Exhibit 10.2
AVANIR PHARMACEUTICALS, INC.
12,500,000 SHARES OF COMMON STOCK
CONTROLLED EQUITY OFFERINGSM
SALES AGREEMENT
July 30, 2009
CANTOR FITZGERALD & CO.
499 Park Avenue
New York, NY 10022
Ladies and Gentlemen:
          AVANIR PHARMACEUTICALS, INC., a Delaware corporation (the “Company”),
confirms its agreement (this “Agreement”) with Cantor Fitzgerald & Co.
(“CF&Co”), 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 CF&Co, acting as agent and/or
principal, up to 12,500,000 shares (the “Placement Shares”) of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”), with gross
proceeds of up to $35,000,000. 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 Placement Shares issued and sold
under this Agreement shall be the sole responsibility of the Company, and CF&Co
shall have no obligation in connection with such compliance, provided that CF&Co
strictly follows the trading instructions provided pursuant to any Placement
Notice. The issuance and sale of Placement Shares through CF&Co 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 Common Stock.
          The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”), with the Commission a
Registration Statement on Form S-3 (No. 333-158665), including a base
prospectus, relating to certain securities, including the Placement Shares 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 promulgated thereunder (collectively, the “Exchange Act”). The
Company has prepared a prospectus supplement specifically relating to the Common
Stock (the “Prospectus Supplement”) to the base prospectus included as part of
such registration statement. The Company has furnished to CF&Co, for use by
CF&Co, 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

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registration statement, 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, as well as any comparable successor
registration statement filed by the Company for the sale of shares of its Common
Stock, including the Placement Shares, collectively are 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 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 either the Electronic Data Gathering Analysis
and Retrieval System or Interactive Data Electronic Applications (collectively
“IDEA”).
     2. Placements. Each time that the Company wishes to issue and sell the
Placement Shares hereunder (each, a “Placement”), it will notify CF&Co by email
notice (or other method mutually agreed to in writing by the parties) (a
“Placement Notice”) containing the parameters in accordance with which it
desires the Placement Shares to be sold, which shall at a minimum include the
number of Placement Shares to be issued, the time period during which sales are
requested to be made, any limitation on the number of Placement Shares that may
be sold in any one Trading Day (as defined in Section 3) and any minimum price
below which sales may not be made, a form of which containing such minimum sales
parameters necessary is attached hereto as Schedule 1. The Placement Notice
shall originate from any of the individuals from the Company set forth on
Schedule 2 (with a copy to each of the other individuals from the Company listed
on such schedule), and shall be addressed to each of the individuals from CF&Co
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 CF&Co unless and until
(i) in accordance with the notice requirements set forth in Section 4, CF&Co
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, (iv) the Company issues a
subsequent Placement Notice with parameters superseding those on the earlier
dated Placement Notice, or (iv) 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 CF&Co 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 CF&Co will have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until the Company delivers a Placement Notice to
CF&Co and CF&Co does not decline such Placement Notice pursuant to the terms set
forth above, and then only upon the

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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 CF&Co. Subject to the terms and conditions
herein set forth, upon the Company’s issuance 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, CF&Co,
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 Global Market (the “Exchange”), to sell such Placement Shares up to the
amount specified, and otherwise in accordance with the terms of such Placement
Notice. CF&Co will provide written confirmation to the Company (including by
email correspondence) no later than the opening of the Trading Day (as defined
below) next 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 compensation payable by the Company to CF&Co with respect to such sales
pursuant to Section 2, and the Net Proceeds (as defined below) payable to the
Company, with an itemization of deductions made by CF&Co (as set forth in
Section 5(a)) from gross proceeds for the Placement Shares that it receives from
such sales. CF&Co may sell Placement Shares by any method permitted by law
deemed to be an “at the market” offering as defined in Rule 415 of the
Securities Act, including without limitation sales made directly on the
Exchange, on any other existing trading market for the Common Stock or to or
through a market maker. With the prior express written consent of the Company,
which may be provided in its Placement Notice, CF&Co may also sell Placement
Shares in privately negotiated transactions. During the term of this Agreement
and notwithstanding anything to the contrary herein, CF&Co agrees that in no
event will it or any CF&Co Affiliate engage in any market making, bidding,
stabilization or other trading activity with regard to the Common Stock if such
activity would be prohibited under Regulation M or other anti-manipulation rules
under the Securities Act. The Company acknowledges and agrees that (i) there can
be no assurance that CF&Co will be successful in selling Placement Shares, and
(ii) CF&Co 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 CF&Co 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 shares of the Common Stock are purchased and sold on the principal market
on which the Common Stock is listed or quoted.
     4. Suspension of Sales. The Company or CF&Co may, upon notice to the other
party in writing (including by email correspondence to each of the individuals
of the other party set forth on Schedule 2, if receipt of such correspondence is
actually acknowledged by any of the individuals to whom the notice is sent,
other than via auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the individuals of the
other party set forth on Schedule 2), suspend any sale of Placement Shares;
provided, however, that such suspension shall not affect or impair either
party’s obligations with respect to any Placement Shares sold hereunder prior to
the receipt of such notice. Each of the Parties agrees that no such notice under
this Section 4 shall be effective against the other unless it is made to one of
the individuals named on Schedule 2 hereto, as such schedule may be amended from
time to time.

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     5. Settlement.
     (a) Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the third (3rd) Business 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 CF&Co at which such Placement
Shares were sold, after deduction for (i) CF&Co’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 CF&Co 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 CF&Co’s or its designee’s account
(provided CF&Co shall have given the Company written notice of such designee at
least one Business 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, CF&Co 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 Placement Shares on
a Settlement Date, the Company will, in addition to and in no way limiting the
rights and obligations set forth in Section 9(a) (Indemnification and
Contribution), (i) hold CF&Co harmless against any loss, claim, damage, or
expense (including reasonable legal fees and expenses), as incurred, arising out
of or in connection with such default by the Company and (ii) pay to CF&Co any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default; provided, however, that the Company shall not
be obligated to so indemnify and reimburse CF&Co if the Placement Shares are not
timely delivered due to (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the NASDAQ Stock Market; (ii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iii) an outbreak or escalation of hostilities or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (iv) any other calamity or crisis or
any change in financial, political or economic conditions in the United States
or elsewhere.
     6. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, CF&Co that as of each Applicable Time (as
defined in Section 20(a)):
     (a) Compliance with Registration Requirements. The Registration Statement
has been filed with the Commission under the Securities Act and declared
effective by the Commission under the Securities Act. The Company has complied
with all requests of the Commission for additional or supplemental information.
No stop order suspending the effectiveness of the

