exv10w1






Exhibit 10.1




AASTROM BIOSCIENCES, INC.




Common Stock

(no par value per share)



At Market Issuance Sales Agreement



June 16, 2011




McNicoll, Lewis & Vlak LLC

1251 Avenue of the Americas

41st Floor

New York, NY 10020



Ladies and Gentlemen:




     Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), confirms its
agreement (this “Agreement”) with McNicoll, Lewis & Vlak LLC (the “MLV”), 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 MLV, shares (the “Placement Shares”) of the Company’s common stock, no par
value per share (the “Common Stock”) provided however, that in no event shall the Company
issue or sell through MLV such number of Shares that (a) exceeds the number of shares of Common
Stock registered on the effective Registration Statement (as defined below) pursuant to which the
offering is being made, or (b) exceeds the number of authorized but unissued shares of the
Company’s Common Stock (the lesser of (a) and (b), the “Maximum Amount”). Notwithstanding
anything to the contrary contained herein, the parties hereto agree that compliance with the
limitations set forth in this Section 1 on the amount of Placement Shares issued and sold under
this Agreement shall be the sole responsibility of the Company and that MLV shall have no
obligation in connection with such compliance. The issuance and sale of Placement Shares through
MLV 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 to issue Common Stock.



     The Company has filed, in accordance with the provisions of the Securities Act of 1933, as
amended (the “Securities Act”) and the rules and regulations thereunder (the
“Securities Act Regulations”), with the Commission a registration statement on Form S-3
(File No. 333-170581), 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 (the “Exchange Act”), and the rules and
regulations thereunder (the “Exchange Act Regulations”). The Company has prepared a
prospectus supplement specifically relating to the Placement Shares (the “Prospectus
Supplement”) to the base prospectus included as part of such registration statement. The



 









 




Company
will furnish to MLV, for use by MLV, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement, relating to the
Placement Shares. Except where the context otherwise requires, such registration statement,
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 Regulations or deemed to be a part of such
registration statement pursuant to Rule 430B of the Securities Act Regulations, is herein called
the “Registration Statement.” The base prospectus 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 Regulations 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 (the “Incorporated Documents”).




     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 the most recent copy filed
with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System, or if
applicable, the Interactive Data Electronic Application system when used by the Commission
(collectively, “EDGAR”).



     2. Placements. Each time that the Company wishes to issue and sell Placement Shares
hereunder (each, a “Placement”), it will notify MLV by email notice (or other method
mutually agreed to in writing by the parties) of 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 day and any minimum price below which sales may not be made (a
“Placement Notice”), the form of which is attached hereto as Schedule 1. The
Placement Notice shall originate from any of the individuals from the Company set forth on
Schedule 3 (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 MLV set forth on Schedule
3, as such Schedule 3 may be amended from time to time. The Placement Notice shall be
effective unless and until (i) MLV declines to accept the terms contained therein for any reason,
in its sole discretion, (ii) the entire amount of the Placement Shares thereunder have been sold,
(iii) the Company suspends or terminates the Placement Notice or (iv) the Agreement has been
terminated under the provisions of Section 12. The amount of any discount, commission or other
compensation to be paid by the Company to MLV in connection with the sale of the Placement Shares
shall be calculated in accordance with the terms set forth in Schedule 2. It is expressly
acknowledged and agreed that neither the Company nor MLV will have any obligation whatsoever with
respect to a Placement or any Placement Shares unless and until the Company delivers a Placement
Notice to MLV and MLV does not decline such Placement Notice pursuant to the terms set forth above,
and then only upon the terms specified therein and herein. In the event of a conflict between the
terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will
control.





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     3. Sale of Placement Shares by MLV.


          (a) Subject to the terms and conditions of this Agreement, upon the Company’s issuance of a
Placement Notice MLV, 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 NASDAQ (the “Exchange”), to sell the
Placement Shares up to the amount specified, and otherwise in accordance with the terms of such
Placement Notice. MLV will provide written confirmation to the Company no later than the opening
of the Trading Day (as defined below) immediately following the Trading Day on which it has made
sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day,
the compensation payable by the Company to MLV pursuant to Section 2 with respect to such
sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the
deductions made by MLV (as set forth in Section 5(b)) from the gross proceeds for the
Placement Shares that it receives from such sales. Subject to the terms of the Placement Notice,
MLV 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 Regulations, 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 written consent of the Company, which may be provided
in its Placement Notice, MLV may also sell Placement Shares by any other method permitted by law,
including but not limited to in privately negotiated transactions. “Trading Day” means any
day on which Common Stock are purchased and sold on the Exchange.




          (b) During the term of this Agreement and notwithstanding anything to the contrary herein, MLV
agrees that, neither MLV nor any of its affiliates or subsidiaries shall engage in (i) any short
sale of any security of the Company or (ii) any sale of any security of the Company that MLV does
not own or any sale which is consummated by the delivery of a security of the Company borrowed by,
or for the account of, MLV. Neither MLV nor any of its affiliates or subsidiaries, shall engage in
any proprietary trading or trading for MLV’s (or its affiliates’ or subsidiaries’) own account.




     4. Suspension of Sales. The Company or MLV 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 3, 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 3), suspend any sale of Placement Shares; provided, however,
that such suspension shall not affect or impair any 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 any other party unless it is
made to one of the individuals named on Schedule 3 hereto, as such Schedule may be amended
from time to time.



     5. Sale and Delivery to MLV; Settlement.



          (a) Sale of Placement Shares. The Company acknowledges and agrees that (i) there can
be no assurance that MLV will be successful in selling Placement Shares, (ii) MLV






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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 MLV to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law
and regulations to sell such Placement Shares as required under this Agreement and (iii) MLV shall
be under no obligation to purchase Placement Shares on a principal basis pursuant to this
Agreement, except as otherwise agreed by MLV and the Company.




          (b) Settlement of Placement Shares. Unless otherwise specified in the applicable
Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd)
Trading Day (or such earlier day as is industry practice for regular-way trading) following the
date on which such sales are made (each, a “Settlement Date”). 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 MLV, after deduction
for (i) MLV’s commission, discount or other compensation for such sales payable by the Company
pursuant to Section 2 hereof, and (ii) any transaction fees imposed by any governmental or
self-regulatory organization in respect of such sales.




          (c) 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 MLV’s or its designee’s account (provided MLV 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
tradable, transferable, registered shares in good deliverable form. On each Settlement Date, MLV
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 agrees that in addition to and in no way limiting the rights and obligations set forth in
Section 10(a) hereto, it will (i) hold MLV 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 or its transfer agent (if applicable) and (ii) pay to MLV any
commission, discount, or other compensation to which it would otherwise have been entitled absent
such default.




          (d) Limitations on Offering Size. Under no circumstances shall the Company cause or
request the offer or sale of any Placement Shares if, after giving effect to the sale of such
Placement Shares, the aggregate gross sales proceeds of Placement Shares sold pursuant to this
Agreement would exceed the Maximum Amount Under no circumstances shall the Company cause or request
the offer or sale of any Placement Shares pursuant to this Agreement at a price lower than the
minimum price authorized from time to time by the Company’s board of directors, a duly authorized
committee thereof or a duly authorized executive committee, and notified to MLV in writing.







