Exhibit



Exhibit 10.5



BACKSTOP AGREEMENT
This BACKSTOP AGREEMENT (this “Agreement”), dated as of December 5, 2019, is entered into by and between Cerecor Inc., a Delaware corporation with offices located at 540 Gaither Road, Suite 400, Rockville, Maryland 20850 (the ”Company”), and Armistice Capital Master Fund Ltd. (the “Backstop Investor”).  
RECITALS
WHEREAS, the Company desires to enter into an Agreement and Plan of Merger (the “Merger Agreement”) with Genie Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company, Second Genie Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, and Aevi Genomic Medicine, Inc., a Delaware corporation (“Aevi”), and upon the terms and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, the transaction will be structured as a two-step merger, with Aevi continuing as the surviving company and a direct wholly-owned subsidiary of the Company (the “Merger”);
WHEREAS, pursuant to promissory notes contemplated by the Merger Agreement, the Company is obligated to make funds available to Aevi in order to fund the operation of Aevi’s business prior to the close of the Merger (the “Aevi Notes”);
WHEREAS, in order to ensure that the required funding that may be issued to Aevi pursuant to those promissory notes, pursuant to the terms of this Agreement and upon the terms and subject to the conditions and limitations set forth therein, the Company is willing to sell, and the Backstop Investor is willing to purchase  shares of the Company’s common stock, $0.001 par value per share ( “Common Stock”) at the Issue Price per share (the “Shares”);
WHEREAS, the Company and the Backstop Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder, or any successor statute (the “1933 Act”).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Backstop Investor hereby agree as follows:
		
	1.
	BACKSTOP COMMITMENT.


(a)     Upon the terms and subject to the conditions contained herein, the Company shall have the option to require the Backstop Investor to purchase from the Company on a Closing Date, and the Backstop Investor, in reliance on the representations and warranties set forth in this Agreement hereby agree to purchase from the Company, the Shares set forth in the Closing Notice, as applicable, subject in all respects to the limitations set forth in Section 1(d) below. The Shares that the Backstop Investor is required to purchase pursuant to this Section 1(a) are referred to herein as the Backstop Investor’s “Backstop Shares.”  
(b)    Subject in all respects to the limitations set forth in Section 1(d) below, the Company may require the Backstop Investor to purchase all or a percentage of the remaining Purchase 







Maximum (as defined below) on any subsequent date (each, a “Closing Date”) by giving to the Backstop Investor, at least seven Business Days prior to such Closing Date, a written notification (a “Closing Notice”) setting forth the percentage of the Purchase Maximum that the Company requires the Backstop Investor to purchase on such Closing Date.  Notwithstanding anything to the contrary contained herein, the Company shall be permitted to issue a Closing Notice only if the Closing Date will occur during a “window period” (as such term is defined in the Company’s Window Period Policy).  The Company shall neither issue a Closing Notice nor permit a Closing to occur while any Company employee, officer or director is in possession of material non-public information.
(c)    On each Closing Date (the “Closing”), (i) payment for the Backstop Shares that the Backstop Investor has agreed to purchase shall be effected by the Backstop Investor wiring an amount (such amount, a “Backstop Drawdown Amount”), to an account of the Company identified to the Backstop Investor at least five days prior to such Closing, equal to the product of (1) the number of Backstop Shares issuable to the Backstop Investor at such Closing (as set forth in a Closing Notice) and (2) the Issue Price, which shall be equal to the closing price for the Common Stock on the Principal Market (as defined below) on the Closing Date, and (ii) the Company shall deliver to the Backstop Investor the Backstop Shares and such certificates. 
(d)    The obligation of the Backstop Investor to purchase Shares hereunder shall terminate on March 20, 2020 (the “Termination Date”). Notwithstanding anything to the contrary contained herein, in no event shall the Backstop Investor be required to purchase at any Closing hereunder a number of Shares in excess of the Purchase Maximum.  As used herein, the term “Purchase Maximum” means an amount equal to (1) $15 million minus (2) the aggregate purchase price of Backstop Shares purchased by the Backstop Investor hereunder on or prior to such date minus (3) without duplication, the aggregate cash proceeds actually received by the Company after the date hereof but on or prior to such date from (i) the sale of its equity or equity-linked securities, in a bona fide transaction, or (ii) the sale of Millipred® to a third party.
(e)    Conditions to the Backstop Investor’s Obligation to Purchase the Backstop Shares.  Notwithstanding anything to the contrary, the obligatioAn of the Backstop Investor to purchase Backstop Shares on a Closing Date is subject to the satisfaction, at or before such Closing Date, of each of the following conditions, provided that these conditions are for the Backstop Investor’s sole benefit and may be waived by the Backstop Investor at any time in its sole discretion by providing the Company with prior written notice thereof:
(i)    The Company shall have duly executed and delivered to the Backstop Investor this Agreement and a Closing Notice, and the Company shall have duly executed and delivered to the Backstop Investor the aggregate number of Backstop Shares pursuant to this Agreement and such Closing Notice.
(ii)    All of the representations and warranties made by the Company in this Agreement that are qualified by materiality or Material Adverse Effect (as defined below) shall be true and correct in all respects as of the date hereof and as of such Closing Date as though made at and as of such Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, which shall be true and correct in all respects as of such date) and all of the representations and warranties made by the Company in this Agreement that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects as of the date hereof and as of such Closing Date as though made at and as of such Closing Date (except to the extent such representations 