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Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the Company’s knowledge, are contemplated
or threatened by the Commission. The Company satisfied all applicable
requirements for the use of Form S-3 under the Securities Act when the
Registration Statement was filed. The Commission has not issued an order
preventing or suspending the use of the base prospectus, any Free Writing
Prospectus (as defined below) or the Prospectus relating to the proposed
offering of the Placement Shares and no proceedings for such purpose have been
instituted or are pending or, to the Company’s knowledge, are contemplated or
threatened by the Commission. The Prospectus delivered to CF&Co for use in
connection with the offering of Placement Shares was, at the time of such
delivery, identical to the electronically transmitted copies thereof filed with
the Commission pursuant to IDEA, except to the extent permitted by
Regulation S-T. At the respective times each part of the Registration Statement
and each amendment thereto became effective or was deemed effective, as the case
may be, the Registration Statement complied and will comply in all material
respects with the Securities Act and did not and 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 statements therein not misleading. The
immediately preceding sentence does not apply to statements in or omissions from
the Registration Statement or any amendments or supplements thereto based upon
and in conformity with written information furnished to the Company by CF&Co
specifically for use therein.
     (b) Delivery of Offering Materials. The Company has delivered to CF&Co, or
made available through IDEA, one complete copy of the Registration Statement and
of each consent 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 CF&Co has reasonably
requested.
     (c) Prospectus. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued, as of the date hereof and at each Applicable Time, as the case may be,
included or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing sentence does not apply to statements in or omissions
from the Prospectus or any amendments or supplements thereto based upon and in
conformity with written information furnished to the Company by CF&Co
specifically for use therein.
     (d) Financial Information. The financial statements of the Company,
together with the related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statement and the Prospectus
fairly present, in all material respects, the financial condition of the Company
as of and at the dates indicated and the results of operations, changes in
financial position, stockholders’ equity and cash flows for the periods therein
specified. Such financial statements, schedules, and notes are in conformity
with GAAP as consistently applied in the United States throughout the periods
involved (except as otherwise stated therein). Any selected financial data
included or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the extent based
upon or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. Any pro forma
financial statements of the Company, and the related notes thereto, included or
incorporated by reference in the

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Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The Company does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus. No other financial
statements are required to be set forth or to be incorporated by reference in
the Registration Statement or the Prospectus under the Securities Act.
     (e) Incorporated Documents. Each document incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus
heretofore filed, at the time it was or hereafter is filed with the Commission,
conformed and will conform when filed in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder; no such document when it was filed (or, if an amendment with respect
to any such document was filed, when such amendment was filed), contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; and no such document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.
     (f) Distribution of Materials; Free Writing Prospectuses. The Company is
not an “ineligible issuer” in connection with the offering pursuant to
Rules 164, 405 and 433 under the Securities Act. The Company has not, directly
or indirectly, distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Placement
Shares other than the Prospectus and other materials, if any, permitted under
the Securities Act to be distributed. Each “issuer free writing prospectus” (a
“Free Writing Prospectus”), as defined in Rule 433 under the Securities Act
(“Rule 433”), relating to the Placement Shares that (i) was 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), as of its issue date and as of each
Applicable Time (as defined in Section 20 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any incorporated document deemed to be a part thereof that has not been
superseded or modified. The foregoing sentence does not apply to statements in
or omissions from any Free Writing Prospectus based upon and in conformity with
written information furnished to the Company by CF&Co specifically for use
therein. The Company has satisfied or will satisfy the conditions in Rule 433 to
avoid a requirement to file with the Commission any electronic road show.
     (g) Organization. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Delaware with full corporate power and authority necessary to own, hold, lease
and/or operate its assets and properties and to conduct the business in which it
is engaged and as described in the Registration Statement and Prospectus; and
the Company is duly qualified as a foreign entity to transact business and is in

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good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure, individually or in the aggregate, to be so
qualified and be in good standing would not have a material adverse effect on
(i) the consolidated business, operations, assets, properties, financial
condition, reputation, prospects, or results of operations of the Company and
any subsidiaries which may be incorporated or formed from time to time (the
“Subsidiaries”) taken as a whole, (ii) the transactions contemplated hereby, or
(iii) the ability of the Company to perform its obligation under this Agreement
(collectively, a “Material Adverse Effect”). The Company has full corporate
power and authority necessary to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
Company is in compliance with the laws, orders, rules, regulations and
directives applicable to it, except for any noncompliance that, individually, or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Complete and correct copies of the certificate of incorporation and of
the bylaws of the Company and all amendments thereto have been delivered or made
available to CF&Co.
     (h) Subsidiaries. The Company has no “significant subsidiaries” (as such
term is defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act). The Company does not own, directly or indirectly, any shares of stock or
any other equity interests or long-term debt securities of any corporation,
firm, partnership, joint venture, association or other entity.
     (i) No Violation or Default. Neither the Company nor any of its
Subsidiaries is (i) in violation of any provision of its charter or bylaws or
similar organizational documents, (ii) in default in any respect, and no event
has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant, or
condition of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject, (iii) in violation in any respect of any statute,
law, rule, regulation, ordinance, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, its Subsidiaries or any of its
properties, as applicable (including, without limitation, those administered by
the Food and Drug Administration of the U.S. Department of Health and Human
Services (the “FDA”) or by any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the
FDA), or (iv) in violation of any rule or regulation of any self-regulating
organization or other non-governmental regulatory authority (including, without
limitation, the rules and regulations of the Exchange) except, with respect to
clauses (ii), (iii), and (iv), any violations or defaults which, singularly or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect. The execution, delivery and performance of this Agreement, the
issuance and sale of the Placement Shares and the consummation of the
transactions contemplated hereby will not conflict with, or result in any breach
of or constitute a default under (nor constitute any event which with notice,
lapse of time or both would result in any breach of, or constitute a default
under), (i) any provision of the charter, bylaws or organizational documents, as
the case may be, of the Company or any of its Subsidiaries, (ii) any provision
of any contract, license, repurchase agreement, management agreement, indenture,
mortgage, deed of trust, bank loan or credit agreement, note, lease or