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     6. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with MLV that as of the date of this Agreement and as of each Applicable Time (as
defined below), unless such representation, warranty or agreement specifies a different time or
time:



          (a) Registration Statement and Prospectus. The Company and, assuming no act or
omission on the part of MLV that would make such statement untrue, the transactions contemplated by
this Agreement meet the requirements for and comply with the conditions for the use of Form S-3
under the Securities Act. The Registration Statement has been filed with the Commission and has
been declared effective under the Securities Act. The Prospectus Supplement will name MLV as the
agent in the section entitled “Plan of Distribution.” The Company has not received, and has no
notice of, any order of the Commission preventing or suspending the use of the Registration
Statement, or threatening or instituting proceedings for that purpose. The Registration Statement
and the offer and sale of Placement Shares as contemplated hereby meet the requirements of Rule 415
under the Act and comply in all material respects with said Rule. Any statutes, regulations,
contracts or other documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so described or
filed. Copies of the Registration Statement, the Prospectus, and any such amendments or
supplements and all documents incorporated by reference therein that were filed with the Commission
on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to
MLV and its counsel. The Company has not distributed and, prior to the later to occur of each
Settlement Date and completion of the distribution of the Placement Shares, will not distribute any
offering material in connection with the offering or sale of the Placement Shares other than the
Registration Statement and the Prospectus and any Issuer Free Writing Prospectus (as defined below)
to which MLV has consented. The Common Stock are currently quoted on the Exchange under the
trading symbol “ASTM”. Except as disclosed in the Registration Statement, including the
Incorporated Documents, the Company has not, in the 12 months preceding the date hereof, received
notice from the Exchange to the effect that the Company is not in compliance with the listing or
maintenance requirements.




          (b) No Misstatement or Omission. The Registration Statement, when it became or
becomes effective, 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 Prospectus and any amendment and supplement thereto, on the date thereof and at
each Applicable Time (defined below), did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing shall not apply to
statements in, or omissions from, any such document made in reliance upon, and in conformity with,
information furnished to the Company by MLV specifically for use in the preparation thereof.




          (c) Conformity with Securities Act and Exchange Act. The Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement thereto, when such
documents were or are filed with the Commission under the Securities Act or the Exchange Act or
became or become effective under the Securities Act, as the case may be,






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conformed or will conform in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable.




          (d) Financial Information. The consolidated financial statements and the related
notes included in the Registration Statement, the Prospectus and the Issuer Free Writing
Prospectuses, if any, present fairly, in all material respects, the consolidated financial
condition of the Company as of the dates thereof and the consolidated results of operations and
cash flows at the dates and for the periods covered thereby in conformity with generally accepted
accounting principles (“GAAP”) applied on a consistent basis (except for such adjustments
to accounting standards and practices as are noted therein) for the periods involved. Any pro forma
financial statements or data included or incorporated by reference in the Registration Statement
and the Prospectus comply with the requirements of Regulation S-X of the Securities Act, including,
without limitation, Article 11 thereof, and the assumptions used in the preparation of such pro
forma financial statements and data are reasonable, the pro forma adjustments used therein are
appropriate to give effect to the circumstances referred to therein and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of those statements and
data. No other financial statements or schedules of the Company or any other entity are required by
the Securities Act or the Rules and Regulations to be included in the Registration Statement or the
Prospectus. All disclosures contained in the Registration Statement or the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the Rules and Regulations) comply with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the
extent applicable.




          (e) Conformity with EDGAR Filing. The Prospectus delivered to MLV for use in
connection with the sale of the Placement Shares pursuant to this Agreement will be identical to
the versions of the Prospectus created to be transmitted to the Commission for filing via EDGAR,
except to the extent permitted by Regulation S-T.




          (f) Organization. The Company and each of its Subsidiaries are, and will be, duly
organized, validly existing as a corporation and in good standing under the laws of their
respective jurisdictions of organization. The Company and each of its Subsidiaries are, and will
be, duly licensed or qualified as a foreign corporation for transaction of business and in good
standing under the laws of each other jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such license or qualification, and
have all corporate power and authority necessary to own or hold their respective properties and to
conduct their respective businesses as described in the Registration Statement and the Prospectus,
except where the failure to be so qualified or in good standing or have such power or authority
would not, individually or in the aggregate, have a material adverse effect or would reasonably be
expected to have a material adverse effect on the assets, business, operations, earnings,
properties, condition (financial or otherwise), prospects, stockholders’ equity or results of
operations of the Company and the Subsidiaries (as defined below) taken as a whole, or prevent or
materially interfere with consummation of the transactions contemplated hereby (a “Material
Adverse Effect”).




          (g) Subsidiaries. The subsidiaries set forth on Schedule 4 (collectively, the
“Subsidiaries”), are the Company’s only significant subsidiaries (as such term is defined
in Rule 1-02 of Regulation S-X promulgated by the Commission). Except as set forth in the
Registration






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Statement and in the Prospectus, the Company owns, directly or indirectly, all of the equity
interests of the Subsidiaries free and clear of any lien, charge, security interest, encumbrance,
right of first refusal or other restriction, and all the equity interests of the Subsidiaries are
validly issued and are fully paid, nonassessable and free of preemptive and similar rights.




          (h) No Violation or Default. Neither the Company nor any of its Subsidiaries is (i)
in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, 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 contained in any indenture,
mortgage, deed of trust, loan agreement 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 is bound or
to which any of the property or assets of the Company or any of its Subsidiaries are subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority applicable to the Company or any of its
Subsidiaries, except, in the case of each of clauses (ii) and (iii) above, for any such violation
or default that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.




          (i) No Material Adverse Change. Subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus and the Free Writing
Prospectuses, if any (including any document deemed incorporated by reference therein), 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 transaction which
is material to the Company and the Subsidiaries taken as a whole, (iii) any obligation or
liability, direct or contingent (including any off-balance sheet obligations), incurred by the
Company or any Subsidiary, which is material to the Company and the Subsidiaries taken as a whole,
(iv) any material change in the capital stock (other than as a result of the sale of Placement
Shares or other than as described in a proxy statement filed on Schedule 14A or a Registration
Statement on Form S-4 and otherwise publicly announced) or outstanding long-term indebtedness of
the Company or any of its Subsidiaries or (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company or any Subsidiary, other than in each case above
in the ordinary course of business or as otherwise disclosed in the Registration Statement or
Prospectus (including any document deemed incorporated by reference therein);




          (j) Capitalization. The issued and outstanding shares of capital stock of the Company
have been validly issued, are fully paid and non-assessable and, other than as disclosed in the
Registration Statement or the Prospectus, were not issued in violation of any preemptive rights,
rights of first refusal or similar rights. The Company has an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus as of the dates
referred to therein (other than the grant of additional options under the Company’s existing stock
option plans, or changes in the number of outstanding Common Stock of the Company due to the
issuance of shares upon the exercise or conversion of securities exercisable for, or convertible
into, Common Stock outstanding on the date hereof or as a result of the issuance of Placement
Shares). The description of the Common Stock in the Registration Statement and the Prospectus is
complete and accurate in all material respects. Except as disclosed in or contemplated by the
Registration Statement or the Prospectus, as of the date referred to therein, the Company did not
have outstanding any options to purchase, or any rights or warrants to






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subscribe for, or any securities or obligations convertible into, or exchangeable for, or any
contracts or commitments to issue or sell, any shares of capital stock or other securities.