2





and warranties expressly speak as of an earlier date, which shall be true and correct in all material respects as of such date);
(iii)    The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor, except as disclosed in the SEC Documents, shall suspension by the SEC or the Principal Market have been threatened (with a reasonable prospect of delisting or suspension occurring after giving effect to all applicable notice, appeal, compliance and hearing periods), as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(iv)    The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(v)    No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.
(vi)    Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
(vii)    From the date hereof to the Closing Date, (i) trading in the Common Stock shall not have been suspended by the SEC or the Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, (ii) at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on the Principal Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Backstop Investor, makes it impracticable or inadvisable to purchase the Shares at the Closing.
(viii)    The Company shall have delivered to the Backstop Investor such other documents relating to the transactions contemplated by this Agreement as the Backstop Investor or its counsel may reasonably request.
(f)    Conditions to the Obligation of the Company to Issue Backstop Shares. The obligation of the Company hereunder to issue and sell the Backstop Shares to the Backstop Investor on a Closing Date is subject to the satisfaction, at or before the such Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Backstop Investor with prior written notice thereof:
(i)    The Backstop Investor shall have delivered to the Company its respective Backstop Drawdown Amount with respect to such Closing Date by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.


3





(ii)    All of the representations and warranties made by the Backstop Investor in this Agreement that are qualified by materiality or Material Adverse Effect shall be true and correct in all respects as of the date hereof and as of such Closing Date as though made at and as of such Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, which shall be true and correct in all respects as of such date) and all of the representations and warranties made by the Backstop Investor in this Agreement that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects as of the date hereof and as of such Closing Date as though made at and as of such Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, which shall be true and correct in all material respects as of such date).
(iii)    The Backstop Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Backstop Investor at or prior to such Closing Date.
		
	2.
	BACKSTOP INVESTOR’S REPRESENTATIONS AND WARRANTIES.


The Backstop Investor represents and warrants to the Company that, as of the date hereof and as of each Closing Date: 
(a)    Organization; Authority. The Backstop Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and the Backstop Investor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.
(b)    Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Backstop Investor and constitutes the legal, valid and binding obligation of the Backstop Investor enforceable against the Backstop Investor in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(c)    No Conflicts. The execution, delivery and performance by the Backstop Investor of this Agreement and the consummation by the Backstop Investor of the transactions contemplated hereby will not (i) contravene the organizational documents of the Backstop Investor, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Backstop Investor is a party or (iii) contravene any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Backstop Investor, except, in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the ability of the Backstop Investor to perform its obligations hereunder.
(d)    No Public Sale or Distribution. The Backstop Investor is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in contravention of the 1933 Act; provided, however, that by making the representations herein, the Backstop Investor does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to registration under the 1933 Act or an available exemption from such registration requirements.  


