Exhibit 10.1


 


SECOND AMENDED AND RESTATED FOUNDERS AGREEMENT


 


THIS SECOND AMENDED
AND RESTATED FOUNDERS AGREEMENT (this “Agreement”) is effective as of July 26, 2016 (the “Effective Date”)
by and between Fortress Biotech, Inc., a Delaware corporation (the “Founder”), and Mustang Bio, Inc. (the “Company”).


 


WHEREAS, Founder formed
Company on March 13, 2015, for the purpose of acquiring, licensing, developing and commercializing specialty pharmaceutical products
(the “Business”) and Founder and the Company previously entered into a Founders Agreement, which was amended and restated
on May 17, 2016 (the “Existing Founders Agreement”).


 


NOW, THEREFORE, in consideration
of the mutual representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


 


		1.	Funding and Payment.



 


		1.1	Formation of the Company. Founder has organized and completed the formation of the Company,
expended time and capital in such formation and identified specific assets the acquisition of which would benefit the Company and
its business purpose.



 


		1.2	In exchange for the consideration contained in paragraph 1.1:



 


		(a)	Founder shall receive 250,000 shares of Class A Preferred Stock of the Company and 2,000,000 shares
of Common Stock of the Company;



 


		(b)	Company shall assume in the future all of Founder’s liabilities, obligations, rights, title
and interest in that certain indebtedness described on Schedule A (the “Indebtedness”);



 


		(c)	[Reserved].



 


		(d)	Founder shall receive an equity fee payable in shares of Common Stock equal to two and one-half
percent (2.5%) of the gross amount of any equity or debt financing, payable within five (5) business days of the closing of
any equity or debt financing for the Company or any of its respective subsidiaries that occurs after the date hereof and ending
on the date when Founder no longer has majority voting control in Company’s voting equity. In calculating the number of shares
payable hereunder, in the case of an equity financing, the number of shares issuable will be based on the share price of the equity
in such round; and (ii) in the case of a debt financing, the number of shares issuable will be based on the closing price of the
common shares of the company on the day prior to the closing of the debt financing or if not publicly-traded, the price of the
common shares in the last equity financing.



 




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		(e)	In the event of a Change in Control, Founder shall receive a one-time change in control fee equal
to five times the product of (i) Net Sales (defined below) for the twelve (12) months immediately preceding the Change in Control
and (ii) 4.5%.



 


For purposes of this Agreement,
“Change of Control” shall mean the occurrence of any of the following events:


 


		(i)	during any consecutive 12-month period, individuals who, at the beginning of such period, constitute
the board of directors of the Company (the “Incumbent Directors”) cease for any reason to constitute at least a majority
of such Board, provided that any person becoming a director after the beginning of such 12-month period and whose election or nomination
for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director;
provided, however, that no individual initially elected or nominated as a director of the Company as a result of
an actual or threatened election contest with respect to the election or removal of directors (“Election Contest”)
or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is
defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “1934 Act”) and as used in Section 13(d)(3)
and 14(d)(2) of the 1934 Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director;



 


		(ii)	any person becomes a “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of either (A) 35% or more of the then-outstanding shares of common stock of the Company (“Company
Common Stock”) or (B) securities of the Company representing 35% or more of the combined voting power of the Company’s
then-outstanding securities eligible to vote for the election of directors (the “Company Voting Securities”); provided,
however, that for purposes of this subsection (ii), the following acquisitions of Company Common Stock or Company Voting
Securities shall not constitute a Change of Control: (i) an acquisition directly from the Company, (ii) an acquisition by the Company
or any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock
or voting power is beneficially owned directly or indirectly by the Company (a “Subsidiary”), (iii) an acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (iv) an acquisition
pursuant to a Non-Qualifying Transaction (as defined in subsection (iii) below);



 




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		(iii)	the consummation of a reorganization, merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or a subsidiary (a “Reorganization”), or the sale or other disposition
of all or substantially all of the Company’s assets (a “Sale”) or the acquisition of assets or stock of another
corporation or other entity (an “Acquisition”), unless immediately following such Reorganization, Sale or Acquisition:
(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company
Common Stock and outstanding Company Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially
own, directly or indirectly, more than 35% of, respectively, the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of
the entity resulting from such Reorganization, Sale or Acquisition (including, without limitation, an entity which as a result
of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through
one or more subsidiaries, the “Surviving Entity”) in substantially the same proportions as their ownership, immediately
prior to such Reorganization, Sale or Acquisition, of the outstanding Company Common Stock and the outstanding Company Voting Securities,
as the case may be, and (B) no person (other than (x) the Company or any Subsidiary, (y) the Surviving Entity or its ultimate parent
entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the beneficial
owner, directly or indirectly, of 35% or more of the total common stock or 35% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board
of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the
initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies
all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or



 


		(iv)	approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.