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other evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries, or any of their respective assets
or properties may be bound or affected, except for any breach or default that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, (iii) any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company or
any of its Subsidiaries, or (iv) any rule or regulation of any self-regulating
organization or other non-governmental regulatory authority (including, without
limitation, the rules and regulations of the Exchange), except for any breach or
default that, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
     (j) Capitalization. As of September 30, 2008, the Company had an
authorized, issued and outstanding capitalization as set forth on its balance
sheet included in the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2008. All of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable, have been issued in compliance with all federal
and state securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right.
     (k) Authorization; Enforceability. This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable in accordance with its terms, except to the
extent that (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles and (ii) the indemnification and
contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.
     (l) Capital Stock and Placement Shares in Proper Form. The capital stock of
the Company, including the Placement Shares, conforms in all material respects
to the description thereof contained in the Registration Statement and the
Prospectus. The holders of the Placement Shares will not be subject to personal
liability under the Delaware General Corporation Law by reason of being such
holders.
     (m) Authorization of Placement Shares. The Placement Shares, when issued
and delivered pursuant to the terms approved by the Board of Directors or a duly
designated committee thereof, against payment therefor as provided herein, will
be duly and validly authorized and issued and fully paid and non-assessable,
free and clear of any pledge, lien, encumbrance, security interest or other
claim, including any statutory or contractual preemptive rights, resale rights,
rights of first refusal or other similar rights, and will be registered pursuant
to Section 12 of the Exchange Act.
     (n) Consents and Permits. (1) The Company and its Subsidiaries have made
all filings, applications and submissions required by, and possesses all
approvals, licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other authorizations
issued by, the appropriate federal, state or foreign regulatory authorities
(including, without limitation, the FDA, and any other foreign, federal, state
or local government or regulatory authorities performing functions similar to
those performed by the FDA) necessary for the ownership or lease of their
respective properties or to conduct its

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businesses as described in the Registration Statement and the Prospectus
(collectively, “Permits”), except for such Permits the failure of which to
possess, obtain or make the same would not reasonably be expected to have a
Material Adverse Effect; and neither the Company nor any of its Subsidiaries has
received any written notice of proceedings relating to the limitation,
revocation, cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, and has any
reason to believe that any such license, certificate, permit or authorization
will not be renewed in the ordinary course. (2) No approval, authorization,
consent or order of or filing with any national, state or local governmental or
regulatory commission, board, body, authority or agency is required in
connection with the issuance and sale of the Placement Shares or the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the Exchange, or approval of the stockholders of the Company
(including as may be required pursuant to Rule 5635 of the NASDAQ Marketplace
Rules)), other than (i) registration of the Placement Shares under the
Securities Act, (ii) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Placement Shares are being
offered by CF&Co, (iii) filing of any reports under the Exchange Act, or
(iv) such approvals as may be required by the Conduct Rules of the Financial
Industry Regulatory Authority, Inc. (“FINRA”).
     (o) No Preferential Rights. Except as set forth in the Registration
Statement and the Prospectus, (i) no person, as such term is defined in
Rule 1-02 of Regulation S-X promulgated under the Securities Act (each, a
“Person”), has the right, contractual or otherwise, to cause the Company to
issue or sell to such Person any shares of Common Stock or shares of any other
capital stock or other securities of the Company, (ii) no Person has any
preemptive rights, resale rights, rights of first refusal, or any other rights
(whether pursuant to a “poison pill” provision or otherwise) to purchase any
shares of Common Stock or shares of any other capital stock or other securities
of the Company, (iii) except as disclosed to CF&Co or its agents in connection
with the transactions contemplated hereby, no Person has the right to act as an
underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Placement Shares, and (iv) no Person has the right,
contractual or otherwise, to require the Company to register under the
Securities Act any shares of Common Stock or shares of any other capital stock
or other securities of the Company, or to include any such shares or other
securities in the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the Registration Statement
or the sale of the Placement Shares as contemplated thereby or otherwise.
     (p) Independent Public Accountant. KMJ Corbin & Company, LLP, whose report
on the financial statements of the Company is filed with the Commission as part
of the Registration Statement and the Prospectus, are and, during the periods
covered by their report, were (i) an independent public accounting firm within
the meaning of the Securities Act, (ii) a registered public accounting firm (as
defined in Section 2(a)(12) of the Sarbanes-Oxley Act), and (iii) not in
violation of the auditor independence requirements of the Sarbanes-Oxley Act.
     (q) Enforceability of Agreements. To the knowledge of the Company, all
agreements between the Company and third parties expressly referenced in the
Prospectus are legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms,

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except to the extent that (i) enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited be federal or
state securities laws or public policy considerations in respect thereof and
except for any other potentially unenforceable term that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
     (r) No Litigation. Except as disclosed in the Registration Statement and
the Prospectus, there are no actions, suits, claims, investigations, inquiries
or proceedings pending or, to the Company’s knowledge, threatened, to which
either the Company or, to the Company’s knowledge, its Subsidiaries, nor any of
their respective officers or directors, is a party or of which any of their
respective properties or other assets is subject at law or in equity, or before
or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or before any self-regulating
organization or other non-governmental regulatory authority (including, without
limitation, the Exchange), which if resolved adversely to the Company or any
Subsidiary would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
     (s) Regulatory Filings. Neither the Company nor any of its Subsidiaries has
failed to file with the applicable regulatory authorities (including, without
limitation, the FDA or any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the FDA)
any required filing, declaration, listing, registration, report or submission,
except for such failures that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; all such filings,
declarations, listings, registrations, reports or submissions were in compliance
with applicable laws when filed and no deficiencies have been asserted by any
applicable regulatory authority with respect to any such filings, declarations,
listings, registrations, reports or submissions, except for any deficiencies
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
     (t) Market Capitalization. As of the date of this Agreement, the aggregate
market value of the Company’s voting stock held by nonaffiliates of the Company
was equal to or greater than $100 million.
     (u) No Material Changes. Subsequent to the respective dates as of which
information is given in, or incorporated by reference into, the Registration
Statement and the Prospectus, there has not been (i) any change, development or
event that has caused, or could reasonably be expected to result, individually
or in the aggregate, in a Material Adverse Effect, (ii) any change in the number
of authorized shares of capital stock, (iii) any transaction that is material to
the Company and its Subsidiaries taken as a whole, or (iv) any obligation or
liability, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or its Subsidiaries, that is material to the Company and
its Subsidiaries taken as a whole.
     (v) No Material Defaults. Neither the Company nor any of its Subsidiaries
has defaulted on any installment on indebtedness for borrowed money or on any
rental on one or more long-term leases, which defaults, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. The
Company has not filed a report pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of its last Annual Report on Form

