier
and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid). For
purposes of this Agreement, “Business Day” shall

 

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mean any day on which the Nasdaq and commercial banks in the City of New York
are open for business.

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

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

15.  Entire Agreement; Amendment; Severability.  This Agreement (including all
schedules and exhibits attached hereto and Placement Notices issued pursuant
hereto) constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and JMP.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.

16.  Applicable Law; Consent to Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of New York
without regard to the principles of conflicts of laws. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

 

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

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

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

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

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

(d) the Company waives, to the fullest extent permitted by law, any claims it
may have against JMP, for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that JMP 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, partners, employees or creditors of the Company.

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

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

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

(b)“Agent’s Information” means, solely the following information in the
Prospectus:  the third sentence of the eighth paragraphs under the caption “Plan
of Distribution” in the Prospectus.

 

 

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

Very truly yours,

 

JMP SECURITIES LLC

 

 

By:      _/s/ Shawn Cross_____________________

Name: Shawn Cross

Title:  Managing Director

Co-Head of Healthcare Investment Banking

 

 

 

ACCEPTED as of the date

first-above written:

 

BAUDAX BIO, INC.

 

 

By:  _/s/ Ryan D. Lake___________________

Name:  Ryan D. Lake

Title:  Chief Financial Officer

 

 

- 28 -

 

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SCHEDULE 1

form of PLACEMENT NOTICE

 

From:

[                              ]

Cc:

[                              ]

To:

[ ]

Subject: JMP at the Market Offering—Placement Notice

Date:_______________, 20___

Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Sales
Agreement between Baudax Bio, Inc. (the “Company”), and JMP Securities LLC
(“JMP”) dated February 13, 2020 (the “Agreement”), I hereby request on behalf of
the Company that JMP sell up to [  ] shares of the Company’s common stock, par
value [____] per share, at a minimum market price of $_______ per share.  Sales
should begin on the date of this Notice and shall continue until [DATE] [all
shares are sold].

 

 

 

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SCHEDULE 2

 

Notice Parties

The Company

Gerri Henwoodghenwood@baudaxbio.com

Ryan Lakeghenwood@baudaxbio.com

 

JMP

Raymond Han, Director rhan@jmpsecurities.com

 

Gil Mogavero, Chief Compliance Officer gmogavero@jmpsecurities.com

 

Andrew Mertz, Managing Director amertz@jmpsecurities.com

 

 

 

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SCHEDULE 3

 

Compensation

JMP shall be paid compensation equal to 3% of the gross proceeds from the sales
of Common Stock pursuant to the terms of this Agreement.

 

 

 

2

 

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Exhibit 7(m)

 

 

 

OFFICER CERTIFICATE

 

 

The undersigned, the duly qualified and elected _______________________, of
Baudax Bio, Inc. (“Company”), a Pennsylvania corporation, does hereby certify in
such capacity and on behalf of the Company, pursuant to Section 7(m) of the
Sales Agreement dated February 13, 2020 (the “Sales Agreement”) between the
Company and JMP Securities LLC, that to 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 Change, are true and correct on and as of the date hereof with
the same force and effect as if expressly made on and as of the date hereof,
except for those representations and warranties that speak solely as of a
specific date and which were true and correct as of such date, and (B) to the
extent such representations and warranties are not subject to any qualifications
or exceptions, are true and correct in all material respects as of the date
hereof as if made on and as of the date hereof with the same force and effect as
if expressly made on and as of the date hereof except for those representations
and warranties that speak solely as of a specific date and which were true and
correct as of such date; and

(ii)

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

 

 

 

 

By:

Name:

Title:

 

 

Date:

 

 

 

 

DM2\12270047.4