 


		(f)	Founder shall receive a cash fee equal to four percent (4.5%) of annual Net Sales, payable on an
annual basis, within 90 days of the end of each calendar year. For purposes of this Agreement, “Net Sales” shall mean
the gross amount invoiced or otherwise charged by Company, its Affiliates and Licensees (“Selling Party”)
to third parties in arm’s length transactions for sales of any Product during a calendar year, less:



 




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		(i)	Normal and customary trade, quantity, cash and discounts and credits allowed and taken;



 


		(ii)	Discounts, refunds, rebates, chargebacks, retroactive price adjustments, and any other allowances
given and taken which effectively reduce the net selling price (other than such which have already diminished the gross amount
invoiced such as those outlined in Section 1.2(f)(i) above), including, without limitation, Medicaid rebates, institutional
rebates or volume discounts;



 


		(iii)	Product returns and allowances granted to such third party;



 


		(iv)	Administrative fees paid to group purchasing organizations (e.g., Medicare) and government-mandated
rebates;



 


		(v)	Shipping, handling, freight, postage, insurance and transportation charges, but all only to the
extent included as a separate line item in the gross amount invoiced;



 


		(vi)	Any tax, tariff or duties imposed on the production, sale, delivery or use of the Product, including,
without limitation, sales, use, excise or value added taxes and customs and duties, but all only to the extent included as a separate
line item (e.g., “taxes”) in the gross amount invoiced; and



 


		(vii)	Bad debt actually written off during the accounting period, as reported by the Selling Party in
accordance with GAAP, applied on a consistent basis (provided, that any bad debt write-off so taken which is later reversed shall
be added back to Net Sales in the accounting period in which the reversal occurs.)



 


Products are considered “sold”
when billed out or invoiced or, in the event such Products are not billed out or invoiced, when the consideration for sale of the
Products is received. If a sale, transfer or other disposition with respect to Products involves consideration other than cash
or is not at arm’s length, then the Net Sales from such sale, transfer or other disposition shall be calculated from the
average selling price for such Product during the calendar quarter in the country where such sale, transfer or disposition took
place. Notwithstanding the foregoing, Net Sales shall not include, and shall be deemed zero with respect to, (i) Products used
by Company, its Affiliates, or Licensees for their internal use, (ii) the distribution of promotional samples of Products provided
free of charge, (iii) Products provided for clinical trials or research, development, or evaluation purposes, or (iv) sales of
Products among Company and its Licensees and their respective Affiliates for resale.


 


“Product” means any product, (i)
owned by Company or (ii) exclusively licensed to Company.


 


“License” means
granting a third party or Affiliate a right to make, have made, use, offer for sale, sell or import a Product.


 




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“Licensee” means a person or entity
granted a License.


 


		1.3	Reports; Audits:



 


		(a)	Within ninety (90) days following the last day of each calendar year, Company shall provide to
Founder a written statement (i) stating (as applicable) the aggregate Net Sales, by country, of each Product sold during the relevant
calendar year by Company, its Affiliates and Licensees, and (ii) detailing the calculation of amounts due pursuant to Section
1.2(f) for such calendar year.



 


		(b)	Company shall keep or cause to be kept such records as are reasonably required to determine the
amounts due under this Agreement; such records must be kept for a minimum of three (3) years following the calendar year to which
such records pertain. At the request (and expense) of Founder, Company shall permit Founder to engage an independent certified
public accounting firm reasonably acceptable to Company, at reasonable times not more than once a year and upon reasonable notice,
to examine only those records as may be necessary to determine, with respect to any calendar year ending not more than three (3)
years prior to Founder’s request, the correctness or completeness of any payment made under this Agreement. Founder shall
promptly provide a copy of the results of any such audit or examination to Company. Founder shall bear the full cost of the performance
of any such audit or examination, unless such audit or examination discloses an underpayment exceeding ten percent (10%) of the
amount actually due hereunder with respect to any particular calendar year, in which case Company shall bear the reasonable, documented
cost of the performance of such audit or examination. Company shall promptly pay to Founder the amount of any underpayment of royalties
revealed by such an examination and review. Any overpayment by Company revealed by an examination and review shall be refunded
to Company within thirty (30) calendar days of its request.



 


		2.	Representations and Warranties of the Parties. Each of the parties hereto hereby
represents and warrants to the other as follows:



 


		2.1	Each party may execute, deliver, and perform this Agreement without the necessity of obtaining
any consent, approval, authorization, registration, filing, or waiver or giving any notice, other than those already obtained;



 


		2.2	This Agreement has been duly authorized by all necessary actions of the party and constitutes the
legal, valid, and binding obligation of such party; and



 


		2.3	Each party has the full right, power, and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.



 




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		3.	Notices. All notices hereunder must be in writing and will be deemed to have been
duly given upon receipt of hand delivery, upon electronic transmission with confirmation of receipt, or upon receipt of registered
mail, return receipt requested, addressed to the address set forth for each party, respectively, on the signature page of this
Agreement or to such other address as may be designated by written notice.



 


		4.	Entire Agreement. This Agreement constitutes the entire agreement of the parties
with respect to the transactions contemplated herein. All prior agreements among the parties concerning the subject matter hereof,
whether written or oral, are merged herein and shall be of no force or effect. This Agreement cannot be altered, modified, or discharged
orally but only by an agreement in writing.



 


		5.	Benefit. This Agreement shall be binding upon and shall inure to the benefit of the
parties, their legal representatives, and assigns.



 


		6.	Severability. If any provision contained in this Agreement is or becomes invalid,
illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein
will not in any way be affected or impaired thereby.



 


		7.	Further Assurances. The parties hereby agree to execute and deliver such further
instruments and do such further acts as may be required to carry out the intent and purposes of this Agreement.



 


		8.	Counterparts. This Agreement may be executed separately by each party in multiple
originals, and each original of this Agreement separately executed by one party, when assembled with one or more copies of this
Agreement separately executed by the other parties, shall be and constitute a fully executed original of this Agreement.



 


		9.	Survival. All representations and warranties made herein by the parties will survive
the execution of this Agreement.



 


		10.	Governing Law. This Agreement shall be governed by and construed in accordance with
the substantive laws of the state of New York, without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the laws of any jurisdiction other than the state of New York.



 


		11.	Term.  This Agreement shall be in effect for a period equal to fifteen (15) years
from the Effective Date (the “Initial Term”). Upon expiration of the Initial Term, this Agreement shall be automatically
renewed for successive periods of one (1) year (together with the Initial Term, the “Term”), unless terminated by Founder
by a letter sent by recorded delivery to the Company at least six (6) months prior to the end of the contractual period in force.
In the event of Change in Control, as defined by this Agreement, termination is governed in accordance with that provision and
subject to the one-time change in control fee.



  


		12.	Amendment and Restatement. The terms and provisions of the Existing Founders Agreement
are hereby amended and restated in their entirety by the terms and provisions of this Second Amended and Restated Founders Agreement
and shall supersede all provisions of the Existing Founders Agreement as of the date hereof. From and after the date hereof, all
references made to the Existing Founders Agreement in any document shall, without more, be deemed to refer to this Second Amended
and Restated Founders Agreement. 



 




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IN WITNESS WHEREOF,
this Agreement has been duly executed by the parties effective for all purposes as of the date first written above.


 


	FORTRESS BIOTECH, INC.	 
	 	 	 
	By: 	/s/  Lindsay A. Rosenwald	 
	Name:	Lindsay A. Rosenwald, MD	 
	Title:	President Address for Notice:	 
	 	 
	2 Gansevoort Street, 9th Floor	 
	New York, NY 10014	 
	Attn: Lindsay A. Rosenwald, MD	 
	lr@fortressbiotech.com	 
	 	 
	MUSTANG BIO, inc.	 
	 	 
	By:	/s/  Michael S. Weiss	 
	Name:	Michael S. Weiss	 
	Title:	Executive Chairman	 
	 	 
	Address for Notice:	 
	 	 
	2 Gansevoort Street, 9th Floor	 
	New York, NY 10014	 
	Attn: Michael S. Weiss	 
	msw@opuspointpartners.com	 


 


[Signature Page to Second Amended and Restated Founders Agreement ]


 




     


     


    

  


SCHEDULE A


 


Indebtedness


 


		1.	$3,600,000.00 (three million six hundred thousand dollars) of the indebtedness to NSC
                                                                Biotech Venture                                                                 Fund I,
                                                                LLC owed                                                                                                            by
                                                                Founder.



 




     Schedule A