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10-K indicating that it (i) has failed to pay any dividend or sinking fund
installment on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long-term
leases, which defaults, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
     (w) Certain Market Activities. Neither the Company nor, to the Company’s
knowledge, any of its Subsidiaries, nor, to the Company’s knowledge, any of
their respective directors, officers or controlling persons has taken, directly
or indirectly, any action designed, or that has constituted or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.
     (x) Broker/Dealer Relationships. Neither the Company nor any of its
Subsidiaries or any related entities (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act or
(ii) directly or indirectly through one or more intermediaries, controls or is a
“person associated with a FINRA member” or “associated person of a FINRA member”
(within the meaning of Article I of the Bylaws of the NASD).
     (y) No Reliance. The Company has not relied upon CF&Co or legal counsel for
CF&Co for any legal, tax or accounting advice in connection with the offering
and sale of the Placement Shares.
     (z) Taxes. The Company and, to the Company’s knowledge, any of its
Subsidiaries has filed on a timely basis (taking into account all applicable
extensions) all necessary federal, state, local and foreign income and franchise
tax returns, if any such returns were required to be filed, through the date
hereof and have paid all taxes shown as due thereon except for any failure to
file or pay which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No tax deficiency has been asserted
against the Company or, to the Company’s knowledge, any of its Subsidiaries, nor
does the Company know of any tax deficiency that is likely to be asserted
against any such entity that, if determined adversely to any such entity, could
reasonably be expected to have a Material Adverse Effect. All tax liabilities,
if any, are adequately provided for on the books of the Company and, to the
Company’s knowledge, any of its Subsidiaries, except for such tax liabilities
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
     (aa) Intellectual Property. Except as set forth in the Prospectus, the
Company and its Subsidiaries own, possess, license or have other rights to use
all foreign and domestic patents, patent applications, trade and service marks,
trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “Intellectual Property”), necessary for
the conduct of their respective businesses as now conducted or as proposed in
the Prospectus to be conducted except to the extent that the failure to own,
possess, license or otherwise hold adequate rights to use such Intellectual
Property would not, individually or in the aggregate, have a Material Adverse
Effect. Except as set forth in the Prospectus, (a) there are no rights of third
parties to any such Intellectual Property owned by the Company and its
Subsidiaries; (b) to the Company’s knowledge, there is no infringement by third
parties of any such Intellectual Property; (c) to the Company’s knowledge, there
is no pending or threatened action, suit, proceeding or claim by others
challenging the Company’s and its Subsidiaries’

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rights in or to any such Intellectual Property, and the Company is unaware of
any facts which could form a reasonable basis for any such action, suit,
proceeding or claim; (d) to the Company’s knowledge, there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property; (e) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that
the Company and its Subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary rights of others; (f) to
the Company’s knowledge, there is no third-party U.S. patent or published U.S.
patent application which contains claims for which an Interference Proceeding
(as defined in 35 U.S.C. § 135) has been commenced against any patent or patent
application described in the Prospectus as being owned by or licensed to the
Company; (g) the Company and its Subsidiaries have complied with the terms of
each agreement pursuant to which Intellectual Property has been licensed to the
Company or such Subsidiary, and all such agreements are in full force and
effect; (h) to the Company’s knowledge, there is no prior art that may render
any patent application within the Intellectual Property unpatentable that has
not been disclosed to the U.S. Patent and Trademark Office; (i) to the Company’s
knowledge, the manufacture, use or sale of the product candidates described in
the Prospectus as under development by the Company or its Subsidiaries falls or
would fall within the scope of one or more claims of one or more patents or
patent applications owned by, or exclusively licensed to, the Company or its
Subsidiaries; and (j) to the Company’s knowledge, each issued patent was validly
issued under the laws of the country that issued it, except, in the case of any
of clauses (b), (c), (d) and (e) above, for any such infringement by third
parties or any such pending or threatened suit, action, proceeding or claim as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
     (bb) Clinical Studies. The clinical, pre-clinical and other studies and
tests conducted by or on behalf of or sponsored by the Company and its
Subsidiaries were and, if still pending, are being conducted in accordance in
all material respects with all statutes, laws, rules and regulations, as
applicable (including, without limitation, those administered by the FDA or by
any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA). The descriptions in
the Registration Statement and Prospectus of the results of such studies and
tests are accurate and complete in all material respects. Except as set forth in
the Prospectus, neither the Company nor any of its Subsidiaries has received any
notices or other correspondence from the FDA or any other foreign, federal,
state or local governmental or regulatory authority performing functions similar
to those performed by the FDA with respect to any ongoing clinical or
pre-clinical studies or tests requiring the termination or suspension of such
studies or tests. The Company is in compliance with all applicable federal,
state, local and foreign laws, regulations, orders, and decrees governing its
business as prescribed by the FDA, or any other federal, state, or foreign
agencies or bodies, including those bodies and agencies engaged in the
regulation of pharmaceuticals or biohazardous substances or materials, except
where non-compliance would not, individually, or in the aggregate, have a
Material Adverse Effect.
     (cc) Compliance Program. The Company has established and administers a
compliance program applicable to the Company, to assist the Company and the
directors, officers and employees of the Company in complying with applicable
regulatory guidelines (including, without limitation, those administered by the
FDA and any other foreign, federal,

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state or local governmental or regulatory authority performing functions similar
to those performed by the FDA).
     (dd) Environmental Laws. The Company and its Subsidiaries: (i) are in
compliance with any and all applicable federal, state, local and foreign laws,
rules, regulations, decisions and orders relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (collectively, “Environmental Laws”); (ii) have
received and are in compliance with all permits, licenses and other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses as described in the Registration Statement and the Prospectus; and
(iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except, in the case of any of
clauses (i), (ii) or (iii) above, for any such failure to comply or failure to
receive required permits, licenses, or other approvals or any such liability as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
     (ee) Accounting Controls. The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; 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.
     (ff) Disclosure Controls. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15e and
15d-15e under the Exchange Act), which are designed to ensure that material
information relating to the Company is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, and that such disclosure controls and procedures are appropriate to
allow timely decisions regarding required disclosure to be included in the
Company’s periodic filings under the Exchange Act. The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the most recently ended quarter (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Except as disclosed in the Registration Statement and the Prospectus and since
the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in Exchange Act
Rules 13a-15 and 15d-15) that have materially affected, or are reasonably likely
to materially affect, the Company’s internal control over financial reporting.
The Company’s independent auditors and the Audit Committee of the Board of
Directors of the Company have been advised of all significant deficiencies, if
any, in the design or operation of internal controls which could adversely
affect the Company’s ability to record, process, summarize and report financial
data. All known material weaknesses, if any, in internal controls have been
identified to the Company’s independent auditors. Since the date of the most
recent evaluation of such disclosure controls and procedures and internal
controls, there have been no significant