          (k) Authorization; Enforceability. The Company has full legal right, power and
authority to enter into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, and validly executed and delivered by the Company and is a
legal, valid and binding agreement of the Company enforceable against the Company 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 10
hereof may be limited by federal or state securities laws and public policy considerations in
respect thereof.




          (l) Authorization of Placement Shares. The Placement Shares, when issued and
delivered pursuant to the terms approved by the board of directors of the Company or a duly
authorized committee thereof, or a duly authorized executive committee, against payment therefor as
provided herein, will be duly and validly authorized and issued and fully paid and nonassessable,
and free and clear of any pledge, lien, encumbrance, security interest or other claim (other than
any pledge, lien, encumbrance, security interest or other claim arising from an act or omission of
MLV or a purchaser), 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. The Placement Shares, when issued, will conform in all material respects to the
description thereof set forth in or incorporated into the Prospectus.




          (m) No Consents Required. All consents, approvals, authorizations, orders,
registrations or qualifications of or with any court or arbitrator or any governmental or
regulatory authority is required for the execution, delivery and performance by the Company of this
Agreement, and the issuance and sale by the Company of the Placement Shares as contemplated hereby,
have been obtained except for such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities laws or by the by-laws and
rules of the Financial Industry Regulatory Authority (“FINRA”) or the Exchange in
connection with the sale of the Placement Shares by MLV.




          (n) 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 Common Stock or shares of any other capital stock
or other securities of the Company (other than upon the exercise of options or warrants to purchase
Common Stock or upon the exercise of options that may be granted from time to time under the
Company’s stock option plans), (ii) no Person has any preemptive rights, rights of first refusal,
or any other rights (whether pursuant to a “poison pill” provision or otherwise) to purchase any
Common Stock or shares of any other capital stock or other securities of the Company from the
Company which have not been duly waived with respect to the offering contemplated hereby, (iii) 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 Common
Stock or shares of any other capital stock or other securities of






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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.




          (o) Independent Public Accountant. PricewaterhouseCoopers LLP (the
“Accountant”), whose report on the consolidated financial statements of the Company is
filed with the Commission as part of the Company’s most recent Annual Report on Form 10-K filed
with the Commission and incorporated into the Registration Statement, are and, during the periods
covered by their report, were independent public accountants within the meaning of the Securities
Act and the Public Company Accounting Oversight Board (United States). To the Company’s knowledge,
after due inquiry, the Accountant is not in violation of the auditor independence requirements of
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company.




          (p) Enforceability of Agreements. All agreements between the Company and third
parties expressly referenced in the Prospectus, other than such agreements that have expired by
their terms or whose termination is disclosed in documents filed by the Company on EDGAR, are
legal, valid and binding obligations of the Company enforceable in accordance with their respective
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 provisions of certain agreements may be limited
be federal or state securities laws or public policy considerations in respect thereof, except for
any unenforceability that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.




          (q) No Litigation. Except as set forth in the Registration Statement or the
Prospectus, there are no legal, governmental or regulatory actions, suits or proceedings pending,
nor, to the Company’s knowledge, any legal, governmental or regulatory investigations, to which the
Company or a Subsidiary is a party or to which any property of the Company or any of its
Subsidiaries is the subject that, individually or in the aggregate, if determined adversely to the
Company or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect;
to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by
any governmental or regulatory authority or threatened by others that, individually or in the
aggregate, if determined adversely to the Company or any of its Subsidiaries, would reasonably be
expected to have a Material Adverse Effect.




          (r) Licenses and Permits. Except as set forth in the Registration Statement or the
Prospectus, the Company and each of its Subsidiaries possess or have obtained, all licenses,
certificates, consents, orders, approvals, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described in the
Registration Statement and the Prospectus (the “Permits”), except where the failure to
possess, obtain or make the same would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the Registration Statement or
the Prospectus, neither the Company nor any of its Subsidiaries have received written notice of any
proceeding relating to revocation or modification of any such Permit or has any reason to believe






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that such Permit will not be renewed in the ordinary course, except where the failure to
obtain any such renewal would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.




          (s) Market Capitalization. As of the close of trading on the Exchange on the Trading
Day immediately prior to the date of this Agreement, the aggregate market value of the outstanding
voting and non-voting common equity (as defined in Securities Act Rule 405) of the Company held by
persons other than affiliates of the Company (pursuant to Securities Act Rule 144, those that
directly, or indirectly through one or more intermediaries, control, or are controlled by, or are
under common control with, the Company) (the “Non-Affiliate Shares”), was approximately
$97 million (calculated by multiplying (x) the price at which the common equity of the Company was
last sold on the Exchange on the Trading Day immediately prior to the date of this Agreement times
(y) the number of Non-Affiliate Shares).




          (t) No Material Defaults. Neither the Company nor any of the 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 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.




          (u) Certain Market Activities. Neither the Company, nor any of the Subsidiaries, nor
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.




          (v) Broker/Dealer Relationships. Neither the Company nor any of the 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 member” or “associated person of a member” (within the
meaning set forth in the FINRA Manual).




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




          (x) Taxes. The Company and each of its Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and paid all taxes shown thereon
through the date hereof, to the extent that such taxes have become due and are not being contested
in good faith, except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect. Except as otherwise disclosed in or contemplated by the Registration
Statement or the Prospectus, no tax deficiency has been determined adversely to the






10









 







Company or any of its Subsidiaries which has had, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company has no knowledge of any
federal, state or other governmental tax deficiency, penalty or assessment which has been or might
be asserted or threatened against it which could have a Material Adverse Effect.




          (y) Title to Real and Personal Property. Except as set forth in the Registration
Statement or the Prospectus, the Company and its Subsidiaries have good and valid title in fee
simple to all items of real property and good and valid title to all personal property described in
the Registration Statement or Prospectus as being owned by them that are material to the businesses
of the Company or such Subsidiary, in each case free and clear of all liens, encumbrances and
claims, except those that (i) do not materially interfere with the use made and proposed to be made
of such property by the Company and any of its Subsidiaries or (ii) would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect. Any real property
described in the Registration Statement or Prospectus as being leased by the Company and any of its
Subsidiaries is held by them under valid, existing and enforceable leases, except those that (A) do
not materially interfere with the use made or proposed to be made of such property by the Company
or any of its Subsidiaries or (B) would not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.




          (z) Intellectual Property. Except as set forth in the Registration Statement or the
Prospectus, the Company and its Subsidiaries own or possess adequate enforceable rights to use all
patents, patent applications, trademarks (both registered and unregistered), service marks, trade
names, trademark registrations, service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) (collectively, the “Intellectual Property”), necessary
for the conduct of their respective businesses as conducted as of the date hereof, except to the
extent that the failure to own or possess adequate rights to use such Intellectual Property would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
except as disclosed in writing to MLV, the Company and any of its Subsidiaries have not received
any written notice of any claim of infringement or conflict which asserted Intellectual Property
rights of others, which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Effect; there are no pending, or to the Company’s knowledge,
threatened judicial proceedings or interference proceedings challenging the Company’s or its
Subsidiaries’ rights in or to or the validity of the scope of any of the Company’s or its
Subsidiaries’ patents, patent applications or proprietary information; no other entity or
individual has any right or claim in any of the Company’s or its Subsidiaries’ patents, patent
applications or any patent to be issued therefrom by virtue of any contract, license or other
agreement entered into between such entity or individual and the Company or a Subsidiary or by any
non-contractual obligation, other than by written licenses granted by the Company or a Subsidiary;
the Company and its Subsidiaries have not received any written notice of any claim challenging the
rights of the Company or a Subsidiary in or to any Intellectual Property owned, licensed or
optioned by the Company or such Subsidiary which claim, if the subject of an unfavorable decision
would result in a Material Adverse Effect.