4





(e)    Accredited Investor Status. The Backstop Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the 1933 Act.
(f)    Reliance on Exemptions. The Backstop Investor understands that the Shares have not been registered under the 1933 Act or any applicable state securities laws and are being offered and sold to it in reliance on the exemptions from registration under the 1933 Act provided by Section 4(a)(2) of the 1933 Act and pursuant to similar exemption from any applicable state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Backstop Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Backstop Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Backstop Investor to acquire the Shares.
(g)    Transfer or Resale. The Backstop Investor understands that: (i) the Shares may not be offered for sale, sold, assigned or transferred (a “Transfer”), directly or indirectly, unless (a) subsequently registered under the 1933 Act, (b) such Transfer is to the Company, or (c) such Transfer is pursuant to a transaction that does not require registration under the 1933 Act or any applicable state securities laws; and (ii) any Transfer of the Shares made in reliance on Rule 144 under the 1933 Act may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not available, any resale of the Shares under circumstances in which the seller (or the Person) through whom the Transfer is made may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any government or any department or agency thereof.
(h)    Legends. The Backstop Investor understands that the certificates or other instruments representing the Shares and, until the earlier of (i) effectiveness of a resale registration statement covering the Shares and (ii) six (6) months after the date on which the Backstop Investor purchased the Shares from the Company, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS PROVIDED THAT THE HOLDER HAS FURNISHED TO THE COMPANY REASONABLE ASSURANCES, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES. THE COMPANY AGREES TO REMOVE SUCH LEGENDS UPON THE EARLIER TO OCCUR OF THE (I) EFFECTIVENESS OF A RESALE 


5





REGISTRATION STATEMENT COVERING THE COMMON SHARES AND (II) SIX (6) MONTHS AFTER THE DATE ON WHICH THE BUYER PURCHASED THE SECURITIES FROM THE COMPANY, WITHOUT FURTHER ACTION BY THE HOLDER.
3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Backstop Investor that, as of the date hereof and each Closing Date and except as set forth in the Disclosure Schedule hereto: 
(a)    Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to conduct their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole, (ii) the transactions contemplated hereby or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under this Agreement. “Subsidiaries” means any Person in which the Company, directly or indirectly, (A) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (B) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary”.


(b)     Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the terms hereof. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Company’s board of directors and (other than the filings with the SEC, Principal Market and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its board of directors or its stockholders or other governing body. This Agreement has been duly executed and delivered by the Company, and each constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law.


(c)    Issuance of Securities. The issuance of the Common Shares is duly authorized and, upon issuance and payment in accordance with the terms of this Agreement shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances with respect to the issuance thereof.


(d)    No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Company’s Certificate of Incorporation and Bylaws, certificate of formation, 


6





memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of The NASDAQ Capital Market (the “Principal Market”), with a reasonable prospect of delisting or suspension occurring after giving effect to all applicable notice, appeal, compliance and hearing periods, and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of (ii) and (iii) for any such conflict, default or violation that would not reasonably be expected to have a Material Adverse Effect.


(e)    Consents. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the filings with the SEC, Principal Market and any other filings as may be required by any state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by this Agreement, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date, and no shareholder consents or approvals are required to effect the offer, sale and issuance of the Shares and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by this Agreement. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.


(f)    Acknowledgment Backstop Investor’s Purchase of Shares. The Company acknowledges and agrees that the Backstop Investor is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Backstop Investor is not acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby, and any advice given by the Backstop Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Backstop Investor’s purchase of the Shares. The Company further represents to the Backstop Investor that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.




7





(g)    Placement Agent’s Fees. None of the Company or its Subsidiaries has, and no manager, governor, director, officer or employee of any of them has, employed any broker or finder, or incurred or will incur any broker’s, finder’s or similar fees, commissions or expenses, in each case in connection with the transactions contemplated by this Agreement, for which the Backstop Investor or its designees will be liable.


(h)    No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to require approval of stockholders of the Company for purposes of the 1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the Principal Market. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering of any of the Shares to be integrated with other offerings of securities of the Company.


(i)    Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to the Backstop Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Shares and the Backstop Investor’s ownership of the Shares. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.


(j)    SEC Documents; Financial Statements. During the two years prior to the date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company made available to the Backstop Investor or its representative true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) of the Company included in the SEC Documents (the “Financial Statements”) complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such Financial Statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates 


8





thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its Financial Statements or otherwise. Except as listed in Section 3(j) of the Company Disclosure Letter, attached hereto as Exhibit A, the Company is not currently contemplating to amend or restate any of the Financial Statements nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.