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changes in internal controls or in other factors that could significantly and
adversely affect internal controls. All “significant deficiencies” and “material
weaknesses” (as such terms are defined in PCAOB Auditing Standard No. 2) of the
Company, if any, have been disclosed in the Registration Statement and the
Prospectus; the principal executive officers (or their equivalents) and
principal financial officers (or their equivalents) of the Company have made all
certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) and any related rules and regulations promulgated by the Commission, and
the statements contained in each such certification are complete and correct.
The Company, its Subsidiaries and the Company’s directors and officers are each
in compliance in all material respects with all applicable effective provisions
of the Sarbanes-Oxley Act and the rules and regulations of the Commission and
the NASDAQ promulgated thereunder.
     (gg) Finder’s Fees. Neither the Company nor any of its Subsidiaries has
incurred any liability for any finder’s fees or similar payments in connection
with the transactions herein contemplated, except as may otherwise exist with
respect to CF&Co pursuant to this Agreement.
     (hh) Labor Disputes. Neither the Company nor any of its Subsidiaries is
engaged in any unfair labor practice; except for matters which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) there is no (A) unfair labor practice complaint pending or,
to the Company’s knowledge, threatened against the Company or its Subsidiaries
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
or, to the Company’s knowledge, threatened, (B) strike, labor dispute, slowdown
or stoppage pending or, to the Company’s knowledge, threatened against the
Company or any of its Subsidiaries and (C) union representation dispute
currently existing concerning the employees of the Company or any of its
Subsidiaries, and (ii) to the Company’s knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the Company or
any of its Subsidiaries, and (B) there has been no violation of any federal,
state, local, or foreign law relating to discrimination in the hiring, promotion
or pay of employees or any applicable wage or hour laws concerning the employees
of the Company.
     (ii) Investment Company Act. Neither the Company nor any of its
Subsidiaries, after giving effect to the offering and sale of the Placement
Shares, will be (i) required to register as an “investment company” or an entity
“controlled” by an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended (the “Investment Company Act”), or
(ii) a “business development company” (as defined in Section 2(a)(48) of the
Investment Company Act.
     (jj) Casualty. Neither the Company nor, to the Company’s knowledge, any of
its Subsidiaries has sustained since the date of the last audited financial
statements included in the Registration Statement and the Prospectus any loss or
interference with its respective business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, in each case that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
     (kk) Underwriter Agreements. The Company is not a party to any agreement
with an agent or underwriter for any other “at-the-market” or continuous equity
transaction.

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     (ll) ERISA. The Company and its Subsidiaries are in compliance with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”), except for any noncompliance that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
No “reportable event” (as defined in section 4043 of ERISA) for which the
Pension Benefit Guaranty Corporation has not waived the notice requirement has
occurred in the past three years with respect to any “pension plan” (as defined
in ERISA) for which the Company and its Subsidiaries would reasonably expect to
have any liability. The Company and its Subsidiaries have not incurred and do
not reasonably expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “pension plan” or
(ii) Sections 412 or 4971 of the Code. Each “pension plan” for which the Company
or its Subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination or
opinion letter to that effect and, to the Company’s knowledge, no event has
occurred since the date of such letter that could reasonably be expected to
result in the loss of such qualification.
     (mm) CF&Co Purchases. The Company acknowledges and agrees that CF&Co has
informed the Company that CF&Co 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 CF&Co may engage in sales of Placement Shares purchased or
deemed purchased from the Company as a “riskless principal” or in a similar
capacity) and (ii) the Company shall not be deemed to have authorized or
consented to any such purchases or sales by CF&Co.
     (nn) No Improper Practices. (i) Neither the Company nor, to the Company’s
knowledge, its Subsidiaries, nor to the Company’s knowledge, any of their
respective executive officers has, in the past five years, made any unlawful
contributions to any candidate for any political office (or failed fully to
disclose any contribution in violation of law) or made any contribution or other
payment to any official of, or candidate for, any federal, state, municipal, or
foreign office or other person charged with similar public or quasi-public duty
in violation of any law or of the character required to be disclosed in the
Prospectus; (ii) no relationship, direct or indirect, exists between or among
the Company or, to the Company’s knowledge, any Subsidiary or any affiliate of
any of them, on the one hand, and the directors, officers and stockholders of
the Company or, to the Company’s knowledge, any Subsidiary, on the other hand,
that is required by the Securities Act to be described in the Registration
Statement and the Prospectus that is not so described; (iii) no relationship,
direct or indirect, exists between or among the Company or any Subsidiary or any
affiliate of them, on the one hand, and the directors, officers, stockholders or
directors of the Company or, to the Company’s knowledge, any Subsidiary, on the
other hand, that is required by the rules of the FINRA to be described in the
Registration Statement and the Prospectus that is not so described; (iv) except
as described in the Prospectus, there are no material outstanding loans or
advances or material guarantees of indebtedness by the Company or, to the
Company’s knowledge, any Subsidiary to or for the benefit of any of their
respective officers or directors or any of the members of the families of any of
them; (v) the Company has not offered, or caused any placement agent to offer,
Common Stock to any person with the intent to influence unlawfully (A) a
customer or supplier of the Company or any Subsidiary to alter the

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customer’s or supplier’s level or type of business with the Company or any
Subsidiary or (B) a trade journalist or publication to write or publish
favorable information about the Company or any Subsidiary or any of their
respective products or services, and, (vi) neither the Company nor any
Subsidiary nor, to the Company’s knowledge, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or regulation
(including, without limitation, the Foreign Corrupt Practices Act of 1977),
which payment, receipt or retention of funds is of a character required to be
disclosed in the Registration Statement or the Prospectus.
     (oo) Title to Property. Except as set forth in the Registration Statement
and the Prospectus, the Company and its Subsidiaries have good and marketable
title to all property (real and personal) described in the Registration
Statement and the Prospectus as being owned by any of them, free and clear of
all material liens, claims, security interests or other encumbrances, except to
the extent such material liens, claims, security interests or other encumbrances
are disclosed in the Registration Statement and the Prospectus; all the property
described in the Registration Statement and the Prospectus as being held under
lease by the Company or any Subsidiary is held thereby under valid, subsisting
and enforceable leases.
     (pp) Insurance. The Company and its Subsidiaries maintain insurance
covering their respective properties, operations, personnel and businesses as
the Company reasonably deems adequate; such insurance insures against such
losses and risks to an extent which the Company reasonably believes is adequate
and in accordance with customary industry practice to protect the Company and
its Subsidiaries and their respective businesses; all such insurance is fully in
force on the date hereof and will be fully in force at the time of purchase;
neither the Company nor its Subsidiaries has reason to believe that it will not
be able to renew any such insurance as and when such insurance expires.
     (qq) Data Reliable and Accurate. All statistical or market-related data
included or incorporated by reference in the Registration Statement and the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources to the extent required.
     (rr) NASDAQ: Registration. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and is accepted for quotation on the
Exchange, and the Company has taken no action designed to terminate the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Exchange, nor except as disclosed in the Prospectus, has the
Company received any notification that the Commission or FINRA is contemplating
terminating such registration or listing. Except as disclosed in the Prospectus,
the Company has complied in all material respects with the applicable
requirements of the Exchange for maintenance of inclusion of the Common Stock
thereon. The Company has filed a Notification of Listing of Additional Shares
with the Exchange with respect to the Placement Shares.
     7. Covenants of the Company. The Company covenants and agrees with CF&Co
that:
     (a) Registration Statement Amendments; Payment of Fees. After the date of
this Agreement and during any period in which a Prospectus relating to any
Placement Shares is