          (aa) Environmental Laws. Except as set forth in the Registration Statement or the
Prospectus, 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






11









 







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 or 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, other approvals or liability as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.




          (bb) Disclosure Controls. The Company and each of its Subsidiaries maintain a system
of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that complies with the requirements of the Exchange Act and has been designed by the
Company’s principal executive officer and principal financial officer, or under their supervision,
to provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles 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 the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company is not aware of any material weaknesses in its internal
control over financial reporting (other than as set forth in the Prospectus). Since the date of
the latest audited financial statements of the Company included in the Prospectus, there has been
no change in the Company’s internal control over financial reporting that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial
reporting (other than as set forth in the Prospectus). The Company maintains disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the Company and such
disclosure controls and procedures have been designed to ensure that material information relating
to the Company and each of its Subsidiaries is made known to the Company’s principal executive
officer and principal financial officer by others within those entities, and such disclosure
controls and procedures are effective. To the knowledge of the Company, the Company’s “internal
controls over financial reporting” and “disclosure controls and procedures” are effective.




          (cc) Sarbanes-Oxley. There is and has been no failure on the part of the Company or,
to the knowledge of the Company, any of the Company’s directors or officers, in their capacities as
such, to comply with any applicable provisions of the Sarbanes-Oxley Act and the rules and
regulations promulgated thereunder. Each of the principal executive officer and the principal
financial officer of the Company (or each former principal executive officer of the Company and
each former principal financial officer of the Company as applicable) has made all certifications
required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules,
forms, statements and other documents required to be filed by it or furnished by it to the
Commission. For purposes of the preceding sentence, “principal executive officer” and “principal
financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.







12









 








          (dd) Finder’s Fees. Neither the Company nor any of the Subsidiaries has incurred any
liability for any finder’s fees, brokerage commissions or similar payments in connection with the
transactions herein contemplated, except as may otherwise exist with respect to MLV pursuant to
this Agreement.




          (ee) Labor Disputes. Except for matters which would not, individually or in the
aggregate, result in a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint
pending, or to the knowledge of the Company, threatened against the Company or any of 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 knowledge of the
Company, threatened against the Company, (B) no strike, labor dispute, slowdown or stoppage,
pending or, to the knowledge of the Company, threatened against the Company, and (C) no union
representation dispute currently existing concerning the employees of the Company.




          (ff) Investment Company Act. Neither the Company nor any of the Subsidiaries is or,
after giving effect to the offering and sale of the Placement Shares, will be 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”).




          (gg) 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.




          (hh) ERISA. To the knowledge of the Company, each material employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), that is maintained, administered or contributed to by the Company or any
of its affiliates for employees or former employees of the Company and any of its Subsidiaries has
been maintained in material compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the “Code”); no prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred which would result in a
material liability to the Company with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption; and for each such plan that is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding
deficiency” as defined in Section 412 of the Code has been incurred, whether or not waived, and the
fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.




          (ii) Margin Rules. Neither the issuance, sale and delivery of the Placement Shares
nor the application of the proceeds thereof by the Company as described in the Registration
Statement and the Prospectus will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board of Governors.




          (jj) Insurance. The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company and each of its






13









 







Subsidiaries reasonably believe are adequate for the conduct of their properties and as is
customary for companies of similar size engaged in similar businesses in similar industries.




          (kk) No Improper Practices. (i) Neither the Company nor, to the Company’s knowledge,
the 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 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; and (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
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.




          (ll) Status Under the Securities Act. The Company was not and is not an ineligible
issuer as defined in Rule 405 under the Securities Act at the times specified in Rules 164 and 433
under the Act in connection with the offering of the Placement Shares.




          (mm) No Misstatement or Omission in an Issuer Free Writing Prospectus. Each Issuer
Free Writing Prospectus, as of its issue date and as of each Applicable Time (as defined in
Section 24 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 Issuer Free Writing Prospectus based upon and in conformity with written information furnished
to the Company by MLV specifically for use therein.







14









 








          (nn) No Conflicts. Neither the execution of this Agreement, nor the issuance,
offering or sale of the Placement Shares, nor the consummation of any of the transactions
contemplated hereby will conflict with, or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has resulted in or will
result in the creation or imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to the terms of any contract or other agreement to which the Company may be
bound or to which any of the property or assets of the Company is subject, except (i) such
conflicts, breaches or defaults as may have been waived and (ii) such conflicts, breaches and
defaults that would not reasonably be expected to have a Material Adverse Effect; nor will such
action result (x) in any violation of the provisions of the organizational or governing documents
of the Company, or (y) in any material violation of the provisions of any statute or any order,
rule or regulation applicable to the Company or of any court or of any federal, state or other
regulatory authority or other government body having jurisdiction over the Company, except where
such violation would not reasonably be expected to have a Material Adverse Effect.




          (oo) Clinical Studies. The clinical, pre-clinical and other studies and tests
conducted by or, to the knowledge of the Company, on behalf of the Company 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). Except as set forth in the Registration Statement or
Prospectus, the Company has not received any written notices or other written 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 requiring the Company to terminate or
suspend any ongoing clinical or pre-clinical studies or tests.




          (pp) Compliance Program. Except as disclosed in the Registration Statement and the
Prospectus, 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, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA), except where such noncompliance would
not reasonably be expected to have a Material Adverse Effect.




          (qq) OFAC. (i) Neither the Company nor any of its Subsidiaries (collectively, the
“Entity”) or any director, officer, employee, agent, affiliate or representative of the
Entity, is a government, individual, or entity (in this paragraph (qq), “Person”) that is,
or is owned or controlled by a Person that is:





     (A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the
United Nations Security Council (“UNSC”), the European Union (“EU”),
Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority
(collectively, “Sanctions”), nor



15









 






     (B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).



          (ii) The Entity represents and covenants that it will not, directly or indirectly, use the
proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person:





     (A) to fund or facilitate any activities or business of or with any Person or
in any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or




     (B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as underwriter,
advisor, investor or otherwise).



          (iii) The Entity represents and covenants that, except as detailed in the Prospectus, for
the past 5 years, it has not knowingly engaged in, is not now knowingly engaged in, and will not
engage in, any dealings or transactions with any Person, or in any country or territory, that at
the time of the dealing or transaction is or was the subject of Sanctions.




          (rr) Stock Transfer Taxes. On each Settlement Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the sale and transfer of
the Placement Shares to be sold hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully complied with.




     Any certificate signed by an officer of the Company and delivered to MLV or to counsel for MLV
pursuant to or in connection with this Agreement shall be deemed to be a representation and
warranty by the Company, as applicable, to MLV as to the matters set forth therein.



