Document:

Exhibit 10.3

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is entered into as of the 26th day of November, 2019, and effective as of the first day of January, 2020 (the “Effective
Date”) by and between MFA Financial, Inc. (“MFA”), and Bryan Wulfsohn (the “Executive”).

 

WITNESSETH:

 

WHEREAS, MFA and the Executive entered into
an employment agreement, effective as of January 1, 2018, the term of which expires on December 31, 2019 (the “Former
Employment Agreement”);

 

WHEREAS, MFA and the Executive desire to
enter into a new employment agreement that supersedes and replaces the Former Employment Agreement in all respects as of the Effective
Date and sets forth the terms of the Executive’s employment with MFA; and

 

WHEREAS, the Executive wishes to continue
serving MFA, and MFA wishes to secure the continued exclusive services of the Executive, under the terms and conditions described
in this Agreement, which will be legally binding on the date the Agreement is executed by the parties hereto.

 

NOW THEREFORE, in consideration of the foregoing
premises and the mutual agreements herein contained, the parties hereto agree as follows:

 

1.           
Term of Employment.

 

(a)         
MFA hereby employs the Executive, and the Executive hereby accepts employment with MFA, in the positions and with the duties
and responsibilities as set forth in Section 2 below for the Term of Employment, subject to the terms and conditions of this Agreement.
Except as otherwise provided in Section 3(b)(iii) below, as of the Effective Date of this Agreement, the Former Employment Agreement
is terminated.

 

(b)         
The term of employment (the “Term of Employment”) under this Agreement shall commence on the Effective
Date and continue until December 31, 2021; provided that if December 31, 2021 occurs during a Garden Leave period, the Term of
Employment shall continue through the end of such Garden Leave. The Term of Employment may also be terminated in accordance with
Section 5 hereof.

 

2.           
Position; Duties and Responsibilities.

 

(a)         
During the Term of Employment, the Executive shall be employed as Co-Chief Investment Officer and Senior Vice President
of MFA, reporting directly and solely to the Chief Executive Officer of MFA (the “CEO”), with such authority,
duties and day-to-day management responsibilities as are customarily maintained and performed by persons holding such offices at
similarly situated mortgage REITs and such other duties as may be mutually agreed upon between the Executive and the CEO.

 

     

     

    

 

(b)         
During the Term of Employment, the Executive shall, without additional compensation, also serve on the board of directors
of, serve as an officer of, and/or perform such executive and consulting services for, or on behalf of, such subsidiaries or affiliates
of MFA as the Board of Directors of MFA (the “Board of Directors”) or the CEO may, from time to time, request.
MFA and such subsidiaries and affiliates are hereinafter referred to, collectively, as the “Company.” For purposes
of this Agreement, the term “affiliate” shall have the meaning ascribed thereto in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the “Act”).

 

(c)         
During the Term of Employment, the Executive shall serve MFA faithfully, diligently and to the best of his ability and shall
devote substantially all of his business time and efforts to his employment and the performance of his duties under this Agreement.
Nothing herein shall preclude the Executive from engaging in charitable and community affairs and managing his personal, financial
and legal affairs, so long as such activities do not materially interfere with his carrying out his duties and responsibilities
under this Agreement.

 

3.           
Compensation.

 

(a)         
Base Salary. During the Term of Employment, the Executive shall be entitled to receive an annualized base salary
(the “Base Salary”) of not less than $400,000. The Compensation Committee of the Board of Directors (the “Compensation
Committee”) shall review the Executive’s Base Salary annually to determine whether increases are appropriate.

 

(b)         
Performance Bonus.

 

(i)             
During the Term of Employment, the Executive shall be eligible to receive an annual bonus for the 12-month performance periods
beginning December 1, 2019 and December 1, 2020, respectively according to the terms set forth on the attached Exhibit A.
The Compensation Committee shall make all determinations with respect to the annual bonus in good faith and consistent with the
attached Exhibit A.

 

(ii)            
The annual bonus shall be paid in a combination of cash and restricted stock as set forth on Exhibit A. The annual
bonus that is payable for any performance period will be paid on or about January 15 following the end of the performance period,
and in no event later than March 15 following the end of the performance period.

 

(iii)           
Any annual bonus for the 12-month period beginning on December 1, 2018 shall be determined and paid in accordance with the
terms of the Former Employment Agreement, but in no event may such bonus be paid to the Executive later than March 15, 2020.

 

(c)         
Equity Compensation. To the extent that the Executive is still employed by MFA on each applicable grant date, within
25 business days following the Effective Date and in February 2021, the Company shall grant to the Executive a time-based RSU award
and a performance-based RSU award, each of which shall be granted according to the terms set forth on the attached Exhibit B and
the terms of the MFA Financial, Inc. Equity Compensation Plan or any successor thereto (the “Equity Compensation Plan”)
(which, for the avoidance of doubt, shall not be inconsistent with the terms set forth on Exhibit B).

 

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(d)         
Stock Ownership Requirements. All shares of MFA stock distributed to the Executive by the Company under this Agreement
or otherwise shall be subject to the stock ownership guidelines in effect for executives from time to time, as determined by the
Board of Directors. Unless the stock ownership guidelines provide otherwise, vested shares of equity grants cannot be transferred
or sold during the Executive’s employment by the Company unless and until the value of the Executive’s stock holdings
in MFA (including shares of restricted stock and RSUs (with any RSUs that vest based on performance valued at target)) exceeds
four times the Executive’s Base Salary; and following the termination of Executive’s employment with the Company, vested
shares of equity grants may not be sold or transferred to the extent the value of the Executive’s stock holdings does not
exceed four times the Executive’s Base Salary as of the date of the Executive’s termination of employment (provided,
however, that this sentence shall no longer apply following the six-month anniversary of the Executive’s termination of employment).
Notwithstanding the foregoing, the restrictions of this subsection (d) shall not prevent Executive from selling shares of MFA stock
to satisfy income tax and employment tax obligations relating to the vesting and settlement of the equity grants to which the shares
relate.

 

4.           
Employee Benefit Programs and Fringe Benefits. During the Term of Employment, the Executive shall be entitled to
at least 25 days in the aggregate of vacation and paid time off for each of calendar years 2020 and 2021 and shall be entitled
to participate in all executive incentive and employee benefit programs of MFA now or hereafter made available to MFA’s senior
executives or salaried employees generally, as such programs may be in effect from time to time. MFA shall reimburse the Executive
for any and all necessary, customary and usual business expenses incurred by Executive in connection with his employment in accordance
with applicable MFA policies.

 

5.           
Termination of Employment.

 

(a)         
Termination Due to Disability. If the Executive’s employment is terminated during the Term of Employment by
reason of the Executive’s Disability, the Executive’s Term of Employment shall terminate automatically without further
obligations to the Executive under this Agreement except as provided in this Section 5(a) and Section 5(h) below. In addition and
if the requirements of Section 5(k) are met:

 

(i)          
The Executive shall receive cash payments in an aggregate amount equal to the sum of (A) Executive’s then current
Base Salary and (B) the average of the annual bonuses paid to the Executive for the three calendar years preceding such termination
(the “Average Bonus”), with such amount to be paid in cash in equal ratable installments in accordance with
applicable MFA payroll practices over the 12 month period following such termination. Such installment payments shall commence
as soon as possible (without undue delay), but in any event within 60 days following the date of termination on account Disability,
and the first payment shall include any unpaid installments for the period prior to commencement. Notwithstanding the foregoing,
in the event that the Executive’s employment is terminated on account of Disability and such termination occurs within 12
months following a Change of Control, in lieu of payment in the form of installments, the sum of the amounts set forth in the preceding
clauses (A) and (B) shall be paid in a lump sum cash payment as soon as possible (without undue delay), but in any event within
60 days following the date of termination on account of Disability.

 

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(ii)         
The Executive shall receive any unpaid Annual Bonus (as defined in Exhibit A) for the Performance Period (as defined
in Exhibit A) immediately preceding the Executive’s date of termination.

 

(iii)        
The Company shall reimburse the Executive for 100% of the COBRA premiums incurred by the Executive for the Executive and
his eligible dependents under the Company’s health care plan during the 18 month period following the Executive’s termination
of employment. Such reimbursement shall be provided on the payroll date immediately following the date on which the Executive remits
the applicable premium payment and shall commence within 60 days after the termination date; provided that the first payment shall
include any reimbursements that would have otherwise been payable during the period beginning on the Executive’s termination
date and ending on the date of the first reimbursement payment. Reimbursement payments shall be treated as taxable compensation
to the Executive to the extent required by law.

 

(iv)        
All of the Executive’s outstanding equity-based awards (e.g., restricted stock, phantom shares, RSUs and stock options)
shall be treated in accordance with the following:

 

(A)        
Except as otherwise provided in (C) below, all unvested awards shall immediately vest.

 

(B)        
All vested options shall remain exercisable until the earlier of (x) 90 days following the date of such termination or (y)
the date on which each such option would have expired had the Executive’s employment not terminated.

 

(C)        
Any equity award that is subject to vesting based on the achievement of performance goals shall vest in accordance with
the terms and conditions applicable to such award, determined as though the Executive remained actively employed through the end
of the applicable performance period, provided that if the Executive’s date of termination occurs within 12 months following
a Change of Control, such award shall become immediately vested with respect to the target number of shares subject to such award.

 

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(b)        
Termination Due to Death. If the Executive’s employment is terminated during the Term of Employment by reason
of the Executive’s death, the Executive’s Term of Employment shall terminate automatically without further obligations
to the Executive, his legal representative or his estate, as the case may be, under this Agreement except as provided in this Section
5(b) and Section 5(h) below. In addition:

 

(i)          
The Executive’s legal representative or his estate, as the case may be, shall receive a lump sum cash payment equal
to the sum of (A) Executive’s then current Base Salary and (B) the Average Bonus. Such payment shall be made as soon as possible
(without undue delay), but in any event within 60 days following the date of the Executive’s death.

 

(ii)         
The Executive shall receive any unpaid Annual Bonus (as defined in Exhibit A) for the Performance Period (as defined
in Exhibit A) immediately preceding the Executive’s date of termination.

 

(iii)        
All of the Executive’s outstanding equity-based awards (e.g., restricted stock, phantom shares, RSUs and stock options)
shall be treated in accordance with the following:

 

(A)        
Except as otherwise provided in (C) below, all unvested awards shall immediately vest.

 

(B)        
All vested options shall remain exercisable until the earlier of (x) 90 days following the date of such termination or (y)
the date on which each such option would have expired had the Executive’s employment not terminated.

 

(C)        
Any equity award that is subject to vesting based on the achievement of performance goals shall vest in accordance with
the terms and conditions applicable to such award, determined as though the Executive remained actively employed through the end
of the applicable performance period, provided that if the Executive’s date of termination occurs within 12 months following
a Change of Control, such award shall become immediately vested with respect to the target number of shares subject to such award.

 

(c)        
Termination By MFA Without Cause or By the Executive for Good Reason. In the event the Executive’s employment
is terminated during the Term of Employment by the Company without Cause or by the Executive for Good Reason (other than for Disability,
as described in Section 5(a)), the Executive’s Term of Employment shall terminate without further obligations to the Executive
under this Agreement, except as provided in this Section 5(c) and Section 5(h) below. In addition and if the requirements of Section
5(k) are met:

 

(i)          
The Executive shall be entitled to an amount (the “Severance Amount”) equal to one and one-half (1.5)
times the sum of (A) his then current Base Salary, and (B) the Average Bonus, with such amount to be paid in cash in equal ratable
installments in accordance with applicable MFA payroll practices over the 18 month period following such termination (the “Severance
Period”). The severance payments shall commence within 60 days following the date of termination, and the first payment
shall include any unpaid installments for the period prior to commencement.

 

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(ii)         
The Executive shall receive any unpaid Annual Bonus for the Performance Period immediately preceding the Executive’s
date of termination.

 

(iii)        
All of the Executive’s outstanding equity-based awards (e.g., restricted stock, phantom shares, RSUs and stock options)
shall be treated in accordance with the following:

 

(A)        
Except as otherwise provided in (C) below, any such awards that would otherwise have vested within 12 months following such
termination had the Executive continued in employment shall immediately vest.

 

(B)        
All vested options shall remain exercisable until the earlier of (x) 90 days following the date of such termination or (y)
the date on which each such option would have expired had the Executive’s employment not terminated.

 

(C)        
Any equity award that is subject to vesting based on the achievement of performance goals shall vest in accordance with
the terms and conditions applicable to such award; provided that the equity award shall vest no less favorably than the following:
the Executive shall vest in a pro-rata portion of the amount determined based on achievement of the performance goals as of the
end of the applicable performance period. The pro-rata portion shall be equal to the product of (I) the number of shares subject
to such award that would have vested if the Executive had remained employed through the end of the applicable performance period
(if any) based on the achievement of the performance goals, and (II) a fraction, the numerator of which is the number of days during
the performance period that would have elapsed as of the anniversary of the date of grant of such award next following the Executive’s
date of termination (but not beyond the end of the applicable performance period), and the denominator of which is the number of
days in the performance period. For the avoidance of doubt, nothing in this Section 5(c)(iii)(C) requires vesting of any equity
award if and to the extent that the applicable performance goals are not achieved as of the end of the applicable performance period.

 

The parties agree that a termination of the Executive’s
employment pursuant to this Section 5(c), Section 5(d), Section 5(e) or Section 5(g) below shall not be a breach of this Agreement
and does not relieve either party of its/his other obligations hereunder.

 

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(d)        
Termination By MFA on the Expiration Date. In the event that, prior to the expiration of the Term of Employment,
MFA fails to renew this Agreement or provide the Executive with a new employment agreement, in either case, on substantially similar
terms to this Agreement (including but not limited to, the term of employment) such that the Term of Employment under this Agreement
expires on December 31, 2021 under circumstances which do not constitute Cause (such termination, an “Expiration Termination”),
then the Executive’s Term of Employment shall terminate on such date without further obligations to the Executive, his legal
representative or his estate, as the case may be, under this Agreement except as provided in Section 5(h) below. In addition and
if the requirements of Section 5(k) are met:

 

(i)          
During the nine month period following the date of termination, the Executive shall continue to be paid his Base Salary
in equal installments in accordance with applicable MFA payroll practices. The continued Base Salary payments shall commence within
60 days following the date of termination, and the first payment shall include any unpaid installments for the period prior to
commencement.

 

(ii)         
The Executive’s outstanding unvested equity-based awards (e.g., restricted stock, phantom shares, RSUs and stock options)
shall be treated in accordance with the following:

 

(A)        
Except as otherwise provided in (B) below, all unvested awards shall immediately vest.

 

(B)        
With respect to any equity award that is subject to vesting based on the achievement of performance goals, such equity award
shall vest based on achievement of the performance goals as of the end of the applicable performance period, in accordance with
the terms and conditions applicable to such award, determined as though the Executive remained actively employed for the entire
performance period. For the avoidance of doubt, no portion of an equity award shall vest in accordance with this Section 5(d)(ii)(B)
if and to the extent that the applicable performance goals are not achieved as of the end of the applicable performance period.

 

(iii)        
During the nine month period following the date of termination, the Company shall reimburse the Executive for 100% of the
COBRA premiums incurred by the Executive for the Executive and his eligible dependents under the Company’s health care, vision
and dental plans (if applicable). Such reimbursement shall be provided on the payroll date immediately following the date on which
the Executive remits the applicable premium payment and shall commence within 60 days after the termination date; provided that
the first payment shall include any reimbursements that would have otherwise been payable during the period beginning on the Executive’s
termination date and ending on the date of the first reimbursement payment. Reimbursement payments shall be treated as taxable
compensation to the Executive to the extent required by law.

 

(iv)        
The Executive shall receive any unpaid Annual Bonus for the Performance Period ending on November 30, 2021; provided that,
for purposes of calculating such Annual Bonus, the IRM Bonus (as defined in Exhibit A) shall be no less than the target amount
of the IRM Bonus for the Performance Period.

 

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Notwithstanding the foregoing, in the event
that an Expiration Termination occurs within 12 months following a Change of Control or within three months prior to a Change of
Control if such termination is initiated by, at the request or suggestion of, or with the agreement of, the counterparty to the
Change of Control, then the Executive shall not be eligible to receive the payments and benefits set forth in the preceding clauses
(i) through (iv), and instead, the Executive shall be eligible to receive the payments and benefits set forth in Section 5(g) below,
determined as though such termination under Section 5(g) was a termination by the Company without Cause. For the avoidance of doubt,
in the event that MFA offers to renew this Agreement or to provide the Executive with a new employment agreement, in either case
on substantially similar terms to this Agreement (including the term of employment) and the Executive rejects such offer, then
the Executive’s employment shall terminate on December 31, 2021, and such termination shall not be considered a termination
of the Executive’s employment by MFA without Cause or give rise to a right of termination of employment by the Executive
for Good Reason, or except as provided in Section 5(h), give rise to any payments under this Section 5.

 

(e)        
Termination by the Company for Cause or Voluntary Termination by the Executive. In the event the Executive’s
employment is terminated during the Term of Employment by the Company for Cause, by the Executive on his own initiative for other
than a Good Reason or due to the Executive’s Disability, the Executive’s Term of Employment shall terminate and the
Executive shall be entitled only to the amounts set forth in Section 5(h) below.

 

(f)        
Garden Leave. The Executive shall provide a Notice of Termination to the Company no less than 90 days prior to any
termination of the Executive’s employment (whether for Good Reason or without Good Reason) during the Term of Employment,
other than a termination during the period described in Section 5(g), and the Company shall provide a Notice of Termination to
the Executive no less than 90 days prior to any termination of the Executive’s employment for Cause during the Term of Employment;
provided that the Company may elect to terminate the Garden Leave (as defined below) and the Executive’s employment at any
time during the Garden Leave if the Executive is terminated for Cause. During this 90-day notice period (the “Garden Leave”),
the Executive shall (i) continue to be an employee of MFA and shall make himself available to provide such services directed by
the Company that are reasonably consistent with the Executive’s status as a senior executive of the Company and (ii) continue
to be paid his Base Salary and to be eligible to participate in the Company’s benefits programs, but shall not be eligible
to earn any annual bonus with respect to a performance period that ends after the commencement of the Garden Leave. During the
Garden Leave, the Company may require the Executive to resign from any position with the Company and/or remove any or all of the
Executive’s duties or responsibilities, which shall not constitute Good Reason or otherwise be a violation of this Agreement.
The Executive agrees that he will not commence employment with any entity during or in connection with the commencement of the
Garden Leave. During the Garden Leave, the Executive shall take all steps reasonably requested by the Company to effect a successful
transition of client and customer relationships to the person or persons designated by the Company.

 

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(g)        
Termination Related to Change of Control. In the event of the termination of the Executive’s employment
during the Term of Employment by the Company other than for Cause or by the Executive for Good Reason (other than for Disability,
as described in Section 5(a)) within 12 months following a Change of Control, or within three months prior to a Change of Control
if such termination is initiated by, at the request or suggestion of, or with the agreement of, the counterparty to the Change
of Control, the Executive’s Term of Employment shall terminate without further obligations to the Executive under this Agreement,
except as provided in Section 5(h) below. In addition and if the requirements of Section 5(k) are met:

 

(i)          
MFA shall immediately pay to Executive in a lump sum, but in all events within 60 days following the date of termination,
an amount in cash equal to one and a half times the sum of (A) the Executive’s then current Base Salary and (B) the Executive’s
Average Bonus;

 

(ii)         
(A) All of the Executive’s outstanding equity-based awards (e.g., restricted stock, phantom shares, RSUs and stock
options) shall immediately vest in full (in the case of any such award which is subject to vesting based on the achievement of
performance goals, such award shall become vested with respect to the target number of shares subject to such award); and (B) any
such options shall remain exercisable until the earlier of (I) 90 days following the date of such termination or (II) the date
on which each such option would have expired had the Executive’s employment not terminated;

 

(iii)        
The Company shall reimburse the Executive for 100% of the COBRA premiums incurred by the Executive for the Executive and
his eligible dependents under the Company’s health care plan during the 18 month period following the Executive’s termination
of employment. Such reimbursement shall be provided on the payroll date immediately following the date on which the Executive remits
the applicable premium payment and shall commence within 60 days after the termination date; provided that, the first payment shall
include any reimbursements that would have otherwise been payable during the period beginning on the Executive’s termination
date and ending on the date of the first reimbursement payment. Reimbursement payments shall be treated as taxable compensation
to the Executive to the extent required by law; and

 

(iv)        
The Executive shall receive any unpaid Annual Bonus for the Performance Period immediately preceding the Executive’s
date of termination.

 

For the avoidance of doubt, if the Executive
is eligible to receive payments and benefits pursuant to this Section 5(g), he shall not be eligible to receive any payments and
benefits pursuant to Section 5(c) or Section 5(d).

 

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(h)         
Other Payments. Upon the termination of the Executive’s employment during the Term of Employment, in addition
to the amounts payable under any Section above and any accrued but unpaid base salary, the Executive shall be entitled to receive
the following:

 

(i)          
any vested deferred compensation (including any interest accrued on or appreciation in value of such deferred amounts) in
accordance with the applicable plan documents;

 

(ii)         
reimbursement for reasonable business expenses incurred but not yet reimbursed by the Company; and

 

(iii)        
any other benefits to which the Executive or his legal representative may be entitled under all applicable plans and programs
of the Company, as provided in Section 4 above.

 

(i)          
Payments Subject to Section 409A and Other Applicable Law.

 

(i)          
Notwithstanding anything herein to the contrary, the Executive shall not be entitled to any payment pursuant to this Section
5 prior to the earliest date permitted under Section 409A of the Code, and applicable Treasury regulations thereunder. To the extent
any payment pursuant to this Section 5 is required to be delayed six months pursuant to the special rules of Section 409A of the
Code related to “specified employees,” each affected payment shall be delayed until six months after the Executive’s
termination of employment, and, unless provided otherwise, with the first such payment being a lump sum equal to the aggregate
payments the Executive would have received during such six-month period if no payment delay had been imposed. Any payments or distributions
delayed in accordance with the prior sentence shall be paid to the Executive on the first day of the seventh month following the
Executive’s termination of employment. If the Executive dies during the postponement period prior to payment, the amounts
delayed shall be paid within 60 days after the date of the Executive’s death.

 

(ii)         
Notwithstanding any other provision contained herein, to the extent any payments or distributions due to the Executive upon
termination of his employment under this Agreement are subject to Section 409A of the Code a termination of the Executive’s
employment shall be interpreted in a manner that is consistent with the definition of a “separation from service” under
Section 409A of the Code and the applicable Treasury regulations thereunder.  Notwithstanding anything elsewhere to the
contrary, the Executive shall have no duties following any termination of his employment with MFA that are inconsistent with his
having a “separation from service” for purposes of Section 409A of the Code and any regulations thereunder.

 

(iii)        
With respect to the lump sum amounts payable in connection with a Change of Control set forth in Section 5(a)(i) and Section
5(g)(i), such amounts shall be paid in installments as described in Section 5(a)(i) and Section 5(c)(i) as though a Change of Control
had not occurred, if such Change of Control does not constitute a “change in control event” for purposes of Section
409A of the Code or if otherwise required by Section 409A of the Code.

 

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(iv)        
In the case of any amounts that are payable to the Executive under this Agreement in the form of installment payments, the
Executive’s right to receive such payments shall be treated as a right to receive a series of separate payments under Treas.
Reg. §1.409A-2(b)(2)(iii).

 

(v)         
Notwithstanding anything herein to the contrary, in the event that the reimbursements provided pursuant to Section 5(a)(iii),
Section 5(d)(iii), or Section 5(g)(iii) would subject the Executive or the Company to adverse tax consequences under Section 105(h)
of the Code or any tax penalties, then the parties shall enter into an economically consistent arrangement that does not cause
either party to incur such adverse tax consequences or penalties.

 

(j)          
No Mitigation; No Offset. In the event of any termination of the Executive’s employment under this Agreement,
he shall be under no obligation to seek other employment or otherwise in any way to mitigate the amount of any payment provided
for in this Section 5, and there shall be no offset against amounts due him under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain.

 

(k)         
Release. The Company’s obligation to make any payment or provide any benefit pursuant to this Section 5 (other
than pursuant to Sections 5(b) and 5(h) above) shall be contingent upon, and is the consideration for, (i) the Executive executing
and delivering to the Company, within 60 days after termination of his employment, a general release (the “Release”),
substantially in the form annexed hereto as Exhibit C (with any revisions necessary to comply with applicable law as reasonably
determined by counsel to MFA and provided in writing to the Executive within five business days after the date of the termination
of his employment), and (ii) such release becoming irrevocable in accordance with its terms.  In the event that any payment
or benefit is subject to Section 409A of the Code and the 60-day period referred to in the immediately preceding sentence spans
two calendar years, any such payments or benefits required to be made hereunder during such 60-day period shall be made in the
second calendar year, the first payment of which shall include all payments that would otherwise have been made prior thereto.

 

(l)          
Parachute Payments.

 

(i)          
Notwithstanding any other provisions of this Agreement to the contrary, in the event that it shall be determined that any
payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit
of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise
(the “Payments”), would constitute an “excess parachute payment” within the meaning of Section 280G
of the Code (after taking into consideration any mitigating factors such as the value of any non-competition restrictions or similar
factors), the Company shall reduce (but not below zero) the aggregate present value of the Payments under the Agreement to the
Reduced Amount (as defined below), if reducing the Payments under this Agreement will provide the Executive with a greater net
after-tax amount than would be the case if no such reduction was made. The Payments shall be reduced as described in the preceding
sentence only if (A) the net amount of the Payments, as so reduced (and after subtracting the net amount of federal, state and
local income and payroll taxes on the reduced Payments), is greater than or equal to (B) the net amount of the Payments without
such reduction (but after subtracting the net amount of federal, state and local income and payroll taxes on the Payments and the
amount of Excise Tax (as defined below) to which the Executive would be subject with respect to the unreduced Payments). Only amounts
payable under this Agreement shall be reduced pursuant to this Section 5(l), and any reduction shall be made in accordance with
Section 409A of the Code.

 

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(ii)         
The “Reduced Amount” shall be an amount expressed in present value that maximizes the aggregate present
value of Payments under this Agreement without causing any Payment under this Agreement to be subject to the Excise Tax, determined
in accordance with Section 280G(d)(4) of the Code. The term “Excise Tax” means the excise tax imposed under
Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

 

(iii)        
All determinations to be made under this Section 5(l) shall be made by an independent registered public accounting firm
or consulting firm selected by the Company immediately prior to a change of control, which shall provide its determinations and
any supporting calculations both to the Company and the Executive within ten days of the change of control. Any such determination
by such firm shall be binding upon the Company and the Executive. All fees and expenses of the accounting or consulting firm in
performing the determinations referred to in this Section 5(l) shall be borne solely by the Company.

 

(m)        
Resignation from Positions.  Upon termination of the Executive’s employment with the Company for any reason,
the Executive shall, as may be requested by the Company, resign from any position he then holds as an officer, director or fiduciary
of the Company or any Company-related entity.  In furtherance of the foregoing, the Executive shall execute and deliver to
the Company any letters, documents and other instruments necessary or appropriate to effect such resignation.

 

6.           
Definitions. For purposes of this Agreement, the following terms shall be defined as set forth below:

 

(a)         
Cause. “Cause” shall mean the Executive’s (i) commission of a felony, a crime of moral turpitude
or any crime committed against MFA, other than traffic violations; (ii) engagement in willful misconduct, willful or gross negligence,
or fraud, embezzlement or misappropriation relating to significant amounts, in each case in connection with the performance of
his duties under this Agreement; (iii) failure to adhere to the lawful directions of the Board of Directors or the CEO that are
reasonably consistent with his duties and position provided for herein; (iv) breach in any material respect of any of the provisions
of Section 7 of this Agreement; (v) material violation of the Company’s Code of Conduct or any other material written policy
of the Company, including without limitation, the Company’s nondiscrimination and harassment policy; or (vi) breach in any
material respect of the terms and provisions of this Agreement resulting in material and demonstrable economic injury to MFA. Notwithstanding
the foregoing, (i) the Executive shall be given written notice of any action or failure to act that is alleged to constitute Cause
(a “Default”), and if curable, an opportunity for 20 business days from the date of such notice in which to
cure such Default, such period to be subject to extension in the discretion of the CEO and (ii) regardless of whether the Executive
is able to cure any Default, the Executive shall not be deemed to have been terminated for Cause without (A) reasonable prior written
notice to the Executive setting forth the reasons for the decision to terminate the Executive for Cause, (B) an opportunity for
the Executive, together with his counsel, to be heard by the CEO and (C) delivery to the Executive of a Notice of Termination approved
by the CEO, stating his good faith opinion that the Executive has engaged in actions or conduct described in the preceding sentence,
which notice specifies the particulars of such action or conduct in reasonable detail; provided, however, MFA may suspend the Executive
with pay until such time as his right to appear before the CEO, as the case may be, has been exercised, so long as such appearance
is within two weeks of the date of suspension.

 

    	 	12	 

     

    

 

(b)         
Change of Control. A “Change of Control” shall mean the occurrence of any one of the following
events:

 

(i)          
any “person,” as such term is used in Sections 13(d) and 14(d) of the Act (other than MFA, any of its affiliates
or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of MFA or any of
its affiliates, and other than the Executive) together with all “affiliates” and “associates” (as such
terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of MFA representing 30% or more of either (A) the combined
voting power of MFA’s then outstanding securities having the right to vote in an election of the Board of Directors (“voting
securities”), or (B) the then outstanding shares of common stock of MFA (“Shares”) (in either such
case other than as a result of an acquisition of securities directly from MFA); or

 

(ii)         
persons who, as of the Effective Date of this Agreement, constitute MFA’s Board of Directors (the “Incumbent
Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger
or similar transaction, to constitute at least a majority of the Board of Directors, provided that any person becoming a Director
of MFA subsequent to the Effective Date whose election or nomination for election was approved and/or ratified by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or

 

(iii)        
consummation of (A) any consolidation or merger of MFA or any subsidiary where the stockholders of MFA, immediately prior
to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined
in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 50% or more of the voting securities
of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B)
any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party
as a single plan) of all or substantially all of the assets of MFA or (C) any plan for the liquidation or dissolution of MFA.

 

    	 	13	 

     

    

 

Notwithstanding the foregoing, a “Change of Control”
shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities
by MFA which, by reducing the number of Shares or other voting securities outstanding, increases (x) the proportionate number of
Shares beneficially owned by any person to 30% or more of the Shares then outstanding or (y) the proportionate voting power represented
by the voting securities beneficially owned by any person to 30% or more of the combined voting power of all then outstanding voting
securities; provided, however, that, if any person referred to in clause (x) or (y) of this sentence shall thereafter become the
beneficial owner of any additional Shares or other voting securities (other than pursuant to a stock split, stock dividend, or
similar transaction), then a “Change of Control” shall be deemed to have occurred for purposes of this Section
6(b).

 

(c)         
Competitor. “Competitor” shall mean any entity or person that is engaged in a business that is
conducted by the Company during the Executive’s employment, or that is under consideration by the Board during the 12 months
prior to the Executive’s termination of employment, including, without limitation, (i) any mortgage REIT, (ii) any entity
or person engaged in any element of acquiring mortgage backed securities (“MBS”), single family residential
mortgage loans (“Whole Loans”), credit risk transfer securities (“CRTs”) or other products
or instruments in which the Company invests, including any private or public investment firm or broker dealer whose business strategy
is based on or who engages in the trading, sales, investment or management of such securities, products or instruments, (iii) any
entity that manages or advises (including any external advisor) either (A) a mortgage REIT or (B) an entity or person engaged in
any element of acquiring MBS, Whole Loans, CRTs or other products or instruments in which the Company invests, including any private
or public investment firm or broker dealer whose business strategy is based on or who engages in the trading, sales, investment
or management of such securities, products or instruments and (iv) any entity or person engaged in the management or sale of single
family residential real estate that is acquired as a result of foreclosure, short sale, deed-in-lieu or other actions undertaken
by such entity or person in respect of investments made by such entity or person in Whole Loans.

 

(d)         
Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)         
Disability. “Disability” shall mean the Executive’s inability for a period of six consecutive
months, to render substantially the services provided for in this Agreement with or without a reasonable accommodation by reason
of mental or physical disability, whether resulting from illness, accident or otherwise, other than by reason of chronic or persistent
abuse of any substance (such as narcotics or alcohol), provided that a Disability for purposes of Section 5(a) shall qualify as
a Disability under Section 409A of the Code to the extent required by Section 409A of the Code. Notwithstanding the foregoing,
no circumstances or condition shall constitute a Disability to the extent that, if it were, a 20% tax would be imposed under Section
409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a Disability to the maximum
extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without causing the imposition
of such 20% tax. In addition, nothing herein shall limit or restrict the payment of any amount subject to Section 409A of the Code
upon an otherwise permitted payment event under Section 409A of the Code, including upon a separation from service.

 

    	 	14	 

     

    

 

(f)         
Good Reason. “Good Reason” shall mean:

 

(i)          
a material diminution in the Executive’s title, duties or responsibilities (other than in connection with the Executive’s
disability);

 

(ii)         
relocation of the Executive’s place of employment without his consent outside the New York City metropolitan area;

 

(iii)        
the failure of MFA to pay within 60 business days any material payment or benefits due from MFA;

 

(iv)        the material failure by MFA to honor any of its material obligations to the Executive.

 

For Good Reason to exist, the Executive must provide written
notice of an event purportedly constituting Good Reason within 90 days of its occurrence, MFA must have failed to cure such event
within 15 days of such notice and the Executive must provide written notice of his decision to terminate employment, such notice
to be provided within 15 days of the expiration of such cure period.  The effective date of such termination shall be
the end of the period of Garden Leave.

 

(g)         
Notice of Termination. “Notice of Termination” means the written notice of termination of the
Executive’s employment delivered by, as applicable, the Executive or MFA.

 

(h)         
Restricted Period. “Restricted Period” shall mean the period commencing on the Effective Date
and ending on the date that is nine months following the Executive’s termination of employment for any reason.

 

7.           
Covenants.

 

(a)         
Confidentiality. During the Term of Employment, and at all times thereafter, the Executive shall maintain the confidentiality
of all confidential or proprietary information of the Company, or of any other person or entity with which the Executive has been
involved as a direct or indirect result of his employment by, or performance of consulting or other services (including, without
limitation, as a director, officer, advisor, agent, consultant or other independent contractor) for, the Company (“Confidential
Information”), and, except in furtherance of his employment by the Company or as specifically required by law or by court
order or as permitted by Section 7(g) or in the course of carrying out his duties for the Company, he shall not directly or indirectly
disclose any such information to any person or entity; nor shall he use Confidential Information for any purpose except for the
benefit of the Company. For purposes of this Agreement, “Confidential Information” includes, without limitation:
client or customer lists, identities, contacts, business and financial information; investment strategies; pricing information
or policies, fees or commission arrangements of the Company; marketing plans, projections, presentations or strategies of the Company;
financial and budget information of the Company; personnel information, personnel lists, resumes, personnel data, organizational
structure, compensation and performance evaluations; information regarding the existence or terms of any agreement or relationship
between the Company and any other party; and any other information of whatever nature, which gives to the Company an opportunity
to obtain an advantage over its competitors who or which do not have access to such information. This restriction shall apply regardless
of whether such Confidential Information is in written, graphic, recorded, photographic, data or any machine readable form or is
orally conveyed to, or memorized by, the Executive; provided, however, that this Section 7(a) shall not apply to Confidential Information
that is or becomes publicly known through no act or omission on the Executive’s part.  Anything to the contrary
notwithstanding, nothing in this Agreement shall prevent the Executive from retaining papers and other materials of a personal
nature, including personal diaries, calendars and Rolodexes, information relating to his compensation or relating to reimbursement
of expenses, and copies of plans, programs and agreements relating to his employment.

 

    	 	15	 

     

    

 

(b)         
Non-Competition and Non-Solicitation. The Executive acknowledges that during the Executive’s employment with
the Company prior to and after the Effective Date, (i) the Executive has had and will continue to have access to trade secrets
and other Confidential Information of the Company, which, if disclosed, would unfairly and inappropriately assist in competition
against the Company; (ii) in the course of the Executive’s employment by a Competitor during the Restricted Period, the Executive
would inevitably use or disclose such trade secrets and Confidential Information; (iii) the Company has substantial relationships
with its customers and the Executive has had and will continue to have access to these customers; (iv) the Executive has generated
and will continue to generate goodwill for the Company in the course of the Executive’s employment and (v) the Executive’s
services are unique and irreplaceable.  Therefore, in consideration of the Executive’s continued employment with
the Company, of the compensation and benefits provided to the Executive under this Agreement, of MFA’s agreement to make
severance benefits available pursuant to Section 5, and of the Executive’s being granted access to the customers, trade secrets
and other Confidential Information of the Company, the Executive agrees that the following restrictions on the Executive’s
activities during and after the Executive’s employment are necessary, appropriate and reasonable to protect the goodwill,
Confidential Information and other legitimate interests of the Company from unfair and inappropriate competition:

 

(i)          
During the Restricted Period, the Executive will not, without the prior written consent of MFA, within the United States,
manage, operate, control or be connected as a stockholder (other than as a holder of shares publicly traded on a stock exchange
or the NASDAQ National Market System, provided that the Executive shall not own more than five percent of the outstanding shares
of any publicly traded company) or partner with, or serve as an officer, director, employee or consultant of, any Competitor.

 

(ii)        
During the Restricted Period, the Executive will not, without the prior written consent of MFA, directly or indirectly (individually,
or through or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), engage in
any activity intentionally to interfere with, disrupt, diminish or damage the business of the Company, or its relationship with
any client, supplier or other business relationship of the Company.

 

    	 	16	 

     

    

 

(iii)       
During the Executive’s employment with the Company and during the period commencing on the Executive’s date
of termination of employment for any reason and ending on the second anniversary of the Executive’s termination of employment,
the Executive will not, without the prior written consent of MFA, directly or indirectly (individually, or through
or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), (A) solicit, encourage,
or engage in any activity to induce any employee of MFA or its affiliates to terminate employment with MFA or its affiliates, or
to become employed by, or to enter into a business relationship with, any other person or entity; or (B) hire or retain any person
who was an employee of MFA or its affiliates within the six month period preceding such action; provided that, (x) this Section
7(b)(iii) shall not apply to any administrative employee of MFA or its affiliates or any person who was an administrative employee
of MFA or its affiliates and (y) any hiring or solicitation pursuant to a general solicitation conducted by an entity that has
hired or agreed to hire the Executive and that does not directly or indirectly target current or former employees of MFA or its
affiliates, or by a headhunter employed by such entity, which in either case does not involve the Executive, shall not be a violation
of this Section 7(b)(iii).

 

(c)         
MFA Materials. The Executive acknowledges that all originals and copies of materials, records and documents generated
by him or coming into his possession during his employment by MFA are the sole property of MFA (“MFA Materials”).
During his employment, and at all times thereafter, the Executive shall not remove, or cause to be removed, from the premises of
MFA, copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to
the business of MFA, except in furtherance of his duties under this Agreement. When the Executive terminates his employment with
MFA, or upon request of MFA at any time, the Executive shall promptly deliver to MFA all originals and copies of MFA Materials
in his possession or control and shall not retain any originals or copies in any form. The Executive further agrees to delete or
destroy any and all documents, files and/or backup files containing MFA Materials on any computer or storage device owned by and/or
within the care, custody or control of the Executive.

 

(d)       
No Disparagement. Each of the Executive and MFA agrees that, except as required by applicable law or compelled by
process of law or as otherwise permitted pursuant to Section 7(g), during and after the Term of Employment they shall not make
any derogatory, disparaging or critical statement about the other party hereto or, further in the case of statements by the Executive
about (i) MFA, its parent, affiliates, or subsidiaries, if any; (ii) any product or service provided by MFA and its parent, affiliates
or subsidiaries, if any; or (iii) MFA’s and its parent’s, affiliates’ or subsidiaries’, if any, prospects
for the future. Nothing in this Section 7(d) shall (A) prohibit either MFA or the Executive from testifying truthfully in any legal
or administrative proceeding or from truthfully responding to any untrue statement by the other party or (B) prohibit the Executive
from making truthful statements in the course of carrying out his duties for MFA.

 

    	 	17	 

     

    

 

(e)       
Cooperation with Respect to Litigation. During the Term of Employment and at all times thereafter, the Executive
agrees to give prompt written notice to MFA of any claim against the Company after becoming aware of such claim and (to the extent
reasonably requested by MFA) to reasonably cooperate, in good faith and to the best of his ability, with MFA in connection with
any and all pending, potential or future claims, investigations or actions which directly or indirectly relate to any action, event
or activity about which the Executive may have knowledge in connection with or as a result of his employment by the Company. Such
cooperation will include all assistance that MFA, its counsel or representatives may reasonably request, including reviewing documents,
meeting with counsel, providing factual information and material, and appearing or testifying as a witness; provided, however,
that MFA will promptly reimburse the Executive for all reasonable expenses, including travel, lodging and meals, incurred by him
in fulfilling his obligations under this Section 7(e) and, except as may be required by law or by court order, should the Executive
then be employed by an entity other than MFA, such cooperation will not materially interfere with the Executive’s then current
employment.

 

(f)         
Remedies.

 

(i)          
The Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its
trade secrets and Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter,
length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Executive
from obtaining other suitable employment during the period in which the Executive is bound by the restraints.  The Executive
agrees that, before providing services, whether as an employee or consultant, to any entity during the Restricted Period, the Executive
will provide a copy of this Agreement to such entity, and such entity shall acknowledge to MFA in writing that it has read this
Agreement.

 

(ii)          The Executive acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company,
that the Executive has sufficient assets and skills to provide a livelihood while such covenants remain in force and that, as a
result of the foregoing, in the event that the Executive breaches such covenants, monetary damages would be an insufficient remedy
for the Company and equitable enforcement of the covenant would be proper.  The Executive therefore agrees that the Company,
in addition to any other remedies available to it, will be entitled to preliminary and permanent injunctive relief against any
breach by the Executive of any of those covenants, without the necessity of showing actual monetary damages or the posting of a
bond or other security.  The Executive also agrees that, in addition to any other remedies available to the Company and
notwithstanding any provision of this Agreement to the contrary, in the event Executive breaches in any material respect any of
his obligations under this Section 7, the Company may immediately cease all payments under Sections 5(a), 5(b), 5(c), 5(d), or
5(g) as applicable, all equity-based awards granted under this Agreement may be immediately forfeited, and the Company may require
that the Executive repay any after-tax amounts previously paid to the Executive under Sections 5(a), 5(b), 5(c) or 5(d), as applicable,
and any stock delivered or other amounts paid (each on an after-tax basis) with respect to any equity-based awards granted under
this Agreement.

 

    	 	18	 

     

    

 

(iii)         
The Executive and MFA further agree that, in the event that any provision of this Section 7 is determined by any court of
competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or
too great a range of activities, that provision will be deemed to be modified to permit its enforcement to the maximum extent permitted
by law.  The Executive further covenants that the Executive will not challenge the reasonableness or enforceability of
any of the covenants set forth in this Section 7 and that the Executive will reimburse MFA and its affiliates for all costs (including
reasonable attorneys’ fees) incurred in connection with any action to enforce any of the provisions of this Section 7 if
either MFA and/or its affiliates prevails on any material issue involved in such dispute or if the Executive challenges the reasonability
or enforceability of any of the provisions of this Section 7, it being understood that the Executive shall not be considered to
have challenged the enforceability of this Section 7 by arguing that his conduct did not, in fact, violate the terms of this Section
7. It is also agreed that each of MFA’s affiliates will have the right to enforce all of the Executive’s obligations
to that affiliate under this Agreement, including without limitation pursuant to this Section 7.

 

(g)         
Permitted Conduct.

 

(i)          
Nothing in this Agreement, including the obligations set forth in this Section 7, restricts or prohibits the Executive from
initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information
to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with
a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department
of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress,
and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are
protected under the whistleblower provisions of state or federal law or regulation. The Executive does not need the prior authorization
of the Company to engage in such communications with the Regulators, respond to such inquiries from the Regulators, provide confidential
information or documents to the Regulators, or make any such reports or disclosures to the Regulators. The Executive is not required
to notify the Company that he has engaged in such communications with the Regulators.

 

    	 	19	 

     

    

 

 

(ii)          
The Company hereby notifies the Executive that federal law provides criminal and civil immunity to federal and state claims
for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official
in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting
or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected
violation of the law. Nothing in this Agreement is intended to limit any rights under such federal law.

 

8.           
Indemnification. MFA shall indemnify the Executive to the fullest extent permitted by Maryland law as amended from
time to time in connection with the Executive’s duties with MFA, against all costs, expenses, liabilities and losses (including,
without limitation, attorneys’ fees, judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement) actually
and reasonably incurred by the Executive in connection with an action, suit or proceeding. While the Executive is an officer of
MFA, and for six years thereafter, MFA (or any successor thereto) shall provide comprehensive coverage under its officers and directors
insurance policy (or policies) on substantially the same terms and levels that it provides to its senior executive officers, at
MFA’s sole cost.

 

9.          
Clawback Policy. The Executive agrees that all bonuses, equity compensation and other incentive compensation provided
by the Company shall be subject to any applicable clawback policy implemented by the Board of Directors from time to time.

 

10.        
Assignability; Binding Nature. This Agreement shall inure to the benefit of MFA and the Executive and their respective
successors, heirs (in the case of the Executive) and assigns. No rights or obligations of MFA under this Agreement may be assigned
or transferred by MFA except that any such rights or obligations may be assigned or transferred pursuant to a merger or consolidation
in which MFA is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of MFA, provided
that the assignee or transferee is the successor to all or substantially all of the assets of MFA and such assignee or transferee
assumes the liabilities, obligations and duties of MFA, as contained in this Agreement, either contractually or as a matter of
law. This Agreement shall not be assignable by the Executive; provided however that, in the event of the Executive’s death
or a judicial determination of his incapacity, references to the Executive in this Agreement shall be deemed, as appropriate, to
be references to his heirs, executor(s) or other legal representative(s).

 

11.        
Representation. MFA and the Executive each represent and warrant that it or he is fully authorized and empowered
to enter into this Agreement and that its or his entering into this Agreement and the performance of its or his obligations under
this Agreement will not violate any agreement to which it or he is a party.

 

12.        
Entire Agreement. This Agreement contains the entire agreement between MFA and the Executive concerning the subject
matter hereof and upon the Effective Date supersedes all prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between them with respect thereto, including without limitation, the Former Employment Agreement, except
as otherwise provided in Section 3(b)(iii).

 

13.        
Amendment or Waiver. This Agreement can only be changed, modified or amended in a writing that is signed by both
the Executive and MFA and that specifically identifies the provision(s) of this Agreement that are being changed, modified or amended.
No waiver by either MFA or the Executive at any time of any breach by the other party of any condition or provision of this Agreement
shall be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time. Any
waiver must be in writing and signed by the Executive or the Board of Directors, as the case may be.

 

    	 	20	 

     

    

 

14.        
Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.

 

15.        
Reasonableness. To the extent that any provision or portion of this Agreement is determined to be unenforceable by
a court of law or equity, that provision or portion of this Agreement shall nevertheless be enforceable to the extent that such
court determines is reasonable.

 

16.        
Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights and obligations. For the avoidance of doubt, the
covenants in Section 7 of this Agreement shall survive any termination or expiration of this Agreement and termination of the Executive’s
employment for any reason.

 

17.        
Governing Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating
thereto, shall be governed by and construed in accordance with the laws of the State of Maryland (without regard to its choice
of law provisions).  Each of the parties agrees that any dispute between the parties shall be resolved only in the courts
of the State of Maryland or the United States District Court for the District of Maryland and the appellate courts having jurisdiction
of appeals in such courts.  In that context, and without limiting the generality of the foregoing, each of the parties
hereto irrevocably and unconditionally (a) submits for himself or itself in any proceeding relating to this Agreement or the Executive’s
employment by MFA or any affiliate, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”),
to the exclusive jurisdiction of the courts of the State of Maryland, the court of the United States of America for the District
of Maryland, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect
of any such Proceeding shall be heard and determined in such Maryland State court or, to the extent permitted by law, in such federal
court; (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that he or it may
now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought
in an inconvenient court and agrees not to plead or claim the same; (c) waives all right to trial by jury in any Proceeding (whether
based on contract, tort or otherwise) arising out of or relating to this Agreement or the Executive’s employment by MFA or
any affiliate, or his or its performance under or the enforcement of this Agreement; (d) agrees that service of process in any
such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such party at his or its address as provided in Section 19; and (e) agrees that nothing in this
Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of Maryland.

 

    	 	21	 

     

    

 

18.          
Legal Fees. MFA shall pay directly all reasonable legal fees incurred by the Executive in connection with the negotiation,
preparation and execution of this Agreement up to $10,000. Subject to Section 7(f), MFA shall reimburse the Executive (and his
beneficiaries) any reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and other reasonable
costs of counsel) incurred by the Executive (or any of his beneficiaries) in resolving any controversy, dispute or claim arising
out of or relating to this Agreement (including, for the avoidance of doubt, with respect to any equity grant described in this
Agreement), if the Executive (or his beneficiaries) is the prevailing party with respect to at least one material issue asserting
a material breach of such Agreement by the Company.

 

19.          
Notices. Any notice given to either party shall be in writing and shall be deemed to have been given when delivered
personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned,
if to MFA, at its principal executive office, and if to the Executive, at the address of the Executive shown on MFA’s records
or at such other address as such party may give notice of.

 

20.          
Headings. The headings of the Sections contained in this Agreement are for convenience only and shall not be deemed
to control or affect the meaning or construction of any provision of this Agreement.

 

21.          
Counterparts. This Agreement may be executed in two or more counterparts.  Signatures delivered by facsimile
(including by “pdf”) shall be deemed effective for all purposes.

 

IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first written above.

 

 

	 	MFA FINANCIAL, INC.
	 	 	 	 
	 	By:	/s/ Craig L. Knutson
	 	 	Name:	 Craig L. Knutson
	 	 	Title:	 Chief Executive Officer and President
	 	 	 	 
	 	 	 	 
	 	EXECUTIVE:
	 	 	 	 
	 	By:	/s/ Bryan Wulfsohn
	 	 	Bryan Wulfsohn

 

    	 	22	 

     

    

 

Exhibit A

 

Annual Performance Bonus

 

The following summarizes the material terms of the annual bonus
(“Annual Bonus”) set forth in Section 3(b) of the Agreement to which this Exhibit A is attached. Unless
otherwise specified in this Exhibit A, all defined terms have the meanings set forth in the Agreement.

 

1.                 
Performance Period. The Annual Bonus shall be payable for each of the following performance periods (each, a “Performance
Period”).

 

		·	December 1, 2019 through November 30, 2020

 

		·	December 1, 2020 through November 30, 2021

 

The Executive shall be eligible to receive the Annual Bonus
only if the Executive remains employed by the Company through the date on which the Annual Bonus is paid, except as provided in
the two next following sentences. The Executive shall receive any unpaid Annual Bonus for the Performance Period immediately preceding
the Executive’s date of termination if the Executive’s employment is terminated by the Company without Cause or by
the Executive for Good Reason, or if the Executive’s employment is terminated by death or Disability, subject to compliance
with Section 5(k) of the Agreement (except in the event of death). In addition, in the event the Executive’s employment is
terminated by the Company on December 31, 2021 under circumstances which do not constitute Cause, the Executive shall receive any
unpaid Annual Bonus for the Performance Period ending on November 30, 2021 calculated in accordance with Section 5(d)(iv) of the
Agreement, subject to compliance with Section 5(k) of the Agreement.

 

Any Annual Bonus shall be subject to achievement of the performance
goals described herein. In no event shall the Executive receive any unpaid Annual Bonus in the event the Executive’s employment
is terminated by the Company for Cause or by the Executive (other than for Good Reason as described above).

 

2.                 
Target Bonus. For each Performance Period, the Executive’s target annual bonus (the “Target Bonus”)
shall be equal to $950,000. The Executive is eligible to receive an Annual Bonus from zero to two times the Target Bonus for each
Performance Period, based on performance as described below.

 

3.                 
Performance Components. The Annual Bonus shall consist of two components:

 

		·	75% of the Annual Bonus shall be payable based on MFA’s return on average equity (“ROAE” and such
portion of the Annual Bonus, the “ROAE Bonus”).

 

		·	25% of the Annual Bonus shall be payable based on the Executive’s individual performance and on MFA performance and risk
management (such portion of the Annual Bonus, the “IRM Bonus”).

 

     

     

    

 

4.                 
Definition of ROAE.

 

For purposes of the ROAE Bonus: “ROAE” means
(i) MFA Return, divided by (ii) MFA Average Equity, for the 12 month Performance Period.

 

“MFA Return” means net income as determined
in accordance with GAAP, but excluding non-cash expense items such as depreciation expense, amortization of goodwill, life-of-loan
loss reserves recorded under the Current Expected Credit Losses accounting standard (ASU 2016-13) and other non-cash expense items
as determined by the Compensation Committee in its sole discretion for the applicable Performance Period. If, for any portion of
any Performance Period, (i) MFA does not use hedge accounting or (ii) its derivative hedging instruments or any portion thereof
are otherwise deemed ineffective, which in either case, results in changes in the value of such hedging instruments being recorded
in MFA’s GAAP income statement, then any gains or losses from such hedging instruments will also be excluded from the calculation
of MFA Return.

 

“MFA Average Equity” means the stockholders’
equity of MFA as determined in accordance with GAAP, but excluding accumulated other comprehensive income or loss (which, among
other things, reflects unrealized gains or losses in MFA’s residential mortgage-backed securities portfolio), stockholders’
equity attributable to preferred stock and other items as determined by the Compensation Committee in its sole discretion for the
applicable Performance Period. For purposes of calculating ROAE, MFA Average Equity shall be determined based on the average of
MFA’s stockholders’ equity calculated as described in the preceding sentence as of the last day of each month during
the applicable Performance Period.

 

5.                 
ROAE Bonus

 

For each Performance Period, the target amount of the ROAE Bonus
will be equal to 75% of the Target Bonus, and the Executive shall be eligible to receive from zero to two times such target amount
of ROAE Bonus.

 

For purposes of the ROAE Bonus:

 

		·	The “ROAE Target” shall be the greater of (x) the 2 Year Treasury Rate + 400 basis points or (y) 8%; provided
that the ROAE Target shall not exceed 10%.

 

		·	The “2 Year Treasury Rate” shall be calculated as the average of the weekly 2 year Treasury note rates published
in the U.S. Federal Reserve H.15 Report for the 52 weeks in the Performance Period.

 

		·	The target bonus multiple (“TBM”) shall be the percentage determined as described below based on ROAE for
the Performance Period.

 

The ROAE Bonus will be calculated by multiplying (i) the TBM
based on ROAE for the Performance Period by (ii) the target amount of the ROAE Bonus for the Performance Period.

 

    	 	24	 

     

    

 

To calculate the TBM, ROAE is compared against the 2 Year Treasury
Rate and the ROAE Target as follows:

 

		·	If ROAE is less than the ROAE Target and ROAE is less than or equal to the 2 Year Treasury Rate, the TBM shall be equal to
0.

 

		·	If ROAE is less than the ROAE Target but ROAE is greater than the 2 Year Treasury Rate, the TBM is equal to the greater of
(x) a fraction where (i) the numerator equals the ROAE minus the 2 Year Treasury Rate and (ii) the denominator equals the ROAE
Target minus the 2 Year Treasury Rate and (y) zero (0).

 

		·	If ROAE is greater than or equal to the ROAE Target, the TBM is equal to the lesser of (x) one (1) plus a fraction where (i)
the numerator equals the ROAE minus the ROAE Target and (ii) the denominator equals 16% minus the ROAE Target, and (y) two (2).

 

		·	Notwithstanding the foregoing, regardless of the applicable ROAE Target, in the event that ROAE equals or exceeds 16%, then
TBM shall be equal to 2.

 

Set forth below are two examples, which are intended to be used
purely for illustrative purposes:

 

Example 1:

 

If the 2-Year Treasury Rate was equal to 3%, ROAE was equal
to 7%, and the target for the ROAE Bonus was equal to $712,500, then:

 

		·	The ROAE Target would be 8%;

 

		·	ROAE would be less than the ROAE Target, so TBM would be equal to a fraction where (x) the numerator equals the ROAE minus
the 2 Year Treasury Rate and (y) the denominator equals the ROAE Target minus the 2 Year Treasury Rate.

 

		·	(7-3)/(8-3) = 80%;

 

		·	TBM =80%;

 

		·	80% of $712,500 = $570,000; and

 

		·	ROAE Bonus = $570,000.

 

Example 2:

 

If the 2-Year Treasury Rate was equal to 7%, ROAE was equal
to 11% and the target for the ROAE Bonus was equal to $712,500, then:

 

		·	The ROAE Target would be 10%;

 

		·	ROAE would be greater than the ROAE Target, so TBM would be equal to the sum of 1 and a fraction where (x) the numerator equals
the ROAE minus the ROAE Target and (y) the denominator equals 16% minus the ROAE Target, up to a maximum TBM of 2;

 

    	 	25	 

     

    

 

		·	(1) + ((11-10)/(16-10)) = 116.67%

 

		·	116.67% of $712,500 = $831,273.75 and

 

		·	ROAE Bonus = $831,273.75.

 

6.                 
IRM Bonus

 

For each Performance Period, the target amount of the IRM Bonus
will be equal to 25% of the Target Bonus, and the Executive shall be eligible to receive from zero to two times the target amount
of such IRM Bonus. The amount of the IRM Bonus shall be determined by the Compensation Committee in its sole discretion, based
upon any factors deemed relevant and appropriate by the Compensation Committee in its sole discretion, including without limitation:

 

		·	MFA’s leverage strategy relative to business plan and peers;

 

		·	MFA’s total stockholder return relative to the S&P financial index or other relevant indices;

 

		·	MFA’s total stockholder return relative to its peer group;

 

		·	MFA’s absolute total stockholder return;

 

		·	MFA’s other asset management activities; and

 

		·	The Executive’s individual performance.

 

7.                 
Form of Payment

 

For each Performance Period, the sum of the ROAE Bonus and the
IRM Bonus shall equal the Annual Bonus. The amount of the Annual Bonus, up to $500,000 shall be paid in cash. To the extent that
the Annual Bonus exceeds $500,000, then (i) 50% of the excess amount will be paid in the form of restricted stock with a fair market
value equal to 50% of the excess on the date of grant, and (ii) 50% of the excess amount will be paid in cash. The restricted stock
will be fully vested as of the date of grant, but the shares may not be sold or otherwise transferred during the three-year period
following the date of grant (or, if earlier, upon the Executive’s death or Disability or the occurrence of a Change of Control).
The restricted stock shall be subject to the terms of the applicable award agreement and the Equity Compensation Plan.

 

The Annual Bonus shall be paid, and restricted stock issued,
as applicable, between January 1 and March 15 following the end of the Performance Period.

 

    	 	26	 

     

    

 

8.                 
Withholding Obligations

 

The parties hereto acknowledge and understand that MFA or the
Executive may require or elect (as the case may be) that the Executive satisfy any federal, state or local tax withholding obligation
with respect to the portion of the Annual Bonus paid in the form of restricted stock by withholding shares from the shares otherwise
issuable to the Executive; provided that such shares shall not exceed the minimum applicable tax withholding required by law, or
such higher amount that does not result in adverse accounting treatment for the Company, as approved in advance by the Compensation
Committee.

 

9.                 
Committee Determinations

 

All determinations with respect to the Annual Bonus, including
the amount, if any, which is payable to the Executive for each Performance Period, shall be made by the Compensation Committee,
in good faith and in compliance with this Exhibit A. Any such determinations shall be final and binding on the Executive
and MFA.

 

    	 	27	 

     

    

 

Exhibit B

 

Summary of the Company’s Long Term
Incentive Program

 

The following summarizes certain material components of the
Company’s Long Term Incentive Program as applicable to grants under Section 3(c) of the Agreement to which this Exhibit
B is attached. Notwithstanding any provision of the Agreement or this Exhibit B, all grants under Section 3(c) of the
Agreement shall be subject to, and consistent with, the terms and conditions of the Equity Compensation Plan. Unless otherwise
specified in this Exhibit B, all defined terms have the meanings set forth in the Agreement.

 

10.                 
Annual Grants.

 

To the extent that the Executive is still
employed by MFA on the applicable grant date, within 25 business days following the Effective Date and in February 2021, the Executive
shall receive grants of restricted stock units subject to time vesting (“TRSUs”) and restricted stock units
which vest based on the achievement of performance goals (“PRSUs”). The TRSU and PRSU grants shall be subject
to the terms of the applicable award agreements and the Equity Compensation Plan.

 

11.                
TRSUs

 

Each annual grant of TRSUs will provide for a grant of TRSUs
with respect to a number shares of MFA common stock equal to $380,000 divided by the average of the daily closing price of MFA
common stock during the first 20 trading days in the year in which the TRSUs are granted, rounded to the nearest whole share. The
TRSUs will become fully vested on the third December 31 following the date of grant; provided that the Executive remains employed
for the entire vesting period and subject to vesting as described in Sections 5(a), 5(b), 5(c) and 5(g) of the Agreement. Any unvested
TRSUs shall be forfeited as of the date of Executive’s termination of employment, except as provided in Sections 5(a), 5(b),
5(c), 5(d), and 5(g) of the Agreement.

 

Within 30 days following the date on which the TRSUs vest, the
Executive will receive one share of common stock of MFA for each TRSU that vests.

 

In the event that dividends are declared with respect to the
common stock of MFA during the period in which the TRSUs are outstanding, the Executive shall receive a cash payment equal to the
amount of dividends that the Executive would have received if the Executive had owned a number of shares of common stock of MFA
equal to the number of outstanding TRSUs as of the date on which the dividend is declared. Such payment shall be made within 30
days after the date on which the dividend is paid on MFA stock.

 

12.                
PRSUs

 

As further described below, 50% of each annual grant of PRSUs
(the “Absolute TSR PRSUs”) will vest based on MFA’s average total shareholder return (“Average
TSR”) for the three year performance period beginning on January 1 of the year of grant (the “TSR Performance
Period”), and 50% of each annual grant of PRSUs (the “Relative TSR PRSUs”) will vest based on MFA’s
TSR compared to the TSR of designated peer group companies, as set forth in the applicable award agreement, during the TSR Performance
Period.

 

     

     

    

 

Each annual grant of PRSUs will provide for a target grant of
Absolute TSR PRSUs (the “Absolute TSR Target Award”) and a target grant of Relative TSR PRSUs (the “Relative
TSR Target Award”). The Absolute TSR Target Award and the Relative TSR Target Award shall each be a number of PRSUs equal
to the quotient of (a) $285,000 and (b) 85% of the average of the daily closing price of MFA common stock during the first 20 trading
days in the year in which the PRSUs are granted, rounded to the nearest whole share.

 

The TSR Performance Periods are as follows:

 

		·	January 1, 2020 through December 31, 2022

 

		·	January 1, 2021 through December 31, 2023

 

The PRSUs will vest on December 31 of the applicable TSR Performance
Period, to the extent that the total shareholder return performance goals described below are achieved; provided that the Executive
remains employed for the entire vesting period and subject to vesting as described in Sections 5(a), 5(b), 5(c), 5(d), and 5(g)
of the Agreement. Any unvested PRSUs shall be forfeited as of the date of Executive’s termination of employment, except as
provided in Sections 5(a), 5(b), 5(c) and 5(g) of the Agreement.

 

Within 30 days following the date on which the PRSUs vest, the
Executive will receive one share of common stock of MFA for each PRSU that vests.

 

For purposes of the PRSUs, TSR of MFA and each applicable peer
group company for the vesting period shall be calculated as follows:

 

		·	“TSR” is equal to (x) the excess of the Average Final Price over the Average Initial Price, plus Dividends
Paid on common stock in respect of the TSR Performance Period, divided by (y) the Average Initial Price.

 

		·	The “Average Initial Price” is equal to the average of the daily closing price of common stock during the
first 20 trading days in January of the first year of the TSR Performance Period.

 

		·	The “Average Final Price” is equal to the average of the daily closing price of common stock during the
last 20 trading days in December of the last year of the TSR Performance Period.

 

		·	The “Dividends Paid” shall equal the cumulative dividends (including any stock dividends) paid per share
of common stock in respect of the TSR Performance Period. For this purpose, dividends declared, but not yet paid, on a share within
the 45 day period preceding the applicable vesting date will be counted as Dividends Paid.

 

    	 	29	 

     

    

 

Absolute TSR PRSUs

 

For purposes of the TSR PRSUs, the “Average TSR”
for the Performance Period is the TSR, divided by 3, and the “Target TSR” is an 8% per annum simple cumulative
return over the TSR Performance Period. MFA’s Average TSR will be compared to the Target TSR to determine whether and to
what extent the Absolute TSR PRSUs will vest.

 

The number of Absolute TSR PRSUs that will vest at the end of
the Performance Period shall be determined by comparing the MFA’s Average TSR to the Target TSR (8% per year), up to a maximum
vesting of 200% of the Absolute TSR Target Award. Any Absolute TSR PRSUs that do not vest at the end of the TSR Performance Period
shall be forfeited.

 

Example Calculations

 

Set forth below are examples addressing vesting of
Absolute TSR PRSUs. The examples below are intended to be used purely for illustrative purposes and assume that the Absolute TSR
Target Award for the applicable grant of Absolute TSR PRSUs is equal to 46,000.

 

Example 1:

 

If MFA’s Average TSR over the TSR Performance
Period were 2%, then the portion of the Absolute TSR PRSUs that would become vested would be equal to: (2/8) of the Absolute TSR
Target Award, or 11,500 PRSUs.

 

Example 2:

 

If MFA’s Average TSR over the TSR Performance
Period were 12%, then the portion of the Absolute TSR PRSUs that would become vested would be equal to: (12/8) of the Absolute
TSR Target Award, or 69,000 PRSUs.

 

Example 3:

 

If MFA’s Average TSR over the TSR Performance
Period were 16%, then the portion of the Absolute TSR PRSUs that would become vested would be equal to (16/8) of the Absolute TSR
Target Award, or 92,000 PRSUs (maximum vesting).

 

Relative TSR PRSUs

 

At the end of each TSR Performance Period, MFA’s TSR and
the TSR of each of the designated peer group companies will be ranked from highest to lowest, and the “Relative TSR Vesting
Percentage” shall be determined based on MFA’s TSR as compared to the TSR of the designated peer group companies
for the TSR Performance Period as follows:

 

    	 	30	 

     

    

  

	MFA’s TSR Rank	Relative TSR Vesting Percentage
	80th percentile or above	200%
	50th percentile	100%
	25th percentile or below	0%

  

If MFA’s TSR Rank is between the 25th percentile and the
50th percentile, or between the 50th percentile and the 80th percentile, the Relative TSR Vesting Percentage will be interpolated.

 

The number of Relative TSR PRSUs that will vest for the TSR
Performance Period shall be determined by multiplying the Relative TSR Target Award by the Relative TSR Vesting Percentage.

 

For the avoidance of doubt, in no event shall any Relative TSR
PRSUs vest if MFA’s TSR Rank is at or below the 25th percentile.

 

The Executive shall not be eligible to receive more than 200%
of the Relative TSR Target Award based on MFA’s TSR Rank.

 

Example Calculations

 

Set forth below are examples addressing vesting of
Relative TSR PRSUs. The examples below are intended to be used purely for illustrative purposes and assume that the Relative TSR
Target Award for the applicable grant of Relative TSR PRSUs is equal to 46,000.

 

Example 1:

 

If MFA’s TSR Rank at the end of the TSR Performance
Period was 15 out of 18, MFA would be in the 17th percentile. Because MFA’s TSR Rank would be below the 25th percentile,
the Relative TSR Vesting Percentage would be equal to 0, so that none of the Relative TSR Target Award would become vested. 100%
of the Relative TSR Target Award for that TSR Performance Period would be forfeited.

 

Example 2:

 

If MFA’s TSR Rank at the end of the TSR Performance
Period was nine out of 18, MFA would be in the 50th percentile. The Relative TSR Vesting Percentage would be equal to 100, so that
100% of the Relative TSR Target Award (46,000 PRSUs) would become vested.

 

    	 	31	 

     

    

 

Example 3:

 

If MFA’s TSR Rank at the end of the TSR Performance
Period was two out of 18, MFA would be in the 89th percentile. The Relative TSR Vesting Percentage would be equal to 200, so that
200% of the Relative TSR Target Award (92,000 PRSUs) would become vested.

 

Dividend Equivalent Rights on PRSUs

 

In the event that dividends are declared with respect to the
common stock of MFA during the TSR Performance Period, then an amount equal to the dividends that the Executive would have received
if the Executive had owned a number of shares of MFA common stock equal to the number of outstanding PRSUs as of the date the dividend
is declared shall be accrued in a bookkeeping account. Accrued dividend amounts shall only be payable, as described below, to the
extent that the underlying PRSUs vest and are distributed.

 

When vested PRSUs (whether Absolute TSR PRSUs or Relative TSR
PRSUs) are distributed to the Executive, the Executive shall receive additional shares of MFA stock equal in value to the accumulated
dividends applicable to the shares distributed with respect to the vested PRSUs. The number of shares to be distributed with respect
to such accrued dividend amounts shall be calculated as follows: (i) the accumulated dividends declared per share of MFA common
stock during the TSR Performance Period, multiplied by (ii) the number of shares of MFA stock distributed with respect to vested
PRSUs, divided by (iii) the per share stock price of MFA common stock on the PRSU vesting date, rounded down to the nearest whole
share. Such additional shares shall be delivered on the same day as the vested PRSUs are distributed.

 

13.                 
Withholding Obligations

 

The parties hereto acknowledge and understand that MFA or the
Executive may require or elect (as the case may be) that the Executive satisfy any federal, state or local tax withholding obligation
with respect to TRSUs and PRSUs by withholding shares from the shares otherwise issuable to the Executive, provided that such shares
shall not exceed the minimum applicable tax withholding required by law, or such higher amount that does not result in adverse
accounting treatment for the Company, as approved in advance by the Compensation Committee.

 

14.                 
Committee Determinations

 

All determinations with respect to the TRSUs and PRSUs shall
be made by the Compensation Committee, in good faith and in compliance with this Exhibit B. Any such determinations shall
be final and binding on the Executive and MFA.

 

    	 	32	 

     

    

 

Exhibit C

 

Release

 

This Release of Claims (this “Release”)
is made as of _________________,by and between MFA FINANCIAL, INC. (“MFA”) and ________________ (the “Executive”).

 

(a)       The
Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the
termination payments and other consideration provided for under the Employment Agreement entered into by MFA and the Executive,
as from time to time amended in accordance with its terms (the “Employment Agreement”), hereby forever releases
and discharges MFA, and its successors, its affiliated entities, and, in such capacities, its past and present directors, employees,
agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes
of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character
in any manner whatsoever arising on or prior to the date of this Release, including but not limited to (i) any claim for breach
of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional
distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or
employment discrimination, and including without limitation alleged violations of Title VII of the Civil Rights Act of 1964, as
amended, prohibiting discrimination based on race, color, religion, sex or national origin; the Family and Medical Leave Act; the
Americans With Disabilities Act; the Age Discrimination in Employment Act; other federal, state and local laws, ordinances and
regulations; (ii) any and all liability that was or may have been alleged against or imputed to MFA by the Executive or by anyone
acting on his behalf; (iii) all claims for monetary or equitable relief, employment or reemployment with MFA in any position, and
any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys’ fees and costs except
as otherwise provided in the Employment Agreement. The only claims that are not being waived and released by the Executive under
this Release are (i) claims for indemnification or D&O coverage or any claim arising under, or preserved by, Section 5 of the
Employment Agreement, (ii) claims that, by applicable law, cannot be waived, (iii) claims based on any wrongful act or omission
occurring after the date Executive signs this Release, (iv) claims to benefits under any compensation or benefit plan, program
or arrangement in which the Executive was participating as of the date of termination of his employment, and (v) claims challenging
the legality of this Release in a legal proceeding pursuant to the Older Workers Benefit Protection Act and the Age Discrimination
in Employment Act. The Executive acknowledges that the Executive has not made any claims or allegations related to sexual harassment
or sexual abuse and none of the termination payments and other consideration provided for under the Employment Agreement are related
to sexual harassment or sexual abuse.

 

(b)       Except
as provided in Section (c) below, the Executive warrants, represents and certifies that he has not filed or instituted, and, no
person or agency has filed or instituted on his behalf and/or at his direction, any complaints, lawsuits, arbitration proceedings,
actions, causes of action, in law or equity, administrative charges, claims, controversies, demands, grievances and/or proceedings
whatsoever against any Releasee, in any forum. The Executive represents and warrants that he has not assigned any claim released
herein.

 

     

     

    

 

(c)       Nothing
in this Release or the Employment Agreement restricts or prohibits the Executive from initiating communications directly with,
responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations
of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or
a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National
Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector
General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower
provisions of state or federal law or regulation. However, to the maximum extent permitted by law, the Executive is waiving the
Executive’s right to receive any individual monetary relief from MFA or any others covered by the Release of Claims resulting
from such claims or conduct, regardless of whether the Executive or another party has filed them, and in the event the Executive
obtains such monetary relief, MFA will be entitled to an offset for the payments made pursuant to this Agreement. This Agreement
does not limit the Executive’s right to receive an award from any Regulator that provides awards for providing information
relating to a potential violation of law. The Executive does not need the prior authorization of MFA to engage in conduct protected
by this paragraph, and the Executive does not need to notify MFA that the Executive has engaged in such conduct.

 

Please take notice that federal law provides
criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose a trade
secret to their attorney, a court, or a government official in certain, confidential circumstances that are set forth at 18 U.S.C.
 §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection
with a lawsuit for retaliation for reporting a suspected violation of the law.

 

(d)       BY
HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT:

 

(1)       HE
HAS RECEIVED A COPY OF THIS RELEASE AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;

 

(2)       IF
HE SIGNS THIS RELEASE PRIOR TO THE EXPIRATION OF TWENTY-ONE DAYS, HE KNOWINGLY AND VOLUNTARILY WAIVES AND GIVES UP THIS RIGHT OF
REVIEW;

 

(3)       HE
HAS THE RIGHT TO REVOKE THIS RELEASE FOR A PERIOD OF SEVEN (7) DAYS AFTER HE SIGNS IT BY MAILING OR DELIVERING A WRITTEN NOTICE
OF REVOCATION TO THE COMPANY’S GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE DAY ON WHICH
HE SIGNED THIS RELEASE;

 

(4)       THIS
RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE RELEASE HAVING
BEEN REVOKED (THE “EFFECTIVE DATE”);

 

     

     

    

 

(5)       THIS
RELEASE WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN SECTION (d)(3).

 

(6)       THE
COMPANY ADVISES THE EXECUTIVE TO CONSULT WITH AN ATTORNEY. THEREFORE, HE IS AWARE OF HIS RIGHT TO CONSULT AN ATTORNEY, HAS BEEN
ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAS HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING
THIS RELEASE;

 

(7)       NO
PROMISE OR INDUCEMENT FOR THIS RELEASE HAS BEEN MADE EXCEPT AS SET FORTH IN THIS RELEASE;

 

(8)       HE
IS LEGALLY COMPETENT TO EXECUTE THIS RELEASE AND ACCEPT FULL RESPONSIBILITY FOR IT; AND

 

(9)       HE
HAS CAREFULLY READ THIS RELEASE, ACKNOWLEDGES THAT HE HAS NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET
FORTH IN THIS DOCUMENT, AND WARRANTS AND REPRESENTS THAT HE IS SIGNING THIS RELEASE KNOWINGLY AND VOLUNTARILY.

 

IN WITNESS WHEREOF, the parties have hereunto
set their hands this __________ day of ___________________.

  

 

	 	By:	
	 	 	Name:
	 	 	Title:Exhibit 10.1

 

OPEN MARKET SALE AGREEMENTSM

 

November 27, 2019

 

JEFFERIES LLC 
 520 Madison Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Senseonics Holdings, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell from time to time through Jefferies LLC, as sales agent and/or principal (the “Agent”), shares of the Company’s common stock, par value $0.001 per share (the “Common Shares”), having an aggregate offering price of up to $50,000,000 on the terms set forth in this agreement (this “Agreement”).

 

Section 1.                                          DEFINITIONS

 

(a)           Certain Definitions. For purposes of this Agreement, capitalized terms used herein and not otherwise defined shall have the following respective meanings:

 

“Affiliate” of a Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first-mentioned Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agency Period” means the period commencing on the date of this Agreement and expiring on the earliest to occur of (x) the date on which the Agent shall have placed the Maximum Program Amount pursuant to this Agreement and (y) the date this Agreement is terminated pursuant to Section 7.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

 

“Floor Price” means the minimum price set by the Company in the Issuance Notice, below which the Agent shall not sell Shares during the applicable period set forth in the Issuance Notice, which may be adjusted by the Company at any time during the period set forth in the Issuance Notice by delivering written notice of such change to the Agent and which in no event shall be less than $1.00 without the prior written consent of the Agent, which may be withheld in the Agent’s sole discretion.

 

“Issuance Amount” means the aggregate Sales Price of the Shares to be sold by the Agent pursuant to any Issuance Notice.

 

“Issuance Notice” means a written notice delivered to the Agent by the Company in accordance with this Agreement in the form attached hereto as Exhibit A that is executed by its Chief Executive Officer, President or Chief Financial Officer.

 

SM            “Open Market Sale Agreement” is a service mark of Jefferies LLC

 

 

“Issuance Notice Date” means any Trading Day during the Agency Period on which an Issuance Notice is delivered pursuant to Section 3(b)(A).

 

“Issuance Price” means the Sales Price less the Selling Commission.

 

“Maximum Program Amount” means Common Shares with an aggregate Sales Price of the lesser of (a) the number or dollar amount of Common Shares registered under the effective Registration Statement (defined below) pursuant to which the offering is being made, (b) the number of authorized but unissued Common Shares (less Common Shares issuable upon exercise, conversion or exchange of any outstanding securities of the Company or otherwise reserved from the Company’s authorized capital stock), (c) the number or dollar amount of Common Shares permitted to be sold under Form S-3 (including General Instruction I.B.6 thereof, if applicable), or (d) the number or dollar amount of Common Shares for which the Company has filed a Prospectus (defined below).

 

“Person” means an individual or a corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or other entity of any kind.

 

“Principal Market” means the NYSE American or such other national securities exchange on which the Common Shares, including any Shares, are then listed.

 

“Sales Price” means the actual sale execution price of each Share placed by the Agent pursuant to this Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.

 

“Selling Commission” means three percent (3.0%) of the gross proceeds of Shares sold pursuant to this Agreement, or as otherwise agreed between the Company and the Agent with respect to any Shares.

 

“Settlement Date” means the second business day following each Trading Day during the period set forth in the Issuance Notice on which Shares are sold pursuant to this Agreement, when the Company shall deliver to the Agent the amount of Shares sold on such Trading Day and the Agent shall deliver to the Company the Issuance Price received on such sales.

 

“Shares” shall mean the Company’s Common Shares issued or issuable pursuant to this Agreement.

 

“Trading Day” means any day on which the Principal Market is open for trading.

 

Section 2.                                          REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to, and agrees with, the Agent that as of (1) the date of this Agreement, (2) each Issuance Notice Date, (3) each Settlement Date, (4) each Triggering Event Date and (5) as of each Time of Sale (as defined below) (each of the times referenced above is referred to herein as a “Representation Date”), except as may be disclosed in the Prospectus (including any documents incorporated by reference therein and any supplements thereto) on or before a Representation Date:

 

(a)           Registration Statement. The Company has prepared and filed, or will file on the date of this Agreement, with the Commission a shelf registration statement on Form S-3 that contains a

 

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prospectus. Such registration statement registers the issuance and sale by the Company of the Shares under the Securities Act. The Company may file one or more additional registration statements from time to time that will contain a prospectus or a base prospectus and related prospectus supplement, as applicable, with respect to the Shares. Except where the context otherwise requires, such registration statement(s), including any information deemed to be a part thereof pursuant to Rule 430B or 462(b) under the Securities Act, including all financial statements, exhibits and schedules thereto and all documents incorporated or deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the Securities Act as from time to time amended or supplemented, is herein referred to as the “Registration Statement,” and the prospectus constituting a part of such registration statement(s), together with any prospectus supplement filed with the Commission pursuant to Rule 424(b) under the Securities Act relating to a particular issuance of the Shares, including all documents incorporated or deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the Securities Act, in each case, as from time to time amended or supplemented, is referred to herein as the “Prospectus,” except that if any revised prospectus is provided to the Agent by the Company for use in connection with the offering of the Shares that is not required to be filed by the Company pursuant to Rule 424(b) under the Securities Act, the term “Prospectus” shall refer to such revised prospectus from and after the time it is first provided to the Agent for such use. The Registration Statement at the time it originally became effective is herein called the “Original Registration Statement.” Any registration statement filed pursuant to Rule 462(b) under the Securities Act is herein called the “Rule 462(b) Registration Statement” and, after such filing, the term “Registration Statement” shall include the Rule 462(b) Registration Statement. As used in this Agreement, the terms “amendment” or “supplement” when applied to the Registration Statement or the Prospectus shall be deemed to include the filing by the Company with the Commission of any document under the Exchange Act after the date hereof that is or is deemed to be incorporated therein by reference.

 

All references in this Agreement to financial statements and schedules and other information which 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 which is or is deemed to be incorporated by reference in or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement or the Prospectus, as the case may be, as of any specified date; and all references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include, without limitation, the filing of any document under the Exchange Act which is or is deemed to be incorporated by reference in or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement or the Prospectus, as the case may be, as of any specified date. The Company’s obligations under this Agreement to furnish, provide, deliver or make available (and all other references of like import) copies of any report or statement shall be deemed satisfied if the same is filed with the Commission through EDGAR (except that, upon the Agent’s request, the Company shall provide a signed and printed copy of the Registration Statement and of any signed amendment or supplement thereto).

 

At the time the Registration Statement was or will be originally declared effective and at the time the Company’s most recent annual report on Form 10-K was filed with the Commission, if later, the Company met the then-applicable requirements for use of Form S-3 under the Securities Act. During the Agency Period, each time the Company files an annual report on Form 10-K the Company will meet the then-applicable requirements for use of Form S-3 under the Securities Act.

 

(b)           Compliance with Registration Requirements. The Original Registration Statement has or will be declared effective by the Commission, and any Rule 462(b) Registration Statement will be automatically effective, under the Securities Act. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information.  No stop

 

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order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, contemplated or threatened by the Commission.  The Company meets the requirements for use of Form S-3 under the Securities Act.  The sale of the Shares hereunder meets the requirements or General Instruction I.B.1 of Form S-3.

 

(c)           No Misstatement or Omission.  The Prospectus when filed complied and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act. Each of the Registration Statement, any Rule 462(b) Registration Statement, the Prospectus and any post-effective amendments or supplements thereto, at the time it became effective or its date, as applicable, complied and as of each of the Settlement Dates, if any, complied in all material respects with the Securities Act and did not and, as of each Settlement Date, if any, did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, did not and, as of each of the Settlement Dates, if any, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to the Agent furnished to the Company in writing by the Agent expressly for use therein, it being understood and agreed that the only such information furnished by the Agent to the Company consists of the information described in Section 6 below.  There are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required.

 

(d)           Ineligible Issuer Status. The Company is not an “ineligible issuer” in connection with the offering of the Shares pursuant to Rules 164, 405 and 433 under the Securities Act.  Any Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act. Each Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of Rule 433 under the Securities Act including timely filing with the Commission or retention where required and legending, and each such Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the issuance and sale of the Shares did not, does not and will not include any information that conflicted, conflicts with or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated by reference therein. Except for the Free Writing Prospectuses, if any, and electronic road shows, if any, furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any Free Writing Prospectus.

 

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

 

(f)            Emerging Growth Company.  As of the date of this Agreement, the Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act.  The Company will cease to be an “emerging growth company” on December 31, 2019 at the latest.  If the Company ceases to be an “emerging growth company” before December 31, 2019, the Company agrees to notify the Agent promptly upon the Company ceasing to be an “emerging growth company.”

 

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

 

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

 

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

 

(j)            Financial Statements. The financial statements included or incorporated by reference in the Registration Statement and the Prospectus, together with the related schedules and notes, present fairly, in all material respects, the financial position of the Company and its subsidiaries at the dates indicated and the statement of operations, stockholders’ equity and cash flows of the Company and its subsidiaries for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved except, in the case of unaudited financial statements, subject to normal year-end audit adjustments and the exclusion of certain footnotes as permitted by the applicable rules of the Commission.  The selected financial data incorporated by reference in the Registration Statement and the Prospectus present fairly, in all material respects, the information shown therein and have been compiled on a basis consistent with that of the audited financial statements incorporated by reference therein.  Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement or the Prospectus under the Securities Act.

 

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

 

(l)            No Material Adverse Change in Business.  Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement and the Prospectus: (i) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one entity, whether or not arising in the ordinary course of business (a “Material Adverse Effect”); (ii) there have been no transactions entered into by the Company and its subsidiaries, considered as one entity, other than those in the ordinary course of business, which are material, individually or in the aggregate, to the Company and its subsidiaries; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or its subsidiaries on any class of its capital stock.

 

(m)          Good Standing of the Company. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this

 

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Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not reasonably be expected to result in a Material Adverse Effect.

 

(n)           Subsidiaries.  The Company has one subsidiary (as defined in Rule 405 under the Securities Act). Such subsidiary, Senseonics, Incorporated (“Senseonics”) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the power and authority (corporate or other) to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus.  Senseonics is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business.  All of the issued and outstanding capital stock or other equity or ownership interests of Senseonics has been duly authorized and validly issued, is fully paid and nonassessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or adverse claim.  The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed on Exhibit 21 to the Company’s Annual Report.

 

(o)           Capitalization. The authorized, issued and outstanding shares of capital stock of the Company are as set forth in the Registration Statement and the Prospectus under the caption “Description of Capital Stock” (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Registration Statement and the Prospectus, or pursuant to the exercise of convertible securities, options or warrants referred to in the Registration Statement and the Prospectus).  The outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable.  None of the outstanding shares of capital stock of the Company or any of its subsidiaries were issued in violation of the preemptive or other similar rights of any securityholder of the Company.

 

(p)           Authorization and Description of Shares. The Shares to be purchased by the Agent from the Company have been duly authorized for issuance and sale to the Agent pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued, fully paid and nonassessable; and the issuance of the Shares is not subject to the preemptive or other similar rights of any securityholder of the Company.  The Common Shares conform, in all material respects, to all statements relating thereto contained in the Registration Statement and the Prospectus and such description conforms, in all material respects, to the rights set forth in the instruments defining the same.  No holder of Shares will be subject to personal liability solely by reason of being such a holder.

 

(q)           Registration Rights. There are no persons with registration rights or other similar rights to have any securities registered for sale pursuant to the Registration Statement or otherwise registered for sale or sold by the Company or any of its subsidiaries under the Securities Act pursuant to this Agreement, other than those rights that have been disclosed in the Registration Statement and the Prospectus and have been validly waived.

 

(r)            Absence of Violations, Defaults and Conflicts. Neither the Company nor any of its subsidiaries is (i) in violation of its charter, bylaws or similar organizational document, (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any one of them may be bound, or to which any of their respective properties or assets are subject (collectively, “Agreements and

 

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Instruments”), except for such defaults that would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or (iii) in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any arbitrator, court, governmental body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over the Company or any of its subsidiaries or any of their respective properties, assets or operations (each, a “Governmental Entity”), except for such violations that would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus (including the issuance and sale of the Shares) and compliance by the Company and its subsidiaries with their respective obligations hereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any of its subsidiaries pursuant to, the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events, liens, charges or encumbrances that would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter, by-laws or similar organizational document of the Company or any of its subsidiaries or, except as would not be reasonably expected to result in a Material Adverse Effect and adversely affect the consummation of the transactions contemplated in this Agreement, any applicable law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity.  As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

 

(s)            Absence of Labor Dispute.  No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers, collaborators, customers or contractors, which, in either case, would reasonably be expected to result in a Material Adverse Effect.

 

(t)            Absence of Proceedings.  Except as disclosed in the Registration Statement and the Prospectus and except as would not reasonably be expected to result in a Material Adverse Effect, or which would not reasonably be expected to materially and adversely affect its properties or assets or the consummation of the transactions contemplated in this Agreement or the performance by the Company or any of its subsidiaries of their respective obligations hereunder, there is no action, suit, proceeding, inquiry or investigation: (i) against or affecting the Company or any of its subsidiaries; (ii) which has as the subject thereof any officer or director of, or property owned or leased by, the Company or any of its subsidiaries; (iii) relating to discrimination matters; or (iv) before or brought by any Governmental Entity (including, without limitation, any action, suit, proceeding, inquiry or investigation before or brought by the Food and Drug Administration (the “FDA”), the European Commission, the European Medicines Agency or any other competent authorities of the Member States of the European Economic Area (collectively, the “EMA”) or any other Health Regulatory Agency (as defined below)), to the knowledge of the Company, now pending or threatened, against or affecting the Company or any of its subsidiaries; and the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective properties or assets is the subject which are not described in the Registration Statement or the Prospectus, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect.

 

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(u)           Accuracy of Exhibits.  There are no contracts or documents which are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which have not been so described in all material respects and filed as required.

 

(v)           Absence of Further Requirements.  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity is necessary or required for the performance by the Company or any of its subsidiaries of their respective obligations hereunder, in connection with the offering, issuance or sale of the Shares hereunder or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or as may be required under the Securities Act, the Securities Act Regulations, the rules of the Principal Market, state securities laws or FINRA rules.

 

(w)          Possession of Licenses and Permits.  The Company and each subsidiary possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Entities necessary to conduct their respective businesses now operated by each of them, except where the failure so to possess would not, singly or in the aggregate, be reasonably expected to result in a Material Adverse Effect.  The Company and each subsidiary are in compliance with the terms and conditions of all Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, be reasonably expected to result in a Material Adverse Effect.  All of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, singly or in the aggregate, be reasonably expected to result in a Material Adverse Effect.  Neither the Company nor any subsidiary have received any notice of proceedings relating to the revocation or modification of any Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would be reasonably expected to result in a Material Adverse Effect.

 

(x)           Title to Property.  The Company and its subsidiaries have good and marketable title to all real property owned and good title to all other properties owned, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (i) are described in the Registration Statement and the Prospectus or (ii) do not, singly or in the aggregate, if title were so encumbered, be reasonably expected to result in a Material Adverse Effect; and all of the leases and subleases material to the business of the Company or its subsidiaries, and under which the Company and each of its subsidiaries hold properties described in the Registration Statement or the Prospectus, are in full force and effect, and neither the Company nor any of its subsidiaries have received notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or any of its subsidiaries to the continued possession of the leased or subleased premises under any such lease or sublease.

 

(y)           Possession of Intellectual Property.  The Company and its subsidiaries own or possess, or they believe they can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by each of them, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or is aware of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity

 

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or inadequacy, singly or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

(z)           Environmental Laws.  Except as described in the Registration Statement and the Prospectus or would not, singly or in the aggregate, be reasonably expected to result in a Material Adverse Effect, (i) neither the Company nor any of its subsidiaries is in violation of any applicable federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of hazardous chemicals, pollutants, contaminants, hazardous wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or toxic mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”); (ii) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws for the operation of their respective businesses and are in compliance with their requirements; (iii) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating to any Environmental Law against the Company or any of its subsidiaries; and (iv) to the Company’s knowledge, there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or Governmental Entity, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.

 

(aa)         ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance in all material respects with ERISA.  “ERISA Affiliate” means, with respect to the Company or any of its subsidiaries, any member of any group of organizations described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of which the Company or such subsidiary is a member.  No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates.  Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA).  Neither the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code.  Each employee benefit plan established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.

 

(bb)         Accounting Controls.  The Company maintains a system of internal control over financial reporting (as defined under Rule 13a-15 and Rule 15d-15 under the rules and regulations of the Commission under the Exchange Act (the “Exchange Act Regulations”)) and a system of internal accounting controls designed to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as

 

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necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (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; and (v) the interactive data in eXtensible Business Reporting Language incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto.  Except as described in the Registration Statement and the Prospectus, since the end of each of the Company’s most recent audited fiscal year, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no change in the Company’s internal control over financial reporting that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Company’s internal control over financial reporting.  In addition, the Company is not aware of any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

(cc)         Disclosure Controls. The Company maintains disclosure controls and procedures (as such is defined in Rule 13a-15(e) of the Exchange Act Rules) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in reports that it files or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management to allow timely decisions regarding disclosures.  The Company has conducted evaluations of the effectiveness of its disclosure controls as required by Rule 13a-15 of the Exchange Act.

 

(dd)         Compliance with the Sarbanes-Oxley Act.  The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith applicable to the Company and its directors and officers.

 

(ee)         Payment of Taxes.  All United States federal income tax returns of the Company and its consolidated subsidiaries required by law to be filed have been filed, and all material taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided.  The United States federal income tax returns of the Company through the fiscal year ended December 31, 2018 have been settled and no assessment in connection therewith has been made against the Company.  The Company and its consolidated subsidiaries have filed all other tax returns that are required to have been filed by any of them or have timely requested extensions thereof pursuant to applicable foreign, state, local or other law except insofar as the failure to file such returns would not be reasonably expected to result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any of its consolidated subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been established by the Company or any consolidated subsidiary and except where failure to pay such taxes would not be reasonably expected to result in a Material Adverse Effect.  The charges, accruals and reserves on the books of the Company or any of its consolidated subsidiaries in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not be reasonably expected to result in a Material Adverse Effect.

 

(ff)          Insurance.  Each of the Company and its subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute and comparable size engaged in the same or

 

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similar business, and all such insurance is in full force and effect.  The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not be reasonably expected to result in a Material Adverse Effect.  Neither the Company nor any of its subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.

 

(gg)         Investment Company Act.  The Company is not required, and upon the issuance and sale of the Shares as herein contemplated and the application of the net proceeds therefrom as described in the Registration Statement and the Prospectus will not be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(hh)         Absence of Manipulation.  None of the Company, any of its subsidiaries or any affiliate of the Company has taken, nor will the Company, any of its subsidiaries or any affiliate take, directly or indirectly, any action which is designed, or would reasonably be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or to, directly or indirectly, result in a violation of Regulation M under the Exchange Act (“Regulation M”) under the Exchange Act. The Company acknowledges that the Agent may engage in passive market making transactions in the Shares on the Principal Market in accordance with Regulation M. The Common Shares are “actively traded securities” (as defined in Regulation M).

 

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

 

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

 

(kk)         Dividend Restrictions. Except as disclosed in the Prospectus, no subsidiary of the Company is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such subsidiary’s equity securities or from repaying to the Company or any other subsidiary of the Company any amounts that may from time to time become due under any loans or advances to such subsidiary from the Company or from transferring any property or assets to the Company or to any other subsidiary.

 

(ll)           Anti-Corruption and Anti-Bribery Laws. Neither the Company nor any of its subsidiaries nor any director, officer, or employee of the Company or any of its subsidiaries, nor to the knowledge of the Company, any agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made or taken any act in furtherance of an offer, promise, or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or employee, including of any government-owned or controlled entity or public international organization, or any political party, party official, or candidate for political office; (iii) violated or is in violation of any

 

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provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the UK Bribery Act 2010, or any other applicable anti-bribery or anti-corruption law; or (iv) made, offered, authorized, requested, or taken an act in furtherance of any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment or benefit.  The Company and its subsidiaries and, to the knowledge of the Company, the Company’s affiliates have conducted their respective businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(mm)      Money Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(nn)         Sanctions.  Neither the Company nor any of its subsidiaries, directors, officers, or employees, nor, to the knowledge of the Company, after due inquiry, any agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries is currently the subject or the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC) or the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority (collectively, “Sanctions”); nor is the Company or any of its subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions (a “Sanctioned Country”), including, without limitation, Crimea, Cuba, Iran, North Korea, and Syria; and the Company will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, or any joint venture partner or other person or entity, for the purpose of financing the activities of or business with any person, or in any country or territory, that at the time of such financing, is the subject or the target of Sanctions or in any other manner that will result in a violation by any person (including any person participating in the transaction whether as underwriter, advisor, investor or otherwise) of applicable Sanctions.  For the past five (5) years, the Company and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

 

(oo)         Lending Relationship. (i)  Neither the Company nor any of its subsidiaries have any material lending or other relationship with any bank or lending affiliate of the Agent and (ii) the Company does not intend to use any of the proceeds from the sale of the Shares to repay any outstanding debt owed to any affiliate of the Agent.

 

(pp)         Statistical and Market-Related Data.  Any statistical, demographic and market-related data included in the Registration Statement or the Prospectus are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate in all material respects and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.

 

(qq)         No Rated Securities.  Neither the Company nor any of its subsidiaries have any debt securities or preferred shares that are rated by any “nationally recognized statistical rating agency” (as that term is defined in Section 3(a)(62) of the Exchange Act).

 

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(rr)           No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the best of the Company’s knowledge, any employee or agent of the Company or any subsidiary, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character required to be disclosed in the Registration Statement or the Prospectus.

 

(ss)          Health Care Authorizations.  The Company and its subsidiaries have submitted and possess, or qualify for applicable exemptions to, such valid and current registrations, listings, approvals, clearances, licenses, certificates, authorizations or permits and supplements or amendments thereto (collectively, “Health Care Authorizations”) issued or required by the appropriate local, state, federal, national, supranational or other foreign regulatory agencies or bodies (collectively, “Health Regulatory Agencies”) necessary to conduct their respective businesses as described in the Registration Statement and the Prospectus, including, without limitation, all such Health Care Authorizations required by the FDA, the Department of Health and Human Services, the European Commission, the EMA or any other Health Regulatory Agencies engaged in the regulation of medical devices, except as would not be reasonably expected to result in a Material Adverse Effect.  Neither the Company nor any of its subsidiaries have received any notice of proceedings, or have any knowledge of any threatened proceedings, relating to the revocation or modification of, or non-compliance with, any such Health Care Authorization, except where such revocation, modification or non-compliance would not result in a Material Adverse Effect.

 

(tt)           Compliance with Health Care Laws.  The Company and its subsidiaries are, and have been, in compliance with all applicable Health Care Laws (as defined below), and have not engaged in activities which are, as applicable, cause for false claims liability, civil penalties, or mandatory or permissive exclusion from Medicare, Medicaid or any other state, federal or national health care program, except where such noncompliance, false claims liability or civil penalties would not reasonably be expected to, singly or in the aggregate, result in a Material Adverse Effect.  For purposes of this Agreement, “Health Care Laws” means all health care laws applicable to the Company, including, but not limited to: the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Section 301 et seq.), the Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), the Civil False Claims Act (31 U.S.C. Section 3729 et seq.), the criminal False Claims Law (42 U.S.C. § 1320a-7b(a)), all criminal laws relating to health care fraud and abuse, including but not limited to 18 U.S.C. Sections 286 and 287, and the health care fraud criminal provisions under the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (42 U.S.C. Section 1320d et seq.), the exclusion laws (42 U.S.C. § 1320a-7), HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (42 U.S.C. Section 17921 et seq.), Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act), any and all other applicable comparable local, state, federal, national, supranational and foreign health care laws and the regulations promulgated pursuant to such laws, each as amended from time to time. Neither the Company nor any of its subsidiaries have received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any court or arbitrator or governmental or regulatory authority or third party alleging that any product operation or activity is in material violation of any Health Care Laws, and, to the knowledge of the Company and each of its subsidiaries, no such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action is threatened. Neither the Company nor any of its subsidiaries have received any written notice of adverse filing, warning letter, untitled letter or other correspondence or notice from the FDA, the European Commission, the EMA or any other Health Regulatory Agencies, or any other court or arbitrator, alleging or asserting material noncompliance with the Health Care Laws. Neither the Company nor any of its subsidiaries are a party to and has no ongoing reporting obligations pursuant to any corporate integrity agreements, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders, plans of correction or similar agreements with or imposed by any

 

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governmental or regulatory authority. Additionally, neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any of its employees, officers or directors has been excluded, suspended or debarred from participation in any U.S. federal health care program or human research study or trial or, to the knowledge of the Company, is subject to a governmental inquiry, investigation, proceeding, or other similar action that could reasonably be expected to result in debarment, suspension, or exclusion.

 

(uu)         Research Studies and Trials. (A) The research studies and trials conducted by or, to the Company’s knowledge, on behalf of, or sponsored by, the Company or any of its subsidiaries, or in which the Company or its subsidiaries have participated, that are described in the Registration Statement or the Prospectus, or the results of which are referred to in the Registration Statement or the Prospectus, as applicable, were and, if still pending, are being, conducted in all material respects in accordance with applicable experimental protocols, procedures and controls pursuant to, where applicable, accepted professional and scientific standards for products or product candidates comparable to those being developed by the Company or its subsidiaries and all applicable statutes, rules and regulations of the FDA, the European Commission, the EMA and any other Health Regulatory Agencies to which it is subject; (B) the descriptions of the results of such studies and trials contained in the Registration Statement or the Prospectus do not contain any misstatement of a material fact or omit to state a material fact necessary to make such statements not misleading; (C) the Company and its subsidiaries have no knowledge of any research studies or trials not described in the Prospectus the results of which reasonably call into question in any material respect the results of the research studies and trials described in the Registration Statement or the Prospectus; (D) neither the Company nor any of its subsidiaries have received any notices or correspondence from the FDA, the European Commission, the EMA or any Health Regulatory Agency or any institutional review board or comparable authority requiring or threatening the premature termination, suspension, material modification or clinical hold of any research studies or trials conducted by or on behalf of, or sponsored by, the Company or any of its subsidiaries or in which the Company or any of its subsidiaries have participated that are described in the Registration Statement or the Prospectus, and, to the Company’s knowledge, there are no reasonable grounds for the same; and (E) there has not been any violation of applicable law or regulation by the Company or any of its subsidiaries in any of their product development efforts, submissions or reports to the FDA, the European Commission, the EMA or any other Health Regulatory Agency that could reasonably be expected to require investigation, corrective action or result in enforcement action, except where such violation would not, singly or in the aggregate, result in a Material Adverse Effect.

 

(vv)         Health Care Products Manufacturing.  The manufacture of the Company’s or its subsidiaries’ products by or, to the knowledge of the Company, on behalf of the Company or any of its subsidiaries is being conducted in compliance with all applicable Health Care Laws, including, without limitation, the FDA’s current good manufacturing practice regulations at 21 CFR Part 820, and, to the extent applicable, the respective counterparts thereof promulgated by the European Commission, the EMA or other Health Regulatory Agencies.  Except as disclosed in the Registration Statement and the Prospectus, neither the Company nor any of its subsidiaries have had any manufacturing site (whether owned by the Company or any of its subsidiaries or, to the knowledge of the Company, that of a third party manufacturer for the Company’s or its subsidiaries’ products) subject to an FDA, European Commission, EMA or other Health Regulatory Agency shutdown or import or export prohibition, nor received any FDA, European Commission, EMA or other Health Regulatory Agency “warning letters,” or “untitled letters” alleging or asserting material noncompliance with any applicable Health Care Laws, requests to make material changes to the Company’s or its subsidiaries’ products, processes or operations, or similar correspondence or notice from the FDA, the European Commission, the EMA or other Health Regulatory Agency alleging or asserting material noncompliance with any applicable Health Care Laws, other than those that have been satisfactorily addressed and/or closed with the FDA, the European Commission, the EMA or other Health Regulatory Agency. To the knowledge of the Company, none of

 

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the FDA, the European Commission, the EMA or any other Health Regulatory Agency is considering such action.

 

(ww)       Listing.  The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.  The Common Shares are registered pursuant to Section 12(b) or Section 12(g) of the Exchange Act and are listed on the Principal Market, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act or delisting the Common Shares from the Principal Market, nor has the Company received any notification that the Commission or the Principal Market is contemplating terminating such registration or listing.

 

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

 

(yy)         Forward-Looking Statements.  Each financial or operational projection or other “forward-looking statement” (as defined by Section 27A of the Securities Act or Section 21E of the Exchange Act) contained in the Registration Statement or the Prospectus (i) was so included by the Company in good faith and with reasonable basis after due consideration by the Company of the underlying assumptions, estimates and other applicable facts and circumstances and (ii) is accompanied by meaningful cautionary statements identifying those factors that could reasonably be expected to cause actual results to differ materially from those in such forward-looking statement.  No such statement, at the time it was made, was made with the knowledge of an executive officer or director of the Company that it was false or misleading.

 

(zz)         [Reserved.]

 

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

 

(bbb)      Agent Purchases.  The Company acknowledges and agrees that the Agent has informed the Company that the Agent may, to the extent permitted under the Securities Act and the Exchange Act, purchase and sell Common Shares for its own account while this Agreement is in effect, provided, that (i) no such purchase or sales shall take place while an Issuance Notice is in effect (except to the extent the Agent may engage in sales of Shares purchased or deemed purchased from the Company as a “riskless principal” or in a similar capacity) and (ii) the Company shall not be deemed to have authorized or consented to any such purchases or sales by the Agent.

 

(ccc)       No Outstanding Loans or Other Extensions of Credit. Since the adoption of Section 13(k) of the Exchange Act, neither the Company nor any of its subsidiaries has extended or maintained credit, arranged for the extension of credit, or renewed any extension of credit, in the form of a personal loan, to or for any director or executive officer (or equivalent thereof) of the Company and/or such subsidiary except for such extensions of credit as are expressly permitted by Section 13(k) of the Exchange Act.

 

(ddd)      Compliance with Laws. The Company has not been advised, and has no reason to believe, that it and each of its subsidiaries are not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in compliance would not reasonably be expected to result in a Material Adverse Effect.

 

(eee)       Compliance with Data Privacy Laws.  The Company and its subsidiaries are, and at all prior times were, in compliance with all applicable state and federal data privacy and security laws and

 

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regulations, including without limitation HIPAA (as defined below), except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and the Company and its subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, the “Privacy Laws”) in all material respects. To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws and regulatory rules or requirements, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company further certifies that neither it nor any subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.

 

(fff)        Cybersecurity. Except where failure to be so in compliance would not reasonably be expected to result in a Material Adverse Effect, (A) there has been no security breach or incident, unauthorized access or disclosure, or other compromise of or relating to the Company or any of its subsidiaries’ information technology and computer systems, networks, hardware, software, data and databases (including the data and information of their respective customers, employees, vendors and any third party data maintained, processed or stored by the Company or any of its subsidiaries, and any such data processed or stored by third parties on behalf of the Company or any of its subsidiaries), equipment or technology (collectively, “IT Systems and Data”); (B) the Company and its subsidiaries have not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in, any security breach or incident, unauthorized access or disclosure or other compromise to their IT Systems and Data; (C) the Company and its subsidiaries have implemented appropriate controls, policies, procedures, and technological safeguards to maintain and protect the integrity, continuous operation, redundancy and security of their IT Systems and Data reasonably consistent with industry standards and practices, or as required by applicable regulatory standards; and (D) the Company and its subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification.

 

Any certificate signed by any officer or representative of the Company or any of its subsidiaries and delivered to the Agent or counsel for the Agent in connection with an issuance of Shares shall be deemed a representation and warranty by the Company to the Agent as to the matters covered thereby on the date of such certificate.

 

The Company acknowledges that the Agent and, for purposes of the opinions to be delivered pursuant to Section 4(o) hereof, counsel to the Company and counsel to the Agent, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

 

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Section 3.                                          ISSUANCE AND SALE OF COMMON SHARES

 

(a)           Sale of Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company and the Agent agree that the Company may from time to time seek to sell Shares through the Agent, acting as sales agent, or directly to the Agent, acting as principal, as follows, with an aggregate Sales Price of up to the Maximum Program Amount, based on and in accordance with Issuance Notices as the Company may deliver, during the Agency Period.

 

(b)           Mechanics of Issuances.

 

(A)          Issuance Notice. Upon the terms and subject to the conditions set forth herein, on any Trading Day during the Agency Period on which the conditions set forth in Section 5(a) and Section 5(b) shall have been satisfied, the Company may exercise its right to request an issuance of Shares by delivering to the Agent an Issuance Notice; provided, however, that (A) in no event may the Company deliver an Issuance Notice to the extent that (I) the sum of (x) the aggregate Sales Price of the requested Issuance Amount, plus (y) the aggregate Sales Price of all Shares issued under all previous Issuance Notices effected pursuant to this Agreement, would exceed the Maximum Program Amount; and (B) prior to delivery of any Issuance Notice, the period set forth for any previous Issuance Notice shall have expired or been terminated. An Issuance Notice shall be considered delivered on the Trading Day that it is received by e-mail to the persons set forth in Schedule A hereto and confirmed by the Company by telephone (including a voicemail message to the persons so identified), with the understanding that, with adequate prior written notice, the Agent may modify the list of such persons from time to time.

 

(B)          Agent Efforts. Upon the terms and subject to the conditions set forth in this Agreement, upon the receipt of an Issuance Notice, the Agent will use its commercially reasonable efforts consistent with its normal sales and trading practices to place the Shares with respect to which the Agent has agreed to act as sales agent, subject to, and in accordance with the information specified in, the Issuance Notice, unless the sale of the Shares described therein has been suspended, cancelled or otherwise terminated in accordance with the terms of this Agreement. For the avoidance of doubt, the parties to this Agreement may modify an Issuance Notice at any time provided they both agree in writing to any such modification.

 

(C)          Method of Offer and Sale. The Shares may be offered and sold (A) in privately negotiated transactions with the consent of the Company; (B) as block transactions; or (C) by any other method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the Principal Market or sales made into any other existing trading market of the Common Shares. Nothing in this Agreement shall be deemed to require either party to agree to the method of offer and sale specified in the preceding sentence, and (except as specified in clause (A) above) the method of placement of any Shares by the Agent shall be at the Agent’s discretion.

 

(D)          Confirmation to the Company. If acting as sales agent hereunder, the Agent will provide written confirmation to the Company no later than the opening of the Trading Day following the Trading Day on which it has placed Shares hereunder setting forth the number of shares sold on such Trading Day, the corresponding Sales Price and the Issuance Price payable to the Company in respect thereof.

 

(E)           Settlement. Each issuance of Shares will be settled on the applicable Settlement Date for such issuance of Shares and, subject to the provisions of Section 5, on or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Shares being sold by crediting the Agent or its designee’s account at The Depository Trust Company through its

 

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Deposit/Withdrawal At Custodian (DWAC) System, or by such other means of delivery as may be mutually agreed upon by the parties hereto and, upon receipt of such Shares, which in all cases shall be freely tradable, transferable, registered shares in good deliverable form, the Agent will deliver, by wire transfer of immediately available funds, the related Issuance Price in same day funds delivered to an account designated by the Company prior to the Settlement Date. The Company may sell Shares to the Agent as principal at a price agreed upon at each relevant time Shares are sold pursuant to this Agreement (each, a “Time of Sale”).

 

(F)           Suspension or Termination of Sales. Consistent with standard market settlement practices, the Company or the Agent may, upon notice to the other party hereto in writing or by telephone (confirmed immediately by verifiable email), suspend any sale of Shares, and the period set forth in an Issuance Notice shall immediately terminate; provided, however, that (A) such suspension and termination shall not affect or impair either party’s obligations with respect to any Shares placed or sold hereunder prior to the receipt of such notice; (B) if the Company suspends or terminates any sale of Shares after the Agent confirms such sale to the Company, the Company shall still be obligated to comply with Section 3(b)(E) with respect to such Shares; and (C) if the Company defaults in its obligation to deliver Shares on a Settlement Date, the Company agrees that it will hold the Agent harmless against any loss, claim, damage or expense (including, without limitation, penalties, interest and reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company. The parties hereto acknowledge and agree that, in performing its obligations under this Agreement, the Agent may borrow Common Shares from stock lenders in the event that the Company has not delivered Shares to settle sales as required by subsection (v) above, and may use the Shares to settle or close out such borrowings. The Company agrees that no such notice shall be effective against the Agent unless it is made to the persons identified in writing by the Agent pursuant to Section 3(b)(A).

 

(G)          No Guarantee of Placement, Etc. The Company acknowledges and agrees that (A) there can be no assurance that the Agent will be successful in placing Shares; (B) the Agent will incur no liability or obligation to the Company or any other Person if it does not sell Shares; and (C) the Agent shall be under no obligation to purchase Shares on a principal basis pursuant to this Agreement, except as otherwise specifically agreed by the Agent and the Company.

 

(H)          Material Non-Public Information. Notwithstanding any other provision of this Agreement, the Company and the Agent agree that the Company shall not deliver any Issuance Notice to the Agent, and the Agent shall not be obligated to place any Shares, during any period in which the Company is in possession of material non-public information.

 

(c)           Fees. As compensation for services rendered, the Company shall pay to the Agent, on the applicable Settlement Date, the Selling Commission for the applicable Issuance Amount (including with respect to any suspended or terminated sale pursuant to Section 3(b)(F)) by the Agent deducting the Selling Commission from the applicable Issuance Amount.

 

(d)           Expenses. The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Shares (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Shares; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares; (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Prospectus, any Free Writing Prospectus (as defined below) prepared by or on behalf of, used by, or referred to by the Company, and

 

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all amendments and supplements thereto, and this Agreement; (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the Agent in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Shares for offer and sale under the state securities or blue sky laws or the provincial securities laws of Canada, and, if requested by the Agent, preparing and printing a “Blue Sky Survey” or memorandum and a “Canadian wrapper” and any supplements thereto, advising the Agent of such qualifications, registrations, determinations and exemptions; (vii) the reasonable fees and disbursements of the Agent’s counsel, including the reasonable fees and expenses of counsel for the Agent in connection with FINRA review, if any, and approval of the Agent’s participation in the offering and distribution of the Shares; (viii) the filing fees incident to FINRA review, if any; (ix) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives, employees and officers of the Company and of the Agent and any such consultants, and the cost of any aircraft chartered in connection with the road show; and (x) the fees and expenses associated with listing the Shares on the Principal Market. The fees and disbursements of Agent’s counsel pursuant to subsections (vi) and (vii) above shall not exceed $75,000.

 

Section 4.                                          ADDITIONAL COVENANTS

 

The Company covenants and agrees with the Agent as follows, in addition to any other covenants and agreements made elsewhere in this Agreement:

 

(a)           Exchange Act Compliance. During the Agency Period, the Company shall (A) file, on a timely basis, with the Commission all reports and documents required to be filed under Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act; and (B) either (A) include in its quarterly reports on Form 10-Q and its annual reports on Form 10-K, a summary detailing, for the relevant reporting period, (1) the number of Shares sold through the Agent pursuant to this Agreement and (2) the net proceeds received by the Company from such sales or (B) prepare a prospectus supplement containing, or include in such other filing permitted by the Securities Act or Exchange Act (each an “Interim Prospectus Supplement”), such summary information and, at least once a quarter and subject to this Section 4, file such Interim Prospectus Supplement pursuant to Rule 424(b) under the Securities Act (and within the time periods required by Rule 424(b) and Rule 430B under the Securities Act).

 

(b)           Securities Act Compliance. After the date of this Agreement, the Company shall promptly advise the Agent in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission; (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement, any Rule 462(b) Registration Statement, any amendment or supplement to the Prospectus or any Free Writing Prospectus; (iii) of the time and date that any post-effective amendment to the Registration Statement or any Rule 462(b) Registration Statement becomes effective; and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto, any Rule 462(b) Registration Statement or any amendment or supplement to the Prospectus or of any order preventing or suspending the use of any Free Writing Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Shares from any securities exchange upon which they are listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its reasonable efforts to obtain the lifting of such order as soon as practicable.

 

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Additionally, the Company agrees that it shall comply with the provisions of Rule 424(b) and Rule 433, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) or Rule 433 were received in a timely manner by the Commission.

 

(c)           Amendments and Supplements to the Prospectus and Other Securities Act Matters. If any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus so that the Prospectus does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if in the opinion of the Agent or counsel for the Agent it is otherwise necessary to amend or supplement the Prospectus to comply with applicable law, including the Securities Act, the Company agrees (subject to Section 4(d) and 4(f)) to promptly prepare, file with the Commission and furnish at its own expense to the Agent, amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law including the Securities Act. Neither the Agent’s consent to, or delivery of, any such amendment or supplement shall constitute a waiver of any of the Company’s obligations under Sections 4(d) and 4(f).

 

(d)           Agent’s Review of Proposed Amendments and Supplements. Prior to amending or supplementing the Registration Statement (including any Rule 462(b) Registration Statement) or the Prospectus (excluding any amendment or supplement through incorporation of any report filed under the Exchange Act), the Company shall furnish to the Agent for review, a reasonable amount of time (in any event, not less than three (3) full business days) prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.

 

(e)           Use of Free Writing Prospectus. Neither the Company nor the Agent has prepared, used, referred to or distributed, or will prepare, use, refer to or distribute, without the other party’s prior written consent, any “written communication” that constitutes a “free writing prospectus” as such terms are defined in Rule 405 under the Securities Act with respect to the offering contemplated by this Agreement (any such free writing prospectus being referred to herein as a “Free Writing Prospectus”).

 

(f)            Free Writing Prospectuses. The Company shall furnish to the Agent for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each proposed free writing prospectus or any amendment or supplement thereto to be prepared by or on behalf of, used by, or referred to by the Company and the Company shall not file, use or refer to any proposed free writing prospectus or any amendment or supplement thereto without the Agent’s consent. The Company shall furnish to the Agent, without charge, as many copies of any free writing prospectus prepared by or on behalf of, or used by the Company, as the Agent may reasonably request. If at any time when a prospectus is required by the Securities Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares (but in any event if at any time through and including the date of this Agreement) there occurred or occurs an event or development as a result of which any free writing prospectus prepared by or on behalf of, used by, or referred to by the Company conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company shall promptly amend or supplement such free writing prospectus to eliminate or correct such conflict or so that the statements in such free writing prospectus as so amended or

 

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supplemented will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at such subsequent time, not misleading, as the case may be; provided, however, that prior to amending or supplementing any such free writing prospectus, the Company shall furnish to the Agent for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of such proposed amended or supplemented free writing prospectus and the Company shall not file, use or refer to any such amended or supplemented free writing prospectus without the Agent’s consent.

 

(g)           Filing of Agent Free Writing Prospectuses. The Company shall not take any action that would result in the Agent or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Agent that the Agent otherwise would not have been required to file thereunder.

 

(h)           Copies of Registration Statement and Prospectus. After the date of this Agreement through the last time that a prospectus is required by the Securities Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares, the Company agrees to furnish the Agent with copies (which may be electronic copies) of the Registration Statement and each amendment thereto, and with copies of the Prospectus and each amendment or supplement thereto in the form in which it is filed with the Commission pursuant to the Securities Act or Rule 424(b) under the Securities Act, both in such quantities as the Agent may reasonably request from time to time; and, if the delivery of a prospectus is required under the Securities Act or under the blue sky or securities laws of any jurisdiction at any time on or prior to the applicable Settlement Date for any period set forth in an Issuance Notice in connection with the offering or sale of the Shares and if at such time any event has occurred 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 any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it is necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Agent and to request that the Agent suspend offers to sell Shares (and, if so notified, the Agent shall cease such offers as soon as practicable); and if the Company decides to amend or supplement the Registration Statement or the Prospectus as then amended or supplemented, to advise the Agent promptly by telephone (with confirmation in writing) and to prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission or effect such compliance; provided, however, that if during such same period the Agent is required to deliver a prospectus in respect of transactions in the Shares, the Company shall promptly prepare and file with the Commission such an amendment or supplement.

 

(i)            Blue Sky Compliance. The Company shall cooperate with the Agent and counsel for the Agent to qualify or register the Shares for sale under (or obtain exemptions from the application of) the state securities or blue sky laws or Canadian provincial securities laws of those jurisdictions designated by the Agent, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Agent promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its reasonable efforts to obtain the withdrawal thereof as soon as practicable.

 

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(j)            Earnings Statement. As soon as practicable, the Company will make generally available to its security holders and to the Agent an earnings statement (which need not be audited) covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act.

 

(k)           Listing; Reservation of Shares. (a) The Company will maintain the listing of the Shares on the Principal Market; and (b) the Company will reserve and keep available at all times, free of preemptive rights, Shares for the purpose of enabling the Company to satisfy its obligations under this Agreement.

 

(l)            Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Shares.

 

(m)          Due Diligence. During the term of this Agreement, the Company will reasonably cooperate with any reasonable due diligence review conducted by the Agent in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during normal business hours and at the Company’s principal offices, as the Agent may reasonably request from time to time.

 

(n)           Representations and Warranties. The Company acknowledges that each delivery of an Issuance Notice and each delivery of Shares on a Settlement Date shall be deemed to be (i) an affirmation to the Agent that the representations and warranties of the Company contained in or made pursuant to this Agreement are true and correct as of the date of such Issuance Notice or of such Settlement Date, as the case may be, as though made at and as of each such date, except as may be disclosed in the Prospectus (including any documents incorporated by reference therein and any supplements thereto); and (ii) an undertaking that the Company will advise the Agent if any of such representations and warranties will not be true and correct as of the Settlement Date for the Shares relating to such Issuance Notice, as though made at and as of each such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Shares).

 

(o)           Deliverables at Triggering Event Dates; Certificates. The Company agrees that on or prior to the date of the first Issuance Notice and, during the term of this Agreement after the date of the first Issuance Notice, upon:

 

(A)          the filing of the Prospectus or the amendment or supplement of any Registration Statement or Prospectus (other than a prospectus supplement relating solely to an offering of securities other than the Shares or a prospectus filed pursuant to Section 4(a)(B)(B)), 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 Prospectus;

 

(B)          the filing with the Commission of an annual report on Form 10-K or a quarterly report on Form 10-Q (including any Form 10-K/A or Form 10-Q/A containing amended financial information or a material amendment to the previously filed annual report on Form 10-K or quarterly report on Form 10-Q), in each case, of the Company; or

 

(C)          the filing with the Commission of a current report on Form 8-K of the Company containing amended financial information (other than information “furnished” pursuant to Item 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K 

 

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relating to reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) that is material to the offering of securities of the Company in the Agent’s reasonable discretion;

 

(any such event, a “Triggering Event Date”), the Company shall furnish the Agent (but in the case of clause (C) above only if the Agent reasonably determines that the information contained in such current report on Form 8-K of the Company is material) with a certificate as of the Triggering Event Date, in the form and substance satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel, modified, as necessary, to relate to the Registration Statement and the Prospectus as amended or supplemented, (A) confirming that the representations and warranties of the Company contained in this Agreement are true and correct, (B) that the Company has performed all of its obligations hereunder to be performed on or prior to the date of such certificate and as to the matters set forth in Section 5(a)(C) hereof, and (C) containing any other certification that the Agent shall reasonably request. The requirement to provide a certificate under this Section 4(o) shall be waived for any Triggering Event Date occurring at a time when no Issuance Notice is pending or a suspension is in effect, which waiver shall continue until the earlier to occur of the date the Company delivers instructions for the sale of Shares hereunder (which for such calendar quarter shall be considered a Triggering Event Date) and the next occurring Triggering Event Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Triggering Event Date when a suspension was in effect and did not provide the Agent with a certificate under this Section 4(o), then before the Company delivers the instructions for the sale of Shares or the Agent sells any Shares pursuant to such instructions, the Company shall provide the Agent with a certificate in conformity with this Section 4(o) dated as of the date that the instructions for the sale of Shares are issued.

 

(p)           Legal Opinions. On or prior to the date of the first Issuance Notice and within five (5) Trading Days of each Triggering Event Date with respect to which the Company is obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this Agreement, (i) a negative assurance letter and a written legal opinion of Cooley LLP, counsel to the Company, and (ii) a negative assurance letter of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Agent, each dated the date of delivery, in form and substance reasonably satisfactory to Agent, substantially similar to the form previously provided to the Agent, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented shall be furnished to the Agent; provided, however, the Company shall be required to furnish no more than one written legal opinion hereunder per calendar quarter. In lieu of such written legal opinions for subsequent periodic filings, in the discretion of the Agent, the Company may furnish a reliance letter from such counsel to the Agent, permitting the Agent to rely on a previously delivered written legal opinion, modified as appropriate for any passage of time or Triggering Event Date (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 such Triggering Event Date).

 

(q)           Comfort Letter. On or prior to the date of the first Issuance Notice and within five (5) Trading Days of each Triggering Event Date with respect to which the Company is obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this Agreement, the Company shall cause Ernst & Young LLP, the independent registered public accounting firm who has audited the financial statements included or incorporated by reference in the Registration Statement, to furnish the Agent a comfort letter, dated the date of delivery, in form and substance reasonably satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel; provided, however, that any such comfort letter will only be required on the Triggering Event Date specified to the extent that it contains financial statements filed with the Commission under the Exchange Act and incorporated or deemed to be incorporated by reference into a Prospectus. If requested by the Agent, the Company shall also cause a comfort letter to be furnished to the

 

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Agent within ten (10) Trading Days of the date of occurrence of any material transaction or event requiring the filing of a current report on Form 8-K containing material amended financial information of the Company, including the restatement of the Company’s financial statements. The Company shall be required to furnish no more than one comfort letter hereunder per calendar quarter.

 

(r)            Secretary’s Certificate. On or prior to the date of the first Issuance Notice and within five (5) Trading Days of each Triggering Event Date, the Company shall furnish the Agent a certificate executed by the Secretary of the Company, signing in such capacity, dated the date of delivery (i) certifying that attached thereto are true and complete copies of the resolutions duly adopted by the Board of Directors of the Company authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the issuance of the Shares pursuant to this Agreement), which authorization shall be in full force and effect on and as of the date of such certificate, (ii) certifying and attesting to the office, incumbency, due authority and specimen signatures of each Person who executed this Agreement for or on behalf of the Company, and (iii) containing any other certification that the Agent shall reasonably request.

 

(s)            Agent’s Own Account; Clients’ Account. The Company consents to the Agent trading, in compliance with applicable law, in the Common Shares for the Agent’s own account and for the account of its clients at the same time as sales of the Shares occur pursuant to this Agreement.

 

(t)            Investment Limitation. The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.

 

(u)           Market Activities. The Company will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Shares or any other reference security, whether to facilitate the sale or resale of the Shares or otherwise, and the Company will, and shall use commercially reasonable efforts to cause each of its affiliates to, comply with all applicable provisions of Regulation M. If the limitations of Rule 102 of Regulation M (“Rule 102”) do not apply with respect to the Shares or any other reference security pursuant to any exception set forth in Section (d) of Rule 102, then promptly upon notice from the Agent (or, if later, at the time stated in the notice), the Company will, and shall use commercially reasonable efforts to cause each of its affiliates to, comply with Rule 102 as though such exception were not available but the other provisions of Rule 102 (as interpreted by the Commission) did apply. The Company shall promptly notify the Agent if it no longer meets the requirements set forth in Section (d) of Rule 102.

 

(v)           Notice of Other Sale. Without providing the Agent notice as promptly as reasonably possible beforehand, the Company will not, directly or indirectly, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any Common Shares or securities convertible into or exchangeable for Common Shares (other than Shares hereunder), warrants or any rights to purchase or acquire Common Shares, during the period beginning on the third Trading Day immediately prior to the date on which any Issuance Notice is delivered to the Agent hereunder and ending on the third Trading Day immediately following the Settlement Date with respect to Shares sold pursuant to such Issuance Notice; and will not directly or indirectly enter into 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 Shares (other than the Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Shares, warrants or any rights to purchase or acquire, Common Shares prior to the termination of this Agreement; provided, however, that such restrictions will not be required in connection with the Company’s (i) issuance or sale of Common Shares, options to purchase Common Shares or Common Shares issuable upon the exercise of options or other equity awards pursuant to any employee or director share option, incentive or benefit plan, share purchase or ownership plan, long-term incentive plan, dividend reinvestment plan, inducement award under rules of the Principal Market or other compensation plan of the Company or its subsidiaries, as in effect on the date of this Agreement, (ii) issuance or sale of Common Shares issuable upon exchange, conversion or redemption of securities or the exercise or 

 

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vesting of warrants, options or other equity awards, (iii) issuance or sale of Common Shares or securities convertible into or exchangeable for Common Shares as consideration for mergers, acquisitions, other business combinations, joint ventures or strategic alliances occurring after the date of this Agreement which are not used for capital raising purposes and (iv) modification of any outstanding options, warrants of any rights to purchase or acquire Common Shares.

 

Section 5.                                          CONDITIONS TO DELIVERY OF ISSUANCE NOTICES AND TO SETTLEMENT

 

(a)           Conditions Precedent to the Right of the Company to Deliver an Issuance Notice and the Obligation of the Agent to Sell Shares. The right of the Company to deliver an Issuance Notice hereunder is subject to the satisfaction, on the date of delivery of such Issuance Notice, and the obligation of the Agent to use its commercially reasonable efforts to place Shares during the applicable period set forth in the Issuance Notice is subject to the satisfaction, on each Trading Day during the applicable period set forth in the Issuance, of each of the following conditions:

 

(A)          Accuracy of the Company’s Representations and Warranties; Performance by the Company. The Company shall have delivered the certificate required to be delivered pursuant to Section 4(o) on or before the date on which delivery of such certificate is required pursuant to Section 4(o). The Company shall have performed, satisfied and complied with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to such date, including, but not limited to, the covenants contained in Section 4(m), Section 4(q) and Section 4(r).

 

(B)          No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby that prohibits or directly and materially adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by this Agreement.

 

(C)          Material Adverse Effect. Except as disclosed in the Prospectus, (a) in the judgment of the Agent there shall not have occurred any Material Adverse Effect; and (b) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” as such term is defined for purposes of Section 3(a)(62) of the Exchange Act.

 

(D)          No Suspension of Trading in or Delisting of Common Shares; Other Events. The trading of the Common Shares (including without limitation the Shares) shall not have been suspended by the Commission, the Principal Market or FINRA and the Common Shares (including without limitation the Shares) shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market or any of its constituent markets. There shall not have occurred (and be continuing in the case of occurrences under clauses (i) and (ii) below) any of the following: (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the Principal Market or trading in securities generally on either the Principal Market shall have been suspended or limited, or minimum or maximum prices shall have been generally established on any of such stock exchanges by the Commission or FINRA; (ii) a general banking moratorium shall have been declared by any of federal or New York, authorities; or (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or

 

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international financial markets, or any substantial change or development involving a prospective  substantial change in United States’ or international political, financial or economic conditions, as in the judgment of the Agent is material and adverse and makes it impracticable to market the Shares in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities.

 

(b)           Documents Required to be Delivered on each Issuance Notice Date. The Agent’s obligation to use its commercially reasonable efforts to place Shares hereunder shall additionally be conditioned upon the delivery to the Agent on or before the Issuance Notice Date of a certificate in form and substance reasonably satisfactory to the Agent, executed by the Chief Executive Officer, President or Chief Financial Officer of the Company, to the effect that all conditions to the delivery of such Issuance Notice shall have been satisfied as at the date of such certificate (which certificate shall not be required if the foregoing representations shall be set forth in the Issuance Notice).

 

(c)           No Misstatement or Material Omission. Agent shall not have advised the Company that the Registration Statement or the Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in the Agent’s reasonable opinion is material, or omits to state a fact that in the Agent’s reasonable opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.

 

Section 6.                                          INDEMNIFICATION AND CONTRIBUTION

 

(a)           Indemnification of the Agent. The Company agrees to indemnify and hold harmless the Agent, its officers and employees, and each person, if any, who controls the Agent within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Agent or such officer, employee or controlling person may become subject, under the Securities Act, the Exchange Act, other federal or state statutory law or regulation, or the laws or regulations of foreign jurisdictions where Shares have been offered or sold or at common law or otherwise (including in settlement of any litigation), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, 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; (ii) any untrue statement or alleged untrue statement of a material fact contained in any Free Writing Prospectus that the Company has used, referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission 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; or (iii) any act or failure to act or any alleged act or failure to act by the Agent in connection with, or relating in any manner to, the Common Shares or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, provided that the Company shall not be liable under this clause (iii) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by the Agent through its bad faith or willful misconduct, and to reimburse the Agent and each such officer, employee and controlling person for any and all documented expenses (including the fees and disbursements of counsel chosen by the Agent) as such expenses are reasonably incurred by the Agent or such officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance

 

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upon and in conformity with written information furnished to the Company by the Agent expressly for  use in the Registration Statement, any such Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Agent to the Company consists of the information described in subsection (b) below. The indemnity agreement set forth in this Section 6(a) shall be in addition to any liabilities that the Company may otherwise have.

 

(b)           Indemnification of the Company, its Directors and Officers. The Agent agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or the laws or regulations of foreign jurisdictions where Shares have been offered or sold or at common law or otherwise (including in settlement of any litigation), arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, 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 (ii) any untrue statement or alleged untrue statement of a material fact contained in any Free Writing Prospectus that the Company has used, referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission 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, but only to the extent arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Agent expressly for use in the Registration Statement, any such Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Agent to the Company consists of solely the name of the Agent, and to reimburse the Company and each such director, officer and controlling person for any and all documented expenses (including the fees and disbursements of counsel chosen by the Company) as such expenses are reasonably incurred by the Company or such officer, director or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The indemnity agreement set forth in this Section 6(b) shall be in addition to any liabilities that the Agent or the Company may otherwise have.

 

(c)           Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 6 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to

 

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the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to  assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel (not to be unreasonably withheld, delayed or conditioned), the indemnifying party will not be liable to such indemnified party under this Section 6 for any reasonable and documented legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (together with local counsel), representing the indemnified parties who are parties to such action), which counsel (together with any local counsel) for the indemnified parties shall be selected by the Agent (in the case of counsel for the indemnified parties referred to in Section 6(a) above) or the Company (in the case of counsel for the indemnified parties referred to in Section 6(b) above), (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party and shall be paid as they are incurred.

 

(d)           Settlements. The indemnifying party under this Section 6 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 6(b) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request; and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding.

 

(e)           Contribution. If the indemnification provided for in this Section 6 is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Agent, on the other hand, from the offering of the Shares pursuant to this Agreement; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Agent, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Agent, on the other hand, in connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total gross proceeds from the offering of

 

28

 

 

the Shares (before deducting expenses) received by the Company bear to the total commissions received  by the Agent. The relative fault of the Company, on the one hand, and the Agent, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Agent, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 6(b), any reasonable and documented legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 6(b) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 6(e); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 6(b) for purposes of indemnification.

 

The Company and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(e).

 

Notwithstanding the provisions of this Section 6(e), the Agent shall not be required to contribute any amount in excess of the agent fees received by the Agent in connection with the offering contemplated hereby. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6(e), each officer and employee of the Agent and each person, if any, who controls the Agent within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Agent, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company with the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.

 

Section 7.                                          TERMINATION & SURVIVAL

 

(a)           Term. Subject to the provisions of this Section 7, the term of this Agreement shall continue from the date of this Agreement until the end of the Agency Period, unless earlier terminated by the parties to this Agreement pursuant to this Section 7.

 

(b)           Termination; Survival Following Termination.

 

(A)          Either party may terminate this Agreement prior to the end of the Agency Period, by giving written notice as required by this Agreement, upon 10 Trading Days’ notice to the other party; provided that, (A) if the Company terminates this Agreement after the Agent confirms to the Company any sale of Shares, the Company shall remain obligated to comply with Section 3(b)(E) with respect to such Shares and (B) Section 2, Section 6, Section 7 and Section 8 shall survive termination of this Agreement. If termination shall occur prior to the Settlement Date for any sale of Shares, such sale shall nevertheless settle in accordance with the terms of this Agreement.

 

(B)          In addition to the survival provision of Section 7(b)(A), the respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers and of the Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Agent or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and, anything herein to the

 

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contrary notwithstanding, will survive delivery of and payment for the Shares sold hereunder and any termination of this Agreement.

 

Section 8.                                          MISCELLANEOUS

 

(a)           Press Releases and Disclosure. The Company may issue a press release describing the material terms of the transactions contemplated hereby as soon as practicable following the date of this Agreement, and may file with the Commission a Current Report on Form 8-K, with this Agreement attached as an exhibit thereto, describing the material terms of the transactions contemplated hereby, and the Company shall consult with the Agent prior to making such disclosures, and the parties hereto shall use all commercially reasonable efforts, acting in good faith, to agree upon a text for such disclosures that is reasonably satisfactory to all parties hereto. No party hereto shall issue thereafter any press release or like public statement (including, without limitation, any disclosure required in reports filed with the Commission pursuant to the Exchange Act) related to this Agreement or any of the transactions contemplated hereby without the prior written approval of the other party hereto, except as may be necessary or appropriate in the reasonable opinion of the party seeking to make disclosure to comply with the requirements of applicable law or stock exchange rules. If any such press release or like public statement is so required, the party making such disclosure shall consult with the other party prior to making such disclosure, and the parties shall use all commercially reasonable efforts, acting in good faith, to agree upon a text for such disclosure that is reasonably satisfactory to all parties hereto.

 

(b)           No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (i) the transactions contemplated by this Agreement, including the determination of any fees, are arm’s-length commercial transactions between the Company and the Agent, (ii) when acting as a principal under this Agreement, the Agent is and has been acting solely as a principal is not the agent or fiduciary of the Company, or its stockholders, creditors, employees or any other party, (iii) the Agent has not assumed nor will assume an advisory or fiduciary responsibility in favor of the Company with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether the Agent has advised or is currently advising the Company on other matters) and the Agent does not have any obligation to the Company with respect to the transactions contemplated hereby except the obligations expressly set forth in this Agreement, (iv) the Agent and its respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, and (v) the Agent has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

(c)           Research Analyst Independence. The Company acknowledges that the Agent’s research analysts and research departments are required to and should be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and as such the Agent’s research analysts may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company or the offering that differ from the views of their respective investment banking divisions. The Company understands that the Agent is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the companies that may be the subject of the transactions contemplated by this Agreement.

 

(d)           Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

 

30

 

If to the Agent:

 

Jefferies LLC
 520 Madison Avenue
 New York, NY 10022
 Attention:  General Counsel

 

with a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square
 New York, NY 10036
 Facsimile: (917) 777-3259
 Attention: Michael J. Zeidel, Esq.

 

If to the Company:

 

Senseonics Holdings, Inc.
 24051 Seneca Meadows Parkway
 Germantown, MD 20876
 Facsimile: (301) 515-0988
 Attention: Chief Financial Officer

 

with a copy (which shall not constitute notice) to:

 

Cooley LLP
 11951 Freedom Drive
 Reston, VA 20190
 Facsimile: (703) 456-8100
 Attention: Christian E. Plaza

 

Any party hereto may change the address for receipt of communications by giving written notice to the others in accordance with this Section 8(d).

 

(e)           Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 6, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term “successors” shall not include any purchaser of the Shares as such from the Agent merely by reason of such purchase.

 

(f)            Partial Unenforceability. The invalidity or unenforceability of any Article, Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Article, Section, paragraph or provision hereof. If any Article, Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

(g)           Governing Law Provisions. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in such state. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the Borough of Manhattan in the City of New York or the courts

 

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of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

 

(h)           General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and may be delivered by facsimile transmission or by electronic delivery of a portable document format (PDF) file. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The Article and Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

 

[Signature Page Immediately Follows]

 

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If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
SENSEONICS HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Tim Goodnow
    
	
 
    	
 
    	
Name:
    	
Tim Goodnow
    
	
 
    	
 
    	
Title:
    	
CEO
    

 

 

The foregoing Agreement is hereby confirmed and accepted by the Agent in New York, New York as of the date first above written.

 

 

	
JEFFERIES LLC
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Michael Magarro
    	
 
    
	
 
    	
Name:
    	
Michael Magarro
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    

 

 

EXHIBIT A

 

ISSUANCE NOTICE

 

[Date]

 

Jefferies LLC

520 Madison Avenue

New York, New York 10022

 

Attn: [          ]

 

Reference is made to the Open Market Sale Agreement between            (the “Company”) and Jefferies LLC (the “Agent”) dated as of             , 20  . The Company confirms that all conditions to the delivery of this Issuance Notice are satisfied as of the date hereof.

 

Date of Delivery of Issuance Notice (determined pursuant to Section 3(b)(A)):

 

Issuance Amount (equal to the total Sales Price for such Shares):

 

$

 

Number of days in selling period:

 

First date of selling period:

 

Last date of selling period:

 

Settlement Date(s) if other than standard T+2 settlement:

 

 

 

Floor Price Limitation (in no event less than $1.00 without the prior written consent of the Agent, which consent may be withheld in the Agent’s sole discretion): $      per share

 

Comments:

 

 

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-1

 

Schedule A

 

Notice Parties

 

The Company

 

Tim Goodnow (tim.goodnow@senseonics.com); Nick B. Tressler (nick.tressler@senseonics.com)

 

The Agent

 

Michael Magarro (mmagarro@jefferies.com); Donald Lynaugh (dlynaugh@jefferies.com); Jack Fabbri (jfabbri@jefferies.com)

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