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required to be delivered by CF&Co 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),
(i) the Company will notify CF&Co 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 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 CF&Co’s request, any amendments or
supplements to the Registration Statement or Prospectus that, in CF&Co’s
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Placement Shares by CF&Co; provided, however, that the
failure of CF&Co to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s right to rely on the
representations and warranties made by the Company in this Agreement, and the
Company will not file any amendment or supplement to the Registration Statement
or Prospectus, other than documents incorporated therein by reference, relating
to the Placement Shares unless a copy thereof has been submitted to CF&Co within
a reasonable period of time before the filing and CF&Co has not reasonably
objected thereto; provided, however, (A) that the failure of CF&Co to make such
objection shall not relieve the Company of any obligation or liability
hereunder, or affect CF&Co’s right to rely on the representations and warranties
made by the Company in this Agreement, (B) that the Company has no obligation to
provide CF&Co any advance copy of such filing or to provide CF&Co an opportunity
to object to such filing if such filing does not name CF&Co; and (C) that CF&Co
shall not object to any such filing if the Company obtains a written opinion of
counsel reasonably satisfactory to CF&Co that such filing is required under
applicable law) (iii) the Company will furnish to CF&Co 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 IDEA; and (iv) the Company will cause each supplement to
the Prospectus relating to the Placement Shares, 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 (without
reliance on Rule 424(b)(8) of the Securities Act).
     (b) Notice of Commission Stop Orders. During any period in which a
Prospectus relating to any Placement Shares is required to be delivered by CF&Co
under the Securities Act with respect to a pending sale of Placement Shares, the
Company will advise CF&Co, 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 or any
other order preventing or suspending the use of the Prospectus, 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 or any examination pursuant to Section 8(e) of the Securities Act,
or if the Company becomes the subject of a proceeding under Section 8A of the
Securities Act in connection with the offering of the Placement Shares; and the
Company will promptly use its commercially reasonable efforts to prevent the
issuance of any stop or other order or to obtain its withdrawal if such a stop
or other 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
CF&Co under the

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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 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 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 CF&Co 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.
     (d) Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by CF&Co under the
Securities Act with respect to a pending sale of the Placement Shares (including
in circumstances where such requirement may be satisfied pursuant to Rule 172
under the Securities Act), the Company will use its commercially reasonable
efforts to cause the Placement Shares to be listed on the Exchange and to
qualify the Placement Shares for sale under the securities laws of such
jurisdictions as CF&Co 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 entity 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 CF&Co 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 CF&Co may
from time to time reasonably request and, at CF&Co’s request, will also furnish
copies of the Prospectus to each exchange or market on which sales of the
Placement Shares may be made. The copies of the Registration Statement and the
Prospectus and any supplements or amendments thereto furnished to CF&Co will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to IDEA, except to the extent permitted by Regulation S-T.
Notwithstanding the foregoing, the Company will not be required to furnish any
document (other than the Prospectus) to CF&Co to the extent such document is
available on IDEA.
     (f) Earnings Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than
15 months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act. “Earnings statement” and “make
generally available” will have the meanings contained in Rule 158 under the
Securities Act.

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     (g) Expenses.

  (i)   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 all expenses incident to the performance of
the Company’s obligations hereunder, which the parties acknowledge include
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, and of this Agreement,
(ii) the preparation, issuance and delivery of the Placement Shares, (iii) the
printing and delivery to CF&Co of copies of the Prospectus and any amendments
and supplements thereto, (iv) the fees and expenses incurred in connection with
the listing or qualification of the Placement Shares for trading on the
Exchange, and (v) the filing fees and expenses, if any, of the Commission and
FINRA.     (ii)   CF&Co will pay all expenses incident to the performance of its
obligations hereunder, including attorney’s fees, consultant fees, travel and
lodging expenses and any other incidental fees and expenses incurred by CF&Co.
Notwithstanding the foregoing, the Company will, within 30 days from the
delivery of an invoice, reimburse CF&Co for up to $50,000 of such out-of-pocket
expenses.

     (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 either the pendency of any Placement
Notice given hereunder, or any period in which the Prospectus relating to the
Placement Shares is required to be delivered by CF&Co, the Company shall provide
CF&Co 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 or Common Stock issuable upon the exercise of options or other
equity awards pursuant to any employee or director stock option or benefits plan
or stock ownership plan or issuances permitted by FINRA (ii) the issuance or
sale of Common Stock pursuant to any dividend reinvestment plan that the Company
may adopt from time to time or (iii) the issuance of Common Stock upon the
exercise of any currently outstanding warrants, options or other rights in
effect or outstanding and disclosed in filings by the Company available on
EDGAR.
     (j) Change of Circumstances. The Company will, at any time during the
pendency of a Placement Notice, advise CF&Co 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 required to be provided to CF&Co pursuant to this Agreement.