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



          (a) Registration Statement Amendments. After the date of this Agreement and during
any period in which a Prospectus relating to any Placement Shares is required to be delivered by
MLV 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 MLV promptly of the time when any subsequent amendment to the
Registration Statement, other than documents incorporated by reference, has been filed with the
Commission and/or has become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information, (ii) the Company will prepare and file with
the Commission, promptly upon MLV’s request, any amendments or supplements to the Registration
Statement or Prospectus that, in MLV’s reasonable opinion, may be necessary or advisable in
connection with the distribution of the Placement Shares by MLV (provided, however, that the
failure of MLV to make such request






16









 







shall not relieve the Company of any obligation or liability hereunder, or affect MLV’s right
to rely on the representations and warranties made by the Company in this Agreement and provided,
further, that the only remedy MLV shall have with respect to the failure to make such filing shall
be to cease making sales under this Agreement until such amendment or supplement is filed); (iii)
the Company will not file any amendment or supplement to the Registration Statement or Prospectus,
other than documents incorporated by reference, relating to the Placement Shares or a security
convertible into the Placement Shares unless a copy thereof has been submitted to MLV within a
reasonable period of time before the filing and MLV has not reasonably objected thereto; provided,
however, (A) that the failure of MLV to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect MLV’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
MLV any advance copy of such filing to provide MLV an opportunity to object to such filing if such
filing does not name MLV, and (C) that MLV shall not object to any such filing if such filing is
required under applicable law (provided, further, that the only remedy MLV shall have with respect
to the failure to by the Company to obtain such consent shall be to cease making sales under this
Agreement) and the Company will furnish to MLV 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 relating to the Placement shares, except for those documents available via EDGAR; and
(iv) the Company will cause each amendment or supplement to the Prospectus to be filed with the
Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act
or, in the case of any document to be incorporated therein by reference, to be filed with the
Commission as required pursuant to the Exchange Act, within the time period prescribed (the
determination to file or not file any amendment or supplement with the Commission under this
Section 7(a), based on the Company’s reasonable opinion or reasonable objections, shall be made
exclusively by the Company).




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




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






17









 







with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or
under the Exchange Act. If the Company has omitted any information from the Registration Statement
pursuant to Rule 430A under the Act, it will use its best efforts to comply with the provisions of
and make all requisite filings with the Commission pursuant to said Rule 430A and to notify MLV
promptly of all such filings. 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 MLV 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 MLV under the Securities Act with respect to
the offer and sale of the Placement Shares, 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 MLV reasonably designates and to
continue such qualifications in effect so long as required for the distribution of the Placement
Shares; provided, however, that the Company shall not be required in connection therewith to
qualify as a foreign corporation or dealer in securities or file a general consent to service of
process in any jurisdiction.




          (e) Delivery of Registration Statement and Prospectus. The Company will furnish to
MLV 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 MLV may from time to time reasonably request and, at MLV’s request, will also
furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares
may be made; provided, however, that the Company shall not be required to furnish any document
(other than the Prospectus) to MLV to the extent such document is available on EDGAR.




          (f) Earnings Statement. The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies
the provisions of Section 11(a) and Rule 158 of the Securities Act.




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




          (h) Notice of Other Sales. The Company shall provide MLV notice as promptly as
reasonably practical before it offers to sell, sells, contracts to sell, grants any option






18









 







to sell or otherwise disposes of any shares of Common Stock (other than the Placement Shares
offered pursuant to this Agreement) or securities convertible into or exchangeable for Common
Stock, warrants or any rights to purchase or acquire, Common Stock during the period beginning on
the Trading Day immediately prior to the date on which any Placement Notice is delivered to MLV
hereunder and ending on the fifth (5th) Trading Day immediately following the final Settlement Date
with respect to Placement Shares sold pursuant to such Placement Notice (or, if the Placement
Notice has been terminated or suspended prior to the sale of all Placement Shares covered by a
Placement Notice, the date of such suspension or termination); and will not directly or indirectly
in any other “at-the-market” or continuous equity transaction offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any Common Stock (other than the Placement
Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for
Common Stock, warrants or any rights to purchase or acquire, Common Stock prior to the termination
of this Agreement with respect to Placement Shares sold pursuant to such Placement Notice;
provided, however, that such restrictions or notice requirements will not be required in
connection with the Company’s issuance or sale of (i) Common Stock, options to purchase Common
Stock or Common Stock issuable upon the exercise of options, pursuant to any employee or director
stock option or benefits plan, stock ownership plan or dividend reinvestment plan (but not Common
Stock subject to a waiver to exceed plan limits in its dividend reinvestment plan) of the Company
whether now in effect or hereafter implemented; (ii) Common Stock issuable upon conversion of
securities or the exercise of warrants, options or other rights in effect or outstanding, and
disclosed in filings by the Company available on EDGAR or otherwise in writing to MLV and (iii)
Common Stock, or securities convertible into or exercisable for Common Stock, offered and sold in a
privately negotiated transaction to vendors, customers, strategic partners or potential strategic
partners who are qualified institutional buyers and not more than three persons that are
“accredited investors” within the meaning of such term under paragraph (a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) of Rule 501 under the Securities Act and otherwise conducted in a manner so as not
to be integrated with the offering of Common Stock hereby.




          (i) Change of Circumstances. The Company will, at any time during the pendency of a
Placement Notice advise MLV 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 MLV pursuant to this Agreement.




          (j) Due Diligence Cooperation. The Company will cooperate with any reasonable due
diligence review conducted by MLV or its representatives 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 MLV may reasonably request.




          (k) Required Filings Relating to Placement of Placement Shares. The Company agrees to
disclose in its Quarterly Reports on Form 10-Q and in its Annual Report on Form 10-K the amount of
Placement Shares sold through MLV, the Net Proceeds to the Company and the compensation payable by
the Company to MLV with respect to such Placement Shares pursuant to this Agreement during the
relevant period (or alternatively, file a prospectus supplement with such summary information with
the Commission under the






19









 







applicable paragraph of Rule 424(b) under the Securities Act on such dates as the Securities
Act shall require).




          (l) Representation Dates; Certificate. Three (3) Trading Days prior to the delivery
of the first Placement Notice pursuant to this Agreement and each time the Company:





(i) files the Prospectus relating to the Placement Shares or amends or supplements (other
than a prospectus supplement relating solely to an offering of securities other than the
Placement Shares) 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 (including any Form 10-K/A
containing amended financial information or a material amendment to the previously filed
Form 10-K);




(iii) files its quarterly reports on Form 10-Q under the Exchange Act; or




(iv) files a current report on Form 8-K containing amended financial information (other than
information “furnished” 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 reclassification 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 MLV (but in the case of clause (iv) above only if MLV reasonably
determines that the information contained in such Form 8-K is material) with a certificate, in the
form attached hereto as Exhibit 7(l). The requirement to provide a certificate under this Section
7(l) 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 MLV with
a certificate under this Section 7(l), then before the Company delivers the Placement Notice or MLV
sells any Placement Shares, the Company shall provide MLV with a certificate, in the form attached
hereto as Exhibit 7(l), dated the date of the Placement Notice.