(k)    Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K and any subsequent unaudited financial statements contained in Form 10-Q there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Except as listed in Section 3(k) of the Company Disclosure Letter, attached hereto as Exhibit A, since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any material capital expenditures, individually or in the aggregate. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.


(l)     No Undisclosed Events, Liabilities, Developments or Circumstances. Other than the transactions contemplated by this Agreement and as listed in Section 3(l) of the Company Disclosure Letter, attached hereto as Exhibit A, since, no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on the Backstop Investor’s investment hereunder or (iii) could have a Material Adverse Effect.


(m)    Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 200,000,000 shares of Common Stock, of which, 44,106,794 were issued and outstanding as of December 4, 2019, and 27,025,210 shares are reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into, shares of Common Stock (inclusive of convertible preferred stock), and (ii) 5,500,000 shares of preferred stock, of which 2,857,143 were issued and outstanding as of December 4, 2019. No shares of Common Stock or preferred stock are held in treasury. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as has been disclosed in the SEC Documents: (i) none of the 


9





Company’s or any Subsidiary’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements, except as listed in Section 3(m) of the Company Disclosure Letter, attached hereto as Exhibit A, by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements, except as listed in Section 3(m) of the Company Disclosure Letter, attached hereto as Exhibit A, under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act, other than agreements with the Backstop Investor; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, except as listed in Section 3(m) of the Company Disclosure Letter, attached hereto as Exhibit A, and those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect.


		
	4.
	COVENANTS.


(a)    Best Efforts.  The Company shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 1
(b)    Use of Proceeds. The Company will use the proceeds resulting from the issuance of the Backstop Shares for general corporate purposes and to fund the Aevi Notes. 
(c)    Blue Sky. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Shares under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Backstop Investor on or prior to such Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Shares required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Shares to the Backstop Investor.


10





(d)    Reporting Status. Until the earlier of (x) the date on which the Shares may be resold by the Backstop Investor without restriction under Rule 144 under the 1933 Act, or (y) the date no Shares are held by the Backstop Investor (the “Reporting Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(e)    Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Shares on an Eligible Market and shall maintain such listing of all Common Shares from time to time issuable under the terms of this Agreement on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the NASDAQ Capital Market, the NASDAQ Global Market or the NASDAQ Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e).
(f)    Except as otherwise set forth in this Agreement, each party to this Agreement shall bear its own expenses in connection with the sale of the Shares to the Backstop Investor provided however, that the Company shall bear all of the costs and expenses of the registration of the Shares pursuant to Section 4(g), below. The Company shall be responsible for the payment of any transfer agent fees and Depository Trust Company (“DTC”) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold the Backstop Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment.
(g)    Resale Registration. The Company agrees to register the Shares for resale pursuant to a registration statement to be filed with the SEC within 30 days of the Termination Date, and subject to the specific terms and conditions of a registration rights agreement to be negotiated in good faith and entered into by the Company and the Backstop Investor.
5.TERMINATION.  
(a)    The Backstop Investor shall have the right to terminate its obligations under this Agreement for a breach by the Company of the terms and provisions of this Agreement without liability of the Backstop Investor to the Company; provided, however, (i) the right to terminate this Agreement under this Section 5(a) shall not be available to the Backstop Investor if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of the Backstop Investor’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Shares shall be applicable only upon the Backstop Investor providing such written notice. 
(b)    This Agreement shall automatically terminate at such time as the Company receives aggregate cash proceeds of at least $15 million after the date hereof but prior to the Termination Date from (i) the sale of its equity or equity-linked securities, in a bona fide transaction, or (ii) the sale of Millipred® to a third party.




11





Nothing contained in this Section 5 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.


		
	6.
	MISCELLANEOUS.


(a)    Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company and Backstop Investor each hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or thereby, 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 consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such 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. Nothing contained herein shall be deemed or operate to preclude the Backstop Investor from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Backstop Investor or to enforce a judgment or other court ruling in favor of the Backstop Investor. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.


(b)    Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.


(c)    Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.


(d)    Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed 


12





amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by the Backstop Investor, under this Agreement (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to the Backstop Investor, or collection by the Backstop Investor pursuant to this Agreement is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of the Backstop Investor, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of the Backstop Investor, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to the Backstop Investor under this Agreement. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by the Backstop Investor under this Agreement or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.


(e)    Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Backstop Investor, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by the Backstop Investor with respect to Common Stock or the Shares, and the other matters contained herein and therein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement shall (or shall be deemed to) (i) have any effect on any agreements the Backstop Investor has entered into with, or any instruments the Backstop Investor has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by the Backstop Investor in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to the Backstop Investor or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and the Backstop Investor, or any instruments the Backstop Investor received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor the Backstop Investor makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Backstop Investor against whom such amendment is to be enforceable. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. The Company has not, directly or indirectly, made any agreements with the Backstop Investor relating to the terms or conditions of the transactions contemplated by this Agreement except as set forth herein. Without limiting 


13





the foregoing, the Company confirms that, except as set forth in this Agreement, the Backstop Investor has not made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for the Backstop Investor to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by the Backstop Investor, any of its advisors or any of its representatives shall affect the Backstop Investor’s right to rely on, or shall modify or qualify any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement and (y) unless a provision of this Agreement is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect the Backstop Investor’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement.


(f)    Notices. All notices, requests, claims, demands and other communications hereunder shall be given (and shall be deemed to have been duly given upon receipt) by hand delivery, by prepaid overnight courier (providing written proof of delivery), by transmission-mail (with confirmation of transmission other than by means of an automatically-generated reply) or by certified or registered mail (return receipt requested and first class postage prepaid), addressed as follows (or at such other address for a Party as shall be specified by like notice):


If to the Company:
Cerecor Inc.
540 Gaither Road, Suite 400
Rockville, Maryland 20850
E-mail: jmiller@cerecor.com
Attention: Joe Miller, Chief Financial Officer


With a copy (for informational purposes only) to:
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, NC 27607
E-mail: dreynolds@wyrick.com
Attention: Donald R. Reynolds, Esq.


If to the Backstop Investor, to its address and email set forth on the signature page hereto.


(g)     Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Common Shares. Backstop Investor may assign some or all of its rights hereunder in connection with any transfer of any of its Shares without the consent of the Company, in which event such assignee shall be deemed to be a Backstop Investor hereunder with respect to such assigned rights, provided such assignment is in compliance with applicable federal and state securities laws.


(h)    No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


(i)    Survival. The representations, warranties, agreements and covenants shall survive the Closings.




14





(j)     Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


(k)    Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for Backstop Investor (or its broker or other financial representative) to effect short sales or similar transactions in the future.


(l)    Remedies. Backstop Investor, and in the event of assignment by Backstop Investor of its rights and obligations hereunder, each holder of Shares, shall have all rights and remedies set forth in this Agreement and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under this Agreement, any remedy at law would inadequate relief to the Backstop Investor. The Company therefore agrees that the Backstop Investor shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement shall be cumulative and in addition to all other remedies available under this Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief).


[signature pages follow]


15






IN WITNESS WHEREOF, the Backstop Investor and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
	
					
	 
	 
	 
	 
	 

	 
	 
	 
	COMPANY:
	 

	 
	 
	 
	 
	 

	 
	 
	 
	CERECOR INC.
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By: /s/ Joseph M. Miller
	 

	 
	 
	 
	Name: Joseph M. Miller
	 

	 
	 
	 
	Title: Chief Financial Officer
	 

	 
	 
	 
	 
	 

	 
	 
	 
	BACKSTOP INVESTOR:
	 

	 
	 
	 
	 
	 

	 
	 
	 
	ARMISTICE CAPITAL MASTER FUND LTD.
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By: /s/ Steven J. Boyd
	 

	 
	 
	 
	Name: Steven J. Boyd
	 

	 
	 
	 
	Title: Chief Investment Officer
	 

	 
	 
	 
	 
	 

	 
	 
	 
	c/o Armistice Capital, LLC
	 

	 
	 
	 
	510 Madison Avenue, 22nd Floor
	 

	 
	 
	 
	New York, NY, 10022
	 

	 
	 
	 
	SBoyd@armisticecapital.com
	 

	 
	 
	 
	DRadden@armisticecapital.com
	 















Exhibit A


Company Disclosure Letter