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     (k) Due Diligence Cooperation. The Company will cooperate with any
reasonable due diligence review conducted by CF&Co 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 CF&Co may reasonably request.
     (l) Required Filings Relating to Placement of Placement Shares. The Company
agrees that on such dates as the Securities Act shall require, the Company will
(i) file a prospectus supplement with the Commission under the applicable
paragraph of Rule 424(b) under the Securities Act (each and every filing date
under Rule 424(b), a “Filing Date”), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold through CF&Co,
the Net Proceeds to the Company and the compensation payable by the Company to
CF&Co with respect to such Placement Shares, and (ii) deliver such number of
copies of each such prospectus supplement to each exchange or market on which
such sales were effected as may be required by the rules or regulations of such
exchange or market.
     (m) Representation Dates; Certificate. Three Trading Days prior to the
First Delivery Date and each time 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 by means of a post-effective
amendment, sticker, or supplement but not by means of incorporation of documents
by reference into the Registration Statement or 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, to “furnish” information pursuant to Items 2.02 or
7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K
relating to the reclassifications of certain properties as discontinued
operations in accordance with Statement of Financial Accounting Standards
No. 144) 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 CF&Co with a certificate, in the form attached
hereto as Exhibit 7(m) within three (3) Trading Days of any Representation Date.
The requirement to provide a certificate under this Section 7(m) shall be waived
for any Representation Date occurring at a time at which no Placement Notice is
pending, 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; provided, however, that such waiver shall not apply for any Representation
Date on which the Company files its annual report on Form 10-K. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide CF&Co with a certificate under this Section 7(m), then before the
Company delivers the Placement Notice or CF&Co sells any Placement Shares, the
Company shall provide CF&Co with a certificate, in the form attached hereto as
Exhibit 7(m), dated the date of the Placement Notice.
     (n) Legal Opinion. On the date of the first Placement Notice given
hereunder, the Company shall cause to be furnished to CF&Co a written opinion
dated as of the date of such Placement Notice of Goodwin Procter LLP (the
“Company Counsel”), in a form substantially

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similar to the form attached hereto as Exhibit 7(n)(1). Within three (3) Trading
Days of each subsequent Representation Date with respect to which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit 7(n)
for which no waiver is applicable, the Company shall cause to be furnished to
CF&Co a written opinion of Company Counsel in a form substantially similar to
the form attached hereto as Exhibit 7(n)(2), modified, as necessary, to relate
to the Registration Statement and the Prospectus as then amended or
supplemented; provided, however, that in lieu of such opinion, Company Counsel
may furnish CF&Co with a letter to the effect that CF&Co 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. Three Trading Days 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(o) for which no waiver is applicable, the Company shall cause its
independent accountants (and any other independent accountants whose report is
included in the Registration Statement or the Prospectus), to furnish CF&Co
letters (the “Comfort Letters”) in form and substance satisfactory to CF&Co, (i)
confirming that they are an independent registered public accounting firm within
the meaning of the Securities Act, the Exchange 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 underwriters in connection with registered
public offerings (the first such letter, the “Initial Comfort Letter”) and
(iii) updating the Initial Comfort Letter with any information that would have
been included in the Initial Comfort Letter had it been given on such date and
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.
     (p) Market Activities. The Company will not, directly or indirectly 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 Placement Shares to be
issued and sold pursuant to this Agreement, or pay anyone any compensation for
soliciting purchases of the Placement Shares to be issued and sold pursuant to
this Agreement other than CF&Co.
     (q) Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor any Subsidiary 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.
     8. Conditions to CF&Co’s Obligations. The obligations of CF&Co hereunder
with respect to a Placement Notice 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 CF&Co of a due diligence review satisfactory to CF&Co in its
reasonable judgment, and to the continuing satisfaction (or waiver by CF&Co in
its sole discretion) of the following additional conditions:

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     (a) Registration Statement Effective. The Registration Statement shall have
become effective and shall be available for the sale of all Placement Shares
contemplated to be issued by any Placement Notice.
     (b) No Material Notices. None of the following events shall have occurred
and be continuing: (i) receipt by the Company of any request for additional
information from the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement, the
response to which would require any post-effective amendments or supplements to
the Registration Statement or the Prospectus; (ii) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Placement Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the occurrence of any event that makes any material statement made
in the Registration Statement or the Prospectus or any material document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, related Prospectus or 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) Material Changes. Except as contemplated in the Prospectus, or
disclosed in the Company’s reports filed with the Commission, there shall not
have been any material adverse change, on a consolidated basis, in the
authorized capital stock of the Company or any Material Adverse Effect, or any
development that could reasonably be expected to cause a Material Adverse
Effect, the effect of which, in the reasonable judgment of CF&Co (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.
     (d) Legal Opinion. CF&Co shall have received the opinion 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).
     (e) Comfort Letter. CF&Co 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 opinion is required pursuant to Section 7(o).
     (f) Representation Certificate. CF&Co 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).
     (g) No Suspension. Trading in the Common Stock shall not have been
suspended on the Exchange.

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     (h) Other Materials. On each date on which the Company is required to
deliver a certificate pursuant to Section 7(m), the Company shall use its
commercially reasonable efforts to furnish to CF&Co such appropriate further
information, certificates and documents as CF&Co may reasonably request. All
such opinions, certificates, letters and other documents will be in compliance
with the provisions hereof. The Company will furnish CF&Co with such conformed
copies of such opinions, certificates, letters and other documents as CF&Co
shall reasonably request.
     (i) 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.
     (j) Approval for Listing. The Placement Shares shall either have been
(i) approved for listing on the Exchange, subject only to notice of issuance, or
(ii) the Company shall have filed an application for listing of the Placement
Shares on the Exchange at, or prior to, the issuance of any Placement Notice.
     (k) No Termination Event. There shall not have occurred any event that
would permit CF&Co to terminate this Agreement pursuant to Section 11(a).
     9. Indemnification and Contribution.
     (a) Company Indemnification. The Company agrees to indemnify and hold
harmless CF&Co, the directors, officers, partners, employees and agents of CF&Co
and each person, if any, who (i) controls CF&Co 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 CF&Co (a “CF&Co Affiliate”) 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 CF&Co, 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 any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, or any
amendments thereto (including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B, if applicable) or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
indemnity agreement shall not apply to the extent that such loss, claim,
liability, expense or damage arises from or is caused directly or indirectly by
an untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in writing to the
Company by or on behalf of CF&Co expressly for inclusion in the Registration
Statement or Prospectus. This indemnity agreement will be in addition to any
liability that the Company might otherwise have.