          (m) Legal Opinion. (1) On the date the first Placement Notice is delivered by the
Company pursuant to this Agreement and (2) within three (3) Trading Days of each other
Representation Date with respect to which the Company is obligated to deliver a certificate in the
form attached hereto as Exhibit 7(l) for which no waiver is applicable, the Company shall cause to
be furnished to MLV written opinions of Goodwin Procter LLP and Dykema Gossett PLLC (“Company
Counsel”), or other counsel satisfactory to MLV, in a form substantially similar to





20












 





the form attached hereto as Exhibit 7(m), modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented, and with customary
assumptions and exceptions; provided, however, the Company shall be required to furnish to MLV no
more than one opinion hereunder per calendar quarter; provided, further, that in lieu of such
opinions for subsequent periodic filings under the Exchange Act, Company Counsel may furnish MLV
with a letter (a “Reliance Letter”) to the effect that MLV may rely on a prior opinion
delivered under this Section 7(m) 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 as of the date of the Reliance Letter).



          (n) Comfort Letter. 1) On the date the first Placement Notice is delivered by the
Company pursuant to this Agreement and (2) within three (3) Trading Days of each Representation
Date, other than pursuant to Section 7(l)(iii), with respect to which the Company is obligated to
deliver a certificate in the form attached hereto as Exhibit 7(l) for which no waiver is
applicable, the Company shall cause its independent accountants to furnish MLV letters (the
“Comfort Letters”), dated the date the Comfort Letter is delivered, which shall meet the
requirements set forth in this Section 7(n); provided, that if a Comfort Letter is requested by MLV
pursuant to Section 7(l)(iv) above, the Company shall cause such Comfort Letter to be furnished to
MLV within ten (10) Trading Days of the date of the filing of the Form 8-K. The Comfort Letter
from the Company’s independent accountants shall be in a form and substance satisfactory to MLV,
(i) confirming that they are an independent public accounting firm within the meaning of the
Securities Act and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such
firm with respect to the financial information and other matters ordinarily covered by accountants’
“comfort letters” to 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.



          (o) Market Activities. The Company will not, directly or indirectly, (i) take any
action designed to cause or result in, or that constitutes or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of Common Stock or (ii) sell, bid for, or purchase Common Stock in
violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Placement
Shares other than MLV.



          (p) Investment Company Act. The Company will conduct its affairs in such a manner so
as to reasonably ensure that neither it nor any of its Subsidiaries will be or become, at any time
prior to the termination of this Agreement, an “investment company,” as such term is defined in the
Investment Company Act.



          (q) No Offer to Sell. Other than an Issuer Free Writing Prospectus approved in
advance by the Company and MLV in its capacity as agent hereunder, neither MLV nor the Company
(including its agents and representatives, other than MLV in their capacity as such) will make,
use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act), required to be filed with the Commission, that constitutes an offer
to sell or solicitation of an offer to buy Placement Shares hereunder.



21









 





          (r) Sarbanes-Oxley Act. Except as set forth in the Registration Statement or
Prospectus, the Company will maintain such controls and other procedures, including, without
limitation, those required by Sections 302 and 906 of the Sarbanes-Oxley Act, and the applicable
regulations thereunder, that are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and forms,
including without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its principal executive officer
and its principal financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure and to ensure that material information
relating to the Company or the Subsidiaries is made known to them by others within those entities.



     8. Representations and Covenants of MLV. MLV represents and warrants that it is duly
registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and
regulations of each state in which the Placement Shares will be offered and sold, except such
states in which MLV is exempt from registration or such registration is not otherwise required.
MLV shall continue, for the term of this Agreement, to be duly registered as a broker-dealer under
FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the
Placement Shares will be offered and sold, except such states in which MLV is exempt from
registration or such registration is not otherwise required, during the term of this Agreement.



     9. Payment of Expenses.



          (a) The Company will pay all expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation, filing, including any fees required by the
Commission, and printing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment and supplement thereto and each Free Writing
Prospectus, in such number as MLV shall deem necessary, (ii) the printing and delivery to MLV of
the Prospectus and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Placement Shares, (iii) the preparation, issuance and
delivery of the certificates, if any, for the Placement Shares to MLV, including any stock or other
transfer taxes and any capital duties, stamp duties or other duties or taxes payable upon the sale,
issuance or delivery of the Placement Shares to MLV, (iv) the fees and disbursements of the
counsel, accountants and other advisors to the Company, (v) the fees and expenses of the transfer
agent and registrar for the Common Stock, (vi) the filing fees incident to any review by FINRA of
the terms of the sale of the Placement Shares, (vii) the fees and expenses of counsel to MLV, not
to exceed $35,000 and (viii) the fees and expenses incurred in connection with the listing of the
Placement Shares on the Exchange.



          (b) If this Agreement is terminated by MLV in accordance with the provisions of Section 13(a)
hereof, the Company shall reimburse MLV for all of its reasonably incurred out-of-pocket expenses, including the reasonable fees and disbursements of counsel for MLV
(less any amounts paid under clause (a)(vii) above) in an amount not to exceed $45,000.



22









 





          (c) In no event shall MLV seek reimbursement of expenses from the Company to the extent it
would cause the total compensation of MLV hereunder to exceed 8% of the offering proceeds.



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



          (a) Registration Statement Effective. The Registration Statement shall have become
effective and shall be available for the (i) resale of all Placement Shares issued to MLV and not
yet sold by MLV and (ii) 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; or (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, the 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) No Misstatement or Material Omission. MLV shall not have advised the Company that
the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact that in MLV’s reasonable opinion is material, or omits to state a fact
that in MLV’s opinion is material and is required to be stated therein or is necessary to make the
statements therein not misleading.



          (d) Material Changes. Except as contemplated in the Prospectus, or disclosed in the
Company’s reports filed with the Commission, there shall not have been any material adverse change, on a consolidated basis, in the authorized capital stock of the Company or any
Material Adverse Effect, or any development that could reasonably be expected to cause a



23









 




Material Adverse Effect, the effect of which in the reasonable judgment of MLV (without relieving
the Company of any obligation or liability it may otherwise have), is so material as to make it
impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and
in the manner contemplated in the Prospectus.




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



          (f) Comfort Letter. MLV shall have received the Comfort Letter required to be
delivered pursuant Section 7(n) on or before the date on which such delivery of such letter is
required pursuant to Section 7(n).



          (g) Representation Certificate. MLV shall have received the certificate required to
be delivered pursuant to Section 7(l) on or before the date on which delivery of such certificate
is required pursuant to Section 7(l).



          (h) No Suspension. Trading in the Common Stock shall not have been suspended on the
Exchange and the Common Stock shall not have been delisted from the Exchange.



          (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 approved for
listing on the Exchange, subject only to notice of issuance, or 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
MLV to terminate this Agreement pursuant to Section 12(a).



     11. Indemnification and Contribution.



          (a) Company Indemnification. The Company agrees to indemnify and hold harmless MLV,
its partners, members, directors, officers, employees and agents and each person, if any, who
controls MLV within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act as follows:



               (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred,
joint or several, arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact included in any related Issuer
Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission



24









 




or alleged omission therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;




               (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred,
joint or several, to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 11(d) below) any such settlement is
effected with the written consent of the Company, which consent shall not unreasonably be delayed
or withheld; and



               (iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel), reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or
(ii) above, provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made solely in reliance upon and in conformity
with written information furnished to the Company by or on behalf of MLV expressly for use in the
Registration Statement (or any amendment thereto), or in any related Issuer Free Writing Prospectus
or the Prospectus (or any amendment or supplement thereto).



          (b) MLV Indemnification. MLV 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 against any and all loss, liability, claim, damage and expense described in the indemnity
contained in Section 11(c), as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement (or any amendments
thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information relating to MLV and furnished to the Company in writing by MLV
expressly for use therein.



          (c) Procedure. Any party that proposes to assert the right to be indemnified under
this Section 11 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 11, 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 11 and (ii) any liability that it may have to any indemnified party under
the foregoing provision of this Section 11 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,



25









 




jointly with any other indemnifying party similarly notified, to assume the defense of the action,
with counsel reasonably satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the defense, the indemnifying
party will not be liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense of such action on
behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties. It is understood
that the indemnifying party or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm admitted to practice in such jurisdiction at any one time
for all such indemnified party or parties. All such fees, disbursements and other charges will be
reimbursed by the indemnifying party promptly after the indemnifying party receives a written
invoice relating to fees, disbursements and other charges in reasonable detail. An indemnifying
party will not, in any event, be liable for any settlement of any action or claim effected without
its written consent. No indemnifying party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters contemplated by this Section 11
(whether or not any indemnified party is a party thereto), unless such settlement, compromise or
consent (1) includes an unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (2) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified
party.




          (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
11 is applicable in accordance with its terms but for any reason is held to be unavailable from the
Company or MLV, the Company and MLV 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 MLV,
such as persons who control the Company within the meaning of the Securities Act, officers of the
Company who signed the Registration Statement and directors of the Company, who also may be liable
for contribution) to which the Company and MLV may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one hand and MLV on the other hand. The relative benefits received by the
Company on the one hand and MLV on the other hand shall be deemed to be in the same



26









 




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 MLV (before deducting
expenses) from the sale of Placement Shares on behalf of the Company. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not only the relative
benefits referred to in the foregoing sentence but also the relative fault of the Company, on the
one hand, and MLV, on the other hand, with respect to the statements or omission that resulted in
such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative fault shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company or MLV, 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 MLV
agree that it would not be just and equitable if contributions pursuant to this Section 11(e) 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 11(e) shall be deemed to include, for the
purpose of this Section 11(e), 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 11(c) hereof. Notwithstanding the foregoing provisions of this Section
11(e), MLV shall not be required to contribute any amount in excess of the commissions received by
it under this Agreement and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11(e), 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 MLV, will have the same rights to
contribution as that party, and each officer and director 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 11(e), 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 11(e) 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 11(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 11(c) hereof.




     12. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 11 of this Agreement and all representations and
warranties of the Company and MLV 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
MLV, 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.



27









 





     13. Termination.



          (a) MLV shall have the right by giving notice as hereinafter specified at any time to
terminate this Agreement if (i) any Material Adverse Effect has occurred that, in the reasonable
judgment of MLV, may materially impair its ability 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(l), 7(m), or 7(n), MLV’s right to terminate shall not arise unless such failure to deliver (or
cause to be delivered) continues for more than ten (10) days from the date such delivery was
required; or (iii) 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 9 (Expenses), Section 11
(Indemnification), Section 12 (Survival of Representations), Section 18 (Governing Law and Time;
Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force
and effect notwithstanding such termination. If MLV elects to terminate this Agreement as provided
in this Section 13(a), MLV shall provide the required notice as specified in Section 14 (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 except that the
provisions of Section 9, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in
full force and effect notwithstanding such termination.



          (c) MLV 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 9, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in
full force and effect notwithstanding such termination.



          (d) Unless earlier terminated pursuant to this Section 13, this Agreement shall automatically
terminate upon the issuance and sale of the maximum amount of the Shares set forth in Section 1 or
the Prospectus through MLV on the terms and subject to the conditions set forth herein; provided
that the provisions of Section 9, Section 11, Section 12, Section 18 and Section 19 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 13(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 9, Section 11, Section 12, Section 18 and Section 19 shall remain in full force and effect.
Upon termination of this Agreement, the Company shall not have any liability to MLV for any
discount, commission or other compensation with respect to any Placement Shares not otherwise sold
by MLV under this Agreement.



     (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



28









 




the close of business on the date of receipt of such notice by MLV 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.




          (g) Subject to the additional limitations set forth in Section 9 of this Agreement, in the
event of termination of this Agreement prior to the sale of any Placement Shares, MLV shall be
entitled only to reimbursement of its out-of-pocket expenses actually incurred.



     14. 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, and if sent to MLV, shall be delivered to:


McNicoll, Lewis & Vlak LLC

420 Lexington Avenue

New York, NY 10017

Attention: General Counsel

Facsimile: (212) 217-3315



with a copy to (such copy not to constitute notice):



LeClairRyan, P.C.

One Riverfront Plaza

1037 Raymond Boulevard

Sixteenth Floor

Newark, NJ 07102

Attention: James T. Seery

Facsimile: (973) 491-3415



and if to the Company, shall be delivered to:



Aastrom Biosciences, Inc.

Domino’s Farms, Lobby K

24 Frank Lloyd Wright Drive

Ann Arbor, MI 48105

Attention: Scott C. Durbin

Chief Financial Officer

Facsimile: (734) 665-0485



with a copy to (such copy not to constitute notice):



Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attention: Mitchell S. Bloom and Danielle M. Lauzon

Telephone: (617) 570-1000

Facsimile: (617) 523-1231







29









 








     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.



     An electronic communication (“Electronic Notice”) shall be deemed written notice for
purposes of this Section 14 if sent to the electronic mail address specified by the receiving party
under separate cover. Electronic Notice shall be deemed received at the time the party sending
Electronic Notice receives confirmation of receipt by the receiving party. Any party receiving
Electronic Notice may request and shall be entitled to receive the notice on paper, in a
nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party
within ten (10) days of receipt of the written request for Nonelectronic Notice.



     15. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and MLV and their respective successors and the affiliates, controlling
persons, officers and directors referred to in Section 11 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.



     16. 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 share
consolidation, stock split, stock dividend, corporate domestication or similar event effected with
respect to the Placement Shares.



     17. 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 MLV. 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



30









 




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.




     18. GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.



     19. CONSENT TO JURISDICTION. 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.



     20. Use of Information. MLV may not use any information gained in connection with this
Agreement and the transactions contemplated by this Agreement, including due diligence, to advise
any party with respect to transactions not expressly approved by the Company.



     21. 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.



     22. Effect of Headings.



     The section and Exhibit headings herein are for convenience only and shall not affect the
construction hereof.



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     23. Permitted Free Writing Prospectuses.



     The Company represents, warrants and agrees that, unless it obtains the prior consent of MLV,
and MLV represents, warrants and agrees that, unless it obtains the prior consent of the Company,
it has not made and will not make any offer relating to the Placement Shares that would constitute
an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,”
as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus
consented to by MLV or by the Company, as the case may be, is hereinafter referred to as a
“Permitted Free Writing Prospectus.” The Company represents and warrants that it has treated and
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule
433 applicable to any Permitted Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. For the purposes of clarity, the parties
hereto agree that all free writing prospectuses, if any, listed in Exhibit G hereto are
Permitted Free Writing Prospectuses.



     24. Absence of Fiduciary Relationship.



          The Company acknowledges and agrees that:



          (a) MLV is acting solely as agent in connection with the public offering of the Placement
Shares and in connection with each transaction contemplated by this Agreement and the process
leading to such transactions, and no fiduciary or advisory relationship between the Company or any
of its respective affiliates, stockholders (or other equity holders), creditors or employees or any
other party, on the one hand, and MLV, on the other hand, has been or will be created in respect of
any of the transactions contemplated by this Agreement, irrespective of whether or not MLV has
advised or is advising the Company on other matters, and MLV has no obligation to the Company with
respect to the transactions contemplated by this Agreement except the obligations expressly set
forth in this Agreement;



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



          (c) MLV has not provided any legal, accounting, regulatory or tax advice with respect to the
transactions contemplated by this Agreement and it has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate;



          (d) it is aware that MLV and its affiliates are engaged in a broad range of transactions which
may involve interests that differ from those of the Company and MLV has no obligation to disclose
such interests and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship or otherwise; and



          (e) it waives, to the fullest extent permitted by law, any claims it may have against MLV for
breach of fiduciary duty or alleged breach of fiduciary duty in connection with the sale of
Placement Shares under this Agreement and agrees that MLV shall not have any liability (whether
direct or indirect, in contract, tort or otherwise) to it in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on its behalf or in
right of it or the Company, employees or creditors of Company, other than in respect of MLV’s



32









 




obligations under this Agreement and to keep information provided by the Company to MLV and MLV’s
counsel confidential to the extent not otherwise publicly-available.




     25. Definitions.



     As used in this Agreement, the following terms have the respective meanings set forth below:



     “Applicable Time” means (i) each Representation Date and (ii) the time of each sale of
any Placement Shares pursuant to this Agreement.



     “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433, relating to the Placement Shares that (1) is required to be filed with the
Commission by the Company, (2) is a “road show” that is a “written communication” within the
meaning of Rule 433(d)(8)(i) whether or not required to be filed with the Commission, or (3) is
exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Placement
Shares or of the offering that does not reflect the final terms, 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) under the Securities Act Regulations.



     “Rule 163,” “Rule 164,” “Rule 172,” “Rule 405,” “Rule
415,” “Rule 424,” “Rule 424(b),” “Rule 430B,” and “Rule 433”
refer to such rules under the Securities Act Regulations.



     All references in this Agreement to financial statements and schedules and other information
that is “contained,” “included” or “stated” in the Registration Statement or the Prospectus (and
all other references of like import) shall be deemed to mean and include all such financial
statements and schedules and other information that is incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.



     All references in this Agreement to the Registration Statement, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to EDGAR; all references in this Agreement to any Issuer Free Writing
Prospectus (other than any Issuer Free Writing Prospectuses that, pursuant to Rule 433, are not
required to be filed with the Commission) shall be deemed to include the copy thereof filed with
the Commission pursuant to EDGAR; and all references in this Agreement to “supplements” to the
Prospectus shall include, without limitation, any supplements, “wrappers” or similar materials
prepared in connection with any offering, sale or private placement of any Placement Shares by MLV
outside of the United States.



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




Very truly yours,





33









 







	 	 	 	 	 
	 	AASTROM BIOSCIENCES, INC.

 	 
	 	By:  	 /s/ Scott Durbin 	 
	 	 	Name:  	Scott Durbin 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	ACCEPTED as of the date first-above written: 

MCNICOLL, LEWIS & VLAK LLC

 	 
	 	By:  	/s/
Patrice McNicoll 	 
	 	 	Name:  	Patrice McNicoll 	 
	 	 	Title:  	Chief Executive Officer 	 



34









 






	 	 	 	 	 




SCHEDULE 1



 



FORM OF PLACEMENT NOTICE


 





	 	 	 

	From:

	 	Aastrom Biosciences, Inc.
	 
	 	 
	To:

	 	McNicoll, Lewis & Vlak LLC
	 
	 	 
	Attention:

	 	Patrice McNicoll
	 
	 	 
	Subject:

	 	At Market Issuance—Placement Notice
	 
	 	 
	Gentlemen:
	 	 






     Pursuant to the terms and subject to the conditions contained in the At Market Issuance Sales
Agreement between Aastrom Biosciences, Inc., a Michigan corporation (the “Company”) and
McNicoll, Lewis & Vlak LLC (“MLV”), dated June 16, 2011, the Company hereby requests that
MLV sell up to ____________ of the Company’s Common Stock, no par value per share, at a minimum
market price of $_______ per share, during the time period beginning [month, day, time] and ending
[month, day, time].



 









 





SCHEDULE 2



 



Compensation


 




     The Company shall pay to MLV in cash, upon each sale of Placement Shares pursuant to this
Agreement, an amount equal to up to 3.0% of the gross proceeds from each sale of Placement Shares.



 









 





SCHEDULE 3



 



Notice Parties


 




     The Company



     Tim
M. Mayleben




     Scott C. Durbin



     MLV




     Randy Billhardt




     Ryan Loforte




     Patrice McNicoll








 









 








SCHEDULE 4



 



Subsidiaries


 





 












 





EXHIBIT 7(l)




Form of Representation Date Certificate


This Officers Certificate (this “Certificate”) is executed and delivered in connection with
Section 7(l) of the At Market Issuance Sales Agreement (the
“Agreement”), dated June 16,
2011, and entered into between Aastrom Biosciences, Inc. (the “Company”) and McNicoll,
Lewis & Vlak LLC. All capitalized terms used but not defined herein shall have the meanings given
to such terms in the Agreement.




     The undersigned, a duly appointed and authorized officer of the Company, having made
reasonable inquiries to establish the accuracy of the statements below and having been authorized
by the Company to execute this certificate on behalf of the Company, hereby certifies as follows:



     1. As of the date of this Certificate, (i) the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading and (ii) neither the
Registration Statement nor the Prospectus contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading and (iii) no
event has occurred as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein not untrue or misleading for (i) and (ii) to be true.



     2. Each of the representations and warranties of the Company contained in the Agreement were,
when originally made, and are, as of the date of this Certificate, true and correct in all material
respects.



     3. Except as waived by MLV in writing, each of the covenants required to be performed by the
Company in the Agreement on or prior to the date of the Agreement, this Representation Date, and
each such other date prior to the date hereof as set forth in the Agreement, has been duly, timely
and fully performed in all material respects and each condition required to be complied with by the
Company on or prior to the date of the Agreement, this Representation Date, and each such other
date prior to the date hereof as set forth in the Agreement has been duly, timely and fully
complied with in all material respects.



     4. Subsequent to the date of the most recent financial statements in the Prospectus, and
except as described in the Prospectus, including Incorporated Documents, there has been no material
adverse change.



     5. No stop order suspending the effectiveness of the Registration Statement or of any part
thereof has been issued, and no proceedings for that purpose have been instituted or are pending or
threatened by any securities or other governmental authority (including, without limitation, the
Commission).



     6. No order suspending the effectiveness of the Registration Statement or the qualification or
registration of the Placement Shares under the securities or Blue Sky laws of any



 









 




jurisdiction are in effect and no proceeding for such purpose is pending before, or threatened, to
the Company’s knowledge or in writing by, any securities or other governmental authority
(including, without limitation, the Commission).




     The undersigned has executed this Officer’s Certificate as of the date first written above.



	 	 	 	 	 
	 	AASTROM BIOSCIENCES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




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