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     (b) CF&Co Indemnification. CF&Co agrees to indemnify and hold harmless the
Company and its directors and each officer of the Company who 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 (a “Company Affiliate”) against any and all losses, liabilities, claims,
damages and expenses to which the Company, 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, as and when incurred,
but only insofar as such loss, liability, claim, damage or expense arises from
or is caused directly or indirectly by an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by or on behalf of CF&Co
expressly for inclusion in the Registration Statement or Prospectus.
     (c) Procedure. Any party that proposes to assert the right to be
indemnified under this Section 9 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under 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. 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 the written 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 the written advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right
to direct the defense of such action on behalf of the indemnified party) or
(4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All

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such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. 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 CF&Co, the Company and
CF&Co 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 CF&Co, if any), to which the
Company and CF&Co may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and
CF&Co, on the other. The relative benefits received by the Company on the one
hand and CF&Co 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
CF&Co 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 CF&Co, 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, on the one hand, or CF&Co, on the other, 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 CF&Co 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), CF&Co 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

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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 CF&Co, will have the same rights to contribution as that
party, and each trustee of the Company and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 9(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. 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 CF&Co, 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) CF&Co shall have the right by giving notice as hereinafter specified at
any time to terminate this Agreement if (i) any Material Adverse Effect, or any
development that has actually occurred and that is reasonably expected to cause
a Material Adverse Effect has occurred that, in the reasonable judgment of
CF&Co, may materially impair the ability of CF&Co 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), CF&Co’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 CF&Co’s
obligations hereunder is not fulfilled; or (iv) any suspension or limitation of
trading in the Placement Shares or in securities generally on the Exchange 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), Section 10 (Survival of Representations), 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 CF&Co elects to terminate this Agreement as provided in this Section 11(a),
CF&Co shall provide the required notice as specified in Section 12 (Notices).
     (b) The Company shall have the right, by giving ten (10) days notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party

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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) CF&Co shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of
Section 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall
remain in full force and effect notwithstanding such termination.
     (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 CF&Co 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 CF&Co 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 CF&Co, shall be delivered to Cantor Fitzgerald & Co., 499 Park Avenue, New
York, New York 10022, fax no. (212) 308-3730, Attention: Capital Markets/Jeff
Lumby, with copies to Stephen Merkel, General Counsel, at the same address, and
DLA Piper LLP (US), 1251 Avenue of the Americas, New York, New York 10020, fax
no. (212) 884-8494, Attention: Dean M. Colucci; or if sent to the Company, shall
be delivered to Avanir Pharmaceuticals, Inc., 101 Enterprise, Suite 300, Aliso
Viejo, California 92656, fax no. (949) 643-6807, Attention: Chief Financial
Officer, with a copy to Goodwin Procter LLP, Three Embarcadero Center, 24th
Floor, San Francisco, California 94111, fax no. (415) 677-9041, Attention: Ryan
A. Murr. 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 or, if such day is not a Business Day, on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to a nationally-recognized
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid). For purposes of this Agreement, “Business Day” shall mean any
day on which the Exchange and commercial banks in the City of New York are open
for business.

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     13. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and CF&Co 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.
     14.  Adjustments for Stock Splits. The parties acknowledge and agree that
all share-related numbers contained in this Agreement shall be adjusted to take
into account any stock split, stock dividend or similar event effected with
respect to the Placement Shares.
     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 CF&Co. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.
     16. Applicable Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the principles of conflicts of laws. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
     17. Waiver of Jury Trial. The Company and CF&Co 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.

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     18. Absence of Fiduciary Relationship. The Company acknowledges and agrees
that:
     (a) CF&Co has been retained solely to act as underwriter in connection with
the sale of the Placement Shares and that no fiduciary, advisory or agency
relationship between the Company and CF&Co has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether CF&Co
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 CF&Co and its affiliates are engaged
in a broad range of transactions which may involve interests that differ from
those of the Company and that CF&Co 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 CF&Co, for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that CF&Co shall have no liability (whether direct or
indirect) to the Company in respect to such fiduciary claim or to any person
asserting a fiduciary duty claim on behalf of or in right of the Company,
including shareholders, 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 transmission.
     20. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
     (a) “Applicable Time” means the date of this Agreement, each Representation
Date, the date on which a Placement Notice is given, any date on which Placement
Shares are sold hereunder, or such other time as agreed to by the Company and
CF&Co.
     (b) “GAAP” means generally accepted accounting principles, as consistently
applied in the United States.
[Remainder of Page Intentionally Blank]

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

            Very truly yours,

AVANIR PHARMACEUTICALS, INC.
      By:   /s/ Christine Ocampo         Name:   Christine Ocampo       
Title:   Vice President, Finance     

ACCEPTED as of the date first-above written:

          CANTOR FITZGERALD & CO.
      By:   /s/ Jeffrey Lumby         Name:   Jeffrey Lumby        Title:  
Managing Director     

 

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SCHEDULE 1
FORM OF PLACEMENT NOTICE

     
From:
  [                                        ]
Cc:
  [                                        ]
To:
  [                                        ]
Subject:
  Controlled Equity Offering—Placement Notice

Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Controlled
Equity OfferingSM Sales Agreement between Avanir Pharmaceuticals, Inc. (the
“Company”) and Cantor Fitzgerald & Co. (“CF&Co”) dated July 30, 2009 (the
“Agreement”), I hereby request on behalf of the Company that CF&Co sell up to
[   ] shares of the Company’s Common Stock, par value $0.0001 per share, at a
minimum market price of $                     per share.

 

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SCHEDULE 2
CANTOR FITZGERALD & CO.
Jeff Lumby
Josh Feldman
Peter Dippolito
AVANIR PHARMACEUTICALS, INC.
Keith Katkin
Christine Ocampo

 

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SCHEDULE 3
COMPENSATION
CF&Co shall be paid compensation equal to four percent (4%) of the first
$10,000,000 in gross proceeds from the sales of the Placement Shares and then a
commission of three percent (3%) of the gross proceeds above that amount.

 

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Exhibit 7(n)(1)

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Exhibit 7(n)(2)

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Exhibit 7(o)

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Exhibit 7(m)
OFFICER CERTIFICATE
The undersigned, the duly qualified and elected
                                        , of AVANIR PHARMACEUTICALS, INC.
(“Company”), a Delaware corporation, does hereby certify in such capacity and on
behalf of the Company, pursuant to Section 7(m) of the Sales Agreement dated
July 30, 2009 (the “Sales Agreement”) between the Company and Cantor Fitzgerald
& Co., that to the best of the knowledge of the undersigned.
     (i) The representations and warranties of the Company in Section 6 of the
Sales Agreement (A) to the extent such representations and warranties are
subject to qualifications and exceptions contained therein relation to
materiality or Material Adverse Effect, are true and correct 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, with the
same force and effect as if expressly made on and as of the date hereof and
(B) to the extent such representations and warranties are not subject to any
qualifications or exceptions, are true and correct in all material respects as
of the date hereof as if 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, with the same force and effect as if
expressly made on and as of the date hereof; 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: