Document:

Exhibit

EXECUTION COPY

Exhibit 10.1

KINDRED BIOSCIENCES, INC.
Common Stock
(par value $0.0001 per share)
At Market Issuance Sales Agreement
December 19, 2016

FBR Capital Markets & Co.
1300 North 17th Street
Suite 1400
Arlington, Virginia 22209
Ladies and Gentlemen:
Kindred Biosciences, Inc., a Delaware corporation (the “Company”), confirms its agreement (this “Agreement”) with FBR Capital Markets & Co. (“FBR”) as follows:
1.Issuance and Sale of Shares. The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through FBR, shares (the “Placement Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”); provided, however, that in no event shall the Company issue or sell through FBR such number of Placement Shares that (a) would cause the Company to exceed the limitations set forth in General Instruction I.B.6 of Form S-3, if the Company is subject to such limitations under General Instruction I.B.6, (b) exceeds the number of shares of Common Stock registered on the effective Registration Statement (as defined below) pursuant to which the offering is being made, or (c) exceeds the number of authorized but unissued shares of Common Stock (the lesser of (a), (b) and (c), the “Maximum Amount”). Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitations set forth in this Section 1 on the number of Placement Shares issued and sold under this Agreement shall be the sole responsibility of the Company and that FBR shall have no obligation in connection with such compliance,  provided that FBR shall not sell more Placement Shares than the aggregate amount requested by the Company on all Placement Notices (as defined below). The issuance and sale of Placement Shares through FBR will be effected pursuant to the Registration Statement (as defined below), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to issue any Placement Shares.

The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (the “Securities Act”), with the Securities and Exchange Commission (the “Commission”), a registration statement on Form S-3 (File No. 333-201553), including a base prospectus, relating to certain securities, including the Placement Shares to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “Exchange Act”). The Company has prepared, or will prepare prior to any sales of the Placement Shares, a prospectus supplement to the base prospectus included, or to be included, as part of such registration statement specifically relating to the Placement Shares (the “Prospectus Supplement”). The Company will furnish to FBR, for use by FBR, copies of the base prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement, relating to the Placement Shares. Except where the context otherwise requires, such registration statement, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B of the Securities Act, is herein called the “Registration Statement.”  The base prospectus, including all documents incorporated or deemed incorporated therein by reference to the extent such information has not been superseded or modified in accordance with Rule 412 under the Securities Act (as qualified by Rule 430B(g) of the Securities Act), included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such base prospectus and/or Prospectus Supplement have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission incorporated by reference therein (the “Incorporated Documents”).
For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include the most recent copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System, or if applicable, the Interactive Data Electronic Application system when used by the Commission (collectively, “EDGAR”).
2.Placements. Each time that the Company wishes to issue and sell Placement Shares hereunder (each, a “Placement”), it will notify FBR by email notice (or other method mutually agreed to in writing by the parties) of the number of Placement Shares, the time period during which sales are requested to be made, any limitation on the number of Placement Shares that may be sold in any one day and any minimum price below which sales may not be made (a “Placement Notice”), the form of which is attached hereto as Schedule 1. The Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 3 (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from FBR set forth on Schedule 3, as such Schedule 3 may be amended from time to 

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time. The Placement Notice shall be effective immediately upon receipt by FBR unless and until (i) FBR declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares thereunder has been sold, (iii) the Company suspends or terminates the Placement Notice or (iv) this Agreement has been terminated under the provisions of Section 13. The amount of any discount, commission or other compensation to be paid by the Company to FBR in connection with the sale of the Placement Shares shall be calculated in accordance with the terms set forth in Schedule 2. It is expressly acknowledged and agreed that neither the Company nor FBR will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to FBR and FBR does not decline such Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein. In the event of a conflict between the terms of Sections 2 or 3 of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.
3.Sale of Placement Shares by FBR.  
a.Subject to the terms and conditions of this Agreement, for the period specified in a Placement Notice, FBR will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the NASDAQ Stock Market (the “Exchange”), to sell the Placement Shares up to the amount specified in, and otherwise in accordance with the terms of, such Placement Notice. FBR will provide written confirmation to the Company no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to FBR pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by FBR (as set forth in Section 5(b)) from the gross proceeds that it receives from such sales. Subject to the terms of a Placement Notice, FBR may sell Placement Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act, including without limitation sales made directly on the Exchange, on any other existing trading market for the Common Stock or to or through a market maker. Subject to the terms of a Placement Notice, FBR may also sell, with the Company’s consent, Placement Shares by any other method permitted by law, including but not limited to negotiated transactions. “Trading Day” means any day on which Common Stock is purchased and sold on the Exchange. 
b.During the term of this Agreement, neither FBR nor any of their respective affiliates or subsidiaries shall engage in (i) any short sale of any security of the Company, (ii) any sale of any security of the Company that FBR does not own or any sale which is consummated by the delivery of a security of the Company borrowed by, or for the account of, FBR, (iii) any proprietary trading or trading for the FBR (or their affiliates or subsidiaries) own account, or (vi) any market making, bidding, stabilization or other trading activity with regard to the Common Stock or related derivative securities if such activity would be prohibited under Regulation M or other anti-manipulation rules under the Securities Act.

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4.Suspension of Sales. The Company or FBR may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other party set forth on Schedule 3, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Schedule 3), suspend any sale of Placement Shares (a “Suspension”); provided, however, that such suspension shall not affect or impair any party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. While a Suspension is in effect, any obligation under Sections 7(l), 7(m), and 7(n) with respect to the delivery of certificates, opinions, or comfort letters to FBR, shall be waived. Each of the parties agrees that no such notice under this Section 4 shall be effective against any other party unless it is made to one of the individuals named on Schedule 3 hereto, as such Schedule may be amended from time to time.
5.Sale and Delivery to FBR; Settlement.
a.Sale of Placement Shares. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, upon FBR’s acceptance of the terms of a Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, FBR, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Exchange to sell such Placement Shares up to the amount specified in, and otherwise in accordance with the terms of, such Placement Notice. The Company acknowledges and agrees that (i) there can be no assurance that FBR will be successful in selling Placement Shares, (ii) FBR will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by FBR to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Exchange to sell such Placement Shares as required under this Agreement and (iii) FBR shall be under no obligation to purchase Placement Shares on a principal basis pursuant to this Agreement, except as otherwise agreed by FBR and the Company. 
b.Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made (each, a “Settlement Date”). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by FBR, after deduction for (i) FBR’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, and (ii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales. 
c.Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting FBR’s or its designee’s account (provided FBR shall have given the Company 

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written notice of such designee and such designee’s account information at least one Trading Day prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, FBR will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date through no fault of FBR, then in addition to and in no way limiting the rights and obligations set forth in Section 11(a) hereto, it will (i) hold FBR harmless against any loss, claim, damage, or reasonable, documented expense (including reasonable and documented legal fees and expenses), as incurred, arising out of or in connection with such default by the Company or its transfer agent (if applicable) and (ii) pay to FBR (without duplication) any commission, discount, or other compensation to which it would otherwise have been entitled absent such default. 
d. Limitations on Offering Size. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares if, after giving effect to the sale of such Placement Shares, the aggregate number of Placement Shares sold pursuant to this Agreement would exceed the lesser of (A) together with all sales of Placement Shares under this Agreement, the Maximum Amount, (B) the amount available for offer and sale under the currently effective Registration Statement and (C) the amount authorized from time to time to be issued and sold under this Agreement by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to FBR in writing.  Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares pursuant to this Agreement at a price lower than the minimum price authorized from time to time by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to FBR in writing.  
6.Representations and Warranties of the Company. Except as disclosed in the Registration Statement or Prospectus (including the Incorporated Documents), the Company represents and warrants to, and agrees with FBR that as of the date of this Agreement and as of each Applicable Time (as defined below), unless such representation, warranty or agreement specifies a different date or time:
a.Registration Statement and Prospectus. The Company and, assuming no act or omission on the part of FBR that would make such statement untrue, the transactions contemplated by this Agreement meet the requirements for and comply with the conditions for the use of Form S-3 under the Securities Act. The Registration Statement has been filed with the Commission and has been declared effective under the Securities Act. The Prospectus Supplement will name FBR as the agent in the section entitled “Plan of Distribution.” The Company has not received, and has no notice of, any order of the Commission preventing or suspending the use of the Registration Statement, or threatening or instituting proceedings for that purpose. The Registration Statement and the offer and sale of Placement Shares as contemplated hereby meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said Rule. Any statutes, regulations, contracts or other documents that are required to be described in 

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the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been so described or filed, as applicable. Copies of the Registration Statement, the Prospectus, and any such amendments or supplements and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to FBR and their counsel. The Company has not distributed and, prior to the later to occur of each Settlement Date and completion of the distribution of the Placement Shares, will not distribute any offering material in connection with the offering or sale of the Placement Shares other than the Registration Statement and the Prospectus and any Issuer Free Writing Prospectus (as defined below) to which FBR has consented. The Common Stock is currently quoted on the Exchange. The Company has not, in the 12 months preceding the date hereof, received notice from the Exchange to the effect that the Company is not in compliance with the listing or maintenance requirements of the Exchange. To the Company’s knowledge, it is in compliance with all such listing and maintenance requirements.
b.No Misstatement or Omission. At each Settlement Date, the Registration Statement and the Prospectus, as of such date, will conform in all material respects with the requirements of the Securities Act. The Registration Statement, when it became effective, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus and any amendment and supplement thereto, on the date thereof and at each Applicable Time (defined below), did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference in the Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the Commission, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by FBR specifically for use in the preparation thereof.
c.Conformity with Securities Act and Exchange Act. The Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement thereto, and the Incorporated Documents, when such documents were or are filed with the Commission under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.
d.Financial Information. The consolidated financial statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries (as defined below) as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company and the Subsidiaries for the periods specified (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the 

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aggregate) and have been prepared in compliance with the published requirements of the Securities Act and Exchange Act, as applicable, and in conformity with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis (except (i) for such adjustments to accounting standards and practices as are noted therein and (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) during the periods involved; the other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the Registration Statement and the Prospectus, are accurately and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the Registration Statement, or the Prospectus that are not included or incorporated by reference as required; the Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off balance sheet obligations), not described in the Registration Statement, and the Prospectus which are required to be described in the Registration Statement or Prospectus; and all disclosures contained or incorporated by reference in the Registration Statement and the Prospectus, if any, regarding “non--GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable.
e.Conformity with EDGAR Filing. The Prospectus delivered to FBR for use in connection with the sale of the Placement Shares pursuant to this Agreement will be identical to the versions of the Prospectus created to be transmitted to the Commission for filing via EDGAR, except to the extent permitted by Regulation S-T. 
f.Organization. The Company and any subsidiary that is a significant subsidiary (as such term is defined in Rule 1-02 of Regulation S-X promulgated by the Commission) (each, a “Subsidiary”, collectively, the “Subsidiaries”), are, and will be, duly organized, validly existing as a corporation and in good standing under the laws of their respective jurisdictions of organization. The Company and the Subsidiaries are duly licensed or qualified as a foreign corporation for transaction of business and in good standing under the laws of each other jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such license or qualification, and have all corporate power and authority necessary to own or hold their respective properties and to conduct their respective businesses as described in the Registration Statement and the Prospectus, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the assets, business, operations, earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity or results of operations of the Company and the Subsidiaries taken as a whole, or prevent the consummation of the transactions contemplated hereby (a “Material Adverse Effect”).
g.Subsidiaries.  As of the date hereof, the Company’s only Subsidiaries are set forth on Schedule 6(g).  The Company owns directly or indirectly, all of the equity interests of the Subsidiaries free and clear of any lien, charge, security interest, encumbrance, right of first refusal or other restriction, and all the equity interests of the Subsidiaries are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.  

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h.No Violation or Default. Neither the Company nor any Subsidiary is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other similar agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any of the property or assets of the Company or any Subsidiary is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of each of clauses (ii) and (iii) above, for any such violation or default that would not, individually or in the aggregate, have a Material Adverse Effect. To the Company’s knowledge, no other party under any material contract or other agreement to which it or any Subsidiary is a party is in default in any respect thereunder where such default would have a Material Adverse Effect.
i.No Material Adverse Effect. Since the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement and Prospectus, there has not been (i) any Material Adverse Effect, or any development that would result in a Material Adverse Effect, (ii) any transaction which is material to the Company and the Subsidiaries taken as a whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by the Company or the Subsidiaries, which is material to the Company and the Subsidiaries taken as a whole, (iv) any material change in the capital stock (other than (A) the grant of additional options under the Company’s existing stock option plans, (B) changes in the number of outstanding Common Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, Common Stock outstanding on the date hereof, (C) as a result of the issuance of Placement Shares, (D) any repurchases of capital stock of the Company, (E) as described in a proxy statement filed on Schedule 14A or a Registration Statement on Form S-4, or (F) otherwise publicly announced) or outstanding long-term indebtedness of the Company or the Subsidiaries or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any Subsidiary, other than in each case above in the ordinary course of business or as otherwise disclosed in the Registration Statement or Prospectus (including any document incorporated by reference therein).  
j.Capitalization. The issued and outstanding shares of capital stock of the Company have been validly issued, are fully paid and non-assessable and, other than as disclosed in the Registration Statement or the Prospectus, are not subject to any preemptive rights, rights of first refusal or similar rights. The Company has an authorized, issued and outstanding capitalization as set forth in the Registration Statement and the Prospectus as of the dates referred to therein (other than (i) the grant of additional options under the Company’s existing stock option plans, (ii) changes in the number of outstanding Common Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, Common Stock outstanding on the date hereof, (iii) as a result of the issuance of Placement Shares, or (iv) any repurchases of capital stock of the Company) and such authorized capital stock conforms to the description thereof set forth in the Registration Statement and the Prospectus. The description of the Common Stock in the Registration Statement and the Prospectus is complete and accurate in all material respects. As of the date referred to therein, the Company did not have outstanding any 

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other options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or exchangeable for, or any contracts or commitments to issue or sell, any shares of capital stock or other securities.
k.S-3 Eligibility.  (i) At the time of filing the Registration Statement and (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), the Company met the then-applicable requirements for use of Form S-3 under the Securities Act, including compliance with General Instruction I.B.1 of Form S-3.   
l.Market Capitalization.  As of the close of trading on the Exchange on the Trading Day immediately prior to the date of this Agreement, the aggregate market value of the outstanding voting and non-voting common equity (as defined in Rule 405) of the Company held by persons other than affiliates of the Company (pursuant to Rule 144 of the Securities Act, those that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company)  (the “Non-Affiliate Shares”), was approximately $70,392,780 (calculated by multiplying (x) the price at which the common equity of the Company was last sold on the Exchange on the Trading Day immediately prior to the date of this Agreement times (y) the number of Non-Affiliate Shares).  
m.Authorization; Enforceability. The Company has full legal right, power and authority to enter into this Agreement and perform the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except to the extent that (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and (ii) the indemnification and contribution provisions of Section 11 hereof may be limited by federal or state securities laws and public policy considerations in respect thereof.
n.Authorization of Placement Shares. The Placement Shares, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, will be duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim (other than any pledge, lien, encumbrance, security interest or other claim arising from an act or omission of FBR or a purchaser), including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and will be registered pursuant to Section 12 of the Exchange Act. The Placement Shares, when issued, will conform in all material respects to the description thereof set forth in or incorporated into the Prospectus.
o.No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or any governmental or regulatory authority is required for the execution, delivery and performance by the Company of this Agreement, and the issuance and sale by the Company of the Placement Shares as contemplated hereby, except for such consents, approvals, authorizations, orders and registrations or qualifications (i) as may 

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be required under applicable state securities laws or by the by-laws and rules of the Financial Industry Regulatory Authority (“FINRA”) or the Exchange, including any notices that may be required by the Exchange, in connection with the sale of the Placement Shares by FBR, (ii) as may be required under the Securities Act and (iii) as have been previously obtained by the Company.
p.No Preferential Rights. (i) No person, as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”), has the right, contractual or otherwise, to cause the Company to issue or sell to such Person any Common Stock or shares of any other capital stock or other securities of the Company (other than upon the exercise of options or warrants to purchase Common Stock or upon the exercise of options that may be granted from time to time under the Company’s stock option plans), (ii) no Person has any preemptive rights, rights of first refusal, or any other rights (whether pursuant to a “poison pill” provision or otherwise) to purchase any Common Stock or shares of any other capital stock or other securities of the Company from the Company which have not been duly waived with respect to the offering contemplated hereby, (iii) no Person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Common Stock, and (iv) no Person has the right, contractual or otherwise, to require the Company to register under the Securities Act any Common Stock or shares of any other capital stock or other securities of the Company, or to include any such shares or other securities in the Registration Statement or the offering contemplated thereby, whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Placement Shares as contemplated thereby or otherwise, except in each case for such rights as have been waived on or prior to the date hereof.
q.Independent Public Accountant. KMJ Corbin & Company LLP (the “Accountant”), whose report on the consolidated financial statements of the Company is filed with the Commission as part of the Company’s most recent Annual Report on Form 10-K filed with the Commission and incorporated into the Registration Statement, are and, during the periods covered by their report, were independent public accountants within the meaning of the Securities Act and the Public Company Accounting Oversight Board (United States). To the Company’s knowledge, the Accountant is not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company.
r.Enforceability of Agreements.  All agreements between the Company and third parties expressly referenced in the Prospectus, other than such agreements that have expired by their terms or whose termination is disclosed in documents filed by the Company on EDGAR, are legal, valid and binding obligations of the Company and, to the Company’s knowledge, enforceable in accordance with their respective terms, except to the extent that (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles and (ii) the indemnification provisions of certain agreements may be limited by federal or state securities laws or public policy considerations in respect thereof, and except for any unenforceability that, individually or in the aggregate, would not have a Material Adverse Effect.
s.No Litigation. There are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any legal, governmental or regulatory 

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investigations, to which the Company or a Subsidiary is a party or to which any property of the Company or any Subsidiary is the subject that, individually or in the aggregate, if determined adversely to the Company or any Subsidiary, would have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement; to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others that, individually or in the aggregate, if determined adversely to the Company or any Subsidiary, would have a Material Adverse Effect; and there are no current or pending legal, governmental or regulatory actions, suits, proceedings or, to the Company’s knowledge, investigations that are required under the Securities Act to be described in the Prospectus that are not described in the Prospectus (including any Incorporated Document).
t.Licenses and Permits. The Company and the Subsidiaries possess or have obtained, all licenses, certificates, consents, orders, approvals, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Registration Statement and the Prospectus (the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary have received written notice of any proceeding relating to revocation or modification of any such Permit or has any reason to believe that such Permit will not be renewed in the ordinary course, except where the failure to obtain any such renewal would not, individually or in the aggregate, have a Material Adverse Effect.
u.No Material Defaults. Neither the Company nor any Subsidiary has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, would have a Material Adverse Effect. The Company has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its last Annual Report on Form 10-K, indicating that it (i) has failed to pay any dividend or sinking fund installment on preferred stock or (ii) has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, would have a Material Adverse Effect.
v.Certain Market Activities. Neither the Company, nor any Subsidiary, nor, to the knowledge of the Company, any of their respective directors, officers or controlling persons has taken, directly or indirectly, any action designed, or that has constituted or would cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares.
w.Broker/Dealer Relationships. Neither the Company nor any Subsidiary or any related entities (i) is required to register as a “broker” or “dealer” in accordance with the provisions of the Exchange Act or (ii) directly or indirectly through one or more intermediaries, controls or is a “person associated with a member” or “associated person of a member” (within the meaning set forth in the FINRA Manual).

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x.No Reliance. The Company has not relied upon FBR or legal counsel for FBR for any legal, tax or accounting advice in connection with the offering and sale of the Placement Shares.
y.Taxes. The Company and the Subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed and paid all taxes shown thereon through the date hereof, to the extent that such taxes have become due and are not being contested in good faith, except where the failure to do so would not have a Material Adverse Effect. Except as otherwise disclosed in or contemplated by the Registration Statement or the Prospectus, no tax deficiency has been determined adversely to the Company or any Subsidiary which has had, or would have, individually or in the aggregate, a Material Adverse Effect. The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty or assessment which has been or might be asserted or threatened against it which could have a Material Adverse Effect.
z.Title to Real and Personal Property. The Company and the Subsidiaries have good and valid title in fee simple to all items of real property and good and valid title to all personal property (excluding intellectual property, which is addressed below) described in the Registration Statement or Prospectus as being owned by them that are material to the businesses of the Company or such Subsidiary, in each case free and clear of all liens, encumbrances and claims, except those that (i) do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries or (ii) would not, individually or in the aggregate, have a Material Adverse Effect. Any real property described in the Registration Statement or Prospectus as being leased by the Company and the Subsidiaries is held by them under valid, existing and enforceable leases, except those that (A) do not materially interfere with the use made or proposed to be made of such property by the Company or the Subsidiaries or (B) would not, individually or in the aggregate, have a Material Adverse Effect.
aa.Intellectual Property. The Company and the Subsidiaries own or possess adequate enforceable rights to use all patents, patent applications, trademarks (both registered and unregistered), service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the “Intellectual Property”), necessary for the conduct of their respective businesses as conducted as of the date hereof, except to the extent that the failure to own or possess adequate rights to use such Intellectual Property would not, individually or in the aggregate, have a Material Adverse Effect; the Company and the Subsidiaries have not received any written notice of any claim of infringement or conflict with asserted Intellectual Property rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect; there are no pending, or to the Company’s knowledge, threatened judicial proceedings or interference proceedings against the Company or its Subsidiaries challenging the Company’s or any of its Subsidiary’s rights in or to or the validity of the scope of any of the Company’s or any Subsidiary’s patents, patent applications or proprietary information; no other entity or individual has any right or claim in any patents, patent applications or any patent to be issued therefrom that are owned or purported to be owned by the Company or any of its Subsidiaries by virtue of any contract, license or other agreement entered into between such entity or individual and the Company or any 

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Subsidiary or by any non-contractual obligation, other than by written licenses granted by the Company or any Subsidiary, except as would not, individually or in the aggregate, have a Material Adverse Effect; the Company and the Subsidiaries have not received any written notice of any claim challenging the rights of the Company or its Subsidiaries in or to any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary which claim, if the subject of an unfavorable decision would result in a Material Adverse Effect.
bb.    Environmental Laws. The Company and the Subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as described in the Registration Statement and the Prospectus; and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), (ii) or (iii) above, for any such failure to comply or failure to receive required permits, licenses, other approvals or liability as would not, individually or in the aggregate, have a Material Adverse Effect.
cc.    Disclosure Controls. The Company maintains a system of internal accounting controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company is not aware of any material weaknesses in its internal control over financial reporting (other than as set forth in the Registration Statement or the Prospectus). Since the date of the latest audited financial statements of the Company included in the Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting (other than as set forth in the Registration Statement or the Prospectus). The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) that comply with the requirements of the Exchange Act. The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of a date within 90 days prior to the filing date of the Form 10-K for the fiscal year most recently ended (such date, the “Evaluation Date”). The Company presented in its Form 10-K for the fiscal year most recently ended the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the most recent Evaluation Date, and the “disclosure controls and procedures” are effective.
dd.    Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any applicable provisions of the Sarbanes-

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Oxley Act and the rules and regulations promulgated thereunder. Each of the principal executive officer and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and other documents required to be filed by it or furnished by it to the Commission during the past 12 months. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Exchange Act Rules 13a-15 and 15d-15.
ee.    Finder’s Fees. Neither the Company nor any Subsidiary has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated, except as may otherwise exist with respect to FBR pursuant to this Agreement.
ff.    Labor Disputes. No labor disturbance by or dispute with employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is threatened which would result in a Material Adverse Effect. 
gg.    Investment Company Act. Neither the Company nor any Subsidiary is or, after giving effect to the offering and sale of the Placement Shares, will be required to register as an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).
hh.    Operations. The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions to which the Company or the Subsidiaries are subject, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency having jurisdiction over the Company (collectively, the “Money Laundering Laws”), except where the failure to be in such compliance would not result in a Material Adverse Effect; 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 Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
ii.    Off-Balance Sheet Arrangements.     There are no transactions, arrangements and other relationships between and/or among the Company, and/or, to the knowledge of the Company, any of its affiliates and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity (each, an “Off Balance Sheet Transaction”) that would affect materially the Company’s liquidity or the availability of or requirements for its capital resources, including those Off Balance Sheet Transactions described in the Commission’s Statement about Management’s Discussion and Analysis of Financial Conditions and Results of Operations (Release Nos. 33-8056; 34-45321; FR-61), required to be described in the Registration Statement or the Prospectus which have not been described as required.

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jj.    Underwriter Agreements. The Company is not a party to any agreement with an agent or underwriter for any other “at-the-market” or continuous equity transaction.
kk.    ERISA. To the knowledge of the Company, (i) each material employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained, administered or contributed to by the Company or any of its affiliates for employees or former employees of the Company and the Subsidiaries has been maintained in material compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred which would result in a material liability to the Company with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption; and (iii) for each such plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid contributions) equals or exceeds the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions, other than, in the case of (i), (ii) and (iii) above, as would not have a Material Adverse Effect.
ll.    Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) (a “Forward-Looking Statement”) contained in the Registration Statement and the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
mm.    Margin Rules. Neither the issuance, sale and delivery of the Placement Shares nor the application of the proceeds thereof by the Company as described in the Registration Statement and the Prospectus will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.
nn.    Insurance. The Company and the Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company and the Subsidiaries reasonably believe are adequate for the conduct of their business.
oo.    No Improper Practices. (i) Neither the Company nor, to the Company’s knowledge, the Subsidiaries, nor to the Company’s knowledge, any of their respective executive officers has, in the past five years, made any unlawful contributions to any candidate for any political office (or failed fully to disclose any contribution in violation of law) or made any contribution or other payment to any official of, or candidate for, any federal, state, municipal, or foreign office or other person charged with similar public or quasi-public duty in violation of any law or of the character required to be disclosed in the Prospectus; (ii) no relationship, direct or indirect, exists between or among the Company or, to the Company’s knowledge, the Subsidiaries or any affiliate of any of them, on the one hand, and the directors, officers and stockholders of the Company or, to the Company’s knowledge, the Subsidiaries, on the other hand, that is required by the Securities Act to be described in the Registration Statement and the Prospectus that is not so described; (iii) no relationship, direct or indirect, exists between or among the Company or the Subsidiaries or 

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any affiliate of them, on the one hand, and the directors, officers, stockholders or directors of the Company or, to the Company’s knowledge, the Subsidiaries, on the other hand, that is required by the rules of FINRA to be described in the Registration Statement and the Prospectus that is not so described; (iv) there are no material outstanding loans or advances or material guarantees of indebtedness by the Company or, to the Company’s knowledge, the Subsidiaries to or for the benefit of any of their respective officers or directors or any of the members of the families of any of them; and (v) the Company has not offered, or caused any placement agent to offer, Common Stock to any person with the intent to influence unlawfully (A) a customer or supplier of the Company or the Subsidiaries to alter the customer’s or supplier’s level or type of business with the Company or the Subsidiaries or (B) a trade journalist or publication to write or publish favorable information about the Company or the Subsidiaries or any of their respective products or services, and, (vi) neither the Company nor the Subsidiaries nor, to the Company’s knowledge, any employee or agent of the Company or the Subsidiaries has made any payment of funds of the Company or the Subsidiaries or received or retained any funds in violation of any law, rule or regulation (including, without limitation, the Foreign Corrupt Practices Act of 1977), which payment, receipt or retention of funds is of a character required to be disclosed in the Registration Statement or the Prospectus. 
pp.    Status Under the Securities Act. The Company was not and is not an ineligible issuer as defined in Rule 405 under the Securities Act at the times specified in Rules 164 and 433 under the Securities Act in connection with the offering of the Placement Shares.
qq.    No Misstatement or Omission in an Issuer Free Writing Prospectus. Each Issuer Free Writing Prospectus, as of its issue date and as of each Applicable Time (as defined in Section 25 below), did not, does not and will not, through the completion of the Placement or Placements for which such Issuer Free Writing Prospectus is issued, when taken together with the Registration Statement and the Prospectus, contain any misstatement of a material fact or omit to state a material fact necessary to prevent the statements made therein from being misleading. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by FBR specifically for use therein.
rr.    No Conflicts. Neither the execution of this Agreement, nor the issuance, offering or sale of the Placement Shares, nor the consummation of any of the transactions contemplated herein and therein, nor the compliance by the Company with the terms and provisions hereof and thereof will conflict with, or will result in a breach of, any of the terms and provisions of, or has constituted or will constitute a default under, or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any contract or other agreement to which the Company may be bound or to which any of the property or assets of the Company is subject, except (i) such conflicts, breaches or defaults as may have been waived and (ii) such conflicts, breaches and defaults that would not have a Material Adverse Effect; nor will such action result (x) in any violation of the provisions of the organizational or governing documents of the Company, or (y) in any material violation of the provisions of any statute or any order, rule or regulation applicable to the Company or of any court or of any federal, state or other regulatory authority or other government body having 

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jurisdiction over the Company, except where such violation would not have a Material Adverse Effect.
ss.    Compliance with Applicable Laws.  The Company and the Subsidiaries: (A) are and at all times have been in material compliance with all statutes, rules and regulations applicable to the ownership, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product under development, manufactured or distributed by the Company or the Subsidiaries (“Applicable Laws”), except for such non-compliance as would not, individually or in the aggregate, have a Material Adverse Effect, (B) have not received any Form 483 from the FDA, notice of adverse finding, warning letter, or other written correspondence or notice from the FDA, the European Medicines Agency (the “EMA”), or any other federal, state, local or foreign governmental or regulatory authority alleging or asserting material noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”), which would, individually or in the aggregate, result in a Material Adverse Effect; (C) possess all material Authorizations and such Authorizations are valid and in full force and effect and neither the Company nor the Subsidiaries is in material violation of any term of any such Authorizations; (D) have not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from the FDA, the EMA, or any other federal, state, local or foreign governmental or regulatory authority or third party alleging that any Company product, operation or activity is in material violation of any Applicable Laws or Authorizations and has no knowledge that the FDA, the EMA, or any other federal, state, local or foreign governmental or regulatory authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding against the Company, except as would not, individually or in the aggregate, have a Material Adverse Effect; (E) have not received notice that the FDA, EMA, or any other federal, state, local or foreign governmental or regulatory authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any material Authorizations and has no knowledge that the FDA, EMA, or any other federal, state, local or foreign governmental or regulatory authority is considering such action, except as would not, individually or in the aggregate, have a Material Adverse Effect; and (F) have filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations except where the failure to file such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments would not result in a Material Adverse Effect, and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were materially complete and correct on the date filed (or were corrected or supplemented by a subsequent submission).  
tt.    Clinical Studies. To the knowledge of the Company, all animal and other preclinical studies and clinical trials conducted by the Company or on behalf of the Company were, and, if still pending are being conducted in all material respects in compliance with all Applicable Laws and in accordance with experimental protocols, procedures and controls generally used by qualified experts in the preclinical study and clinical trials of new drugs and biologics as applied to comparable products to those being developed by the Company, except in each case where failure 

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to comply would not have a Material Adverse Effect; the descriptions of the results of such preclinical studies and clinical trials contained in the Registration Statement and the Prospectus are accurate in all material respects, and, except as set forth in the Registration Statement and the Prospectus, the Company has no knowledge of any other clinical trials or preclinical studies, the results of which reasonably call into question the clinical trial or preclinical study results described or referred to in the Registration Statement and the Prospectus when viewed in the context in which such results are described; and the Company has not received any written notices or correspondence from the FDA, the EMA, or any other domestic or foreign governmental agency requiring the termination or suspension of any preclinical studies or clinical trials conducted by or on behalf of the Company that are described in the Registration Statement and the Prospectus or the results of which are referred to in the Registration Statement and the Prospectus.
uu.    Compliance Program. The Company has initiated a compliance program applicable to the Company, to assist the Company and the directors, officers and employees of the Company in complying with applicable regulatory guidelines (including, without limitation, those administered by the FDA, the EMA, and any other foreign, federal, state or local governmental or regulatory authority performing functions similar to those performed by the FDA or EMA).
vv.    OFAC.
(i)    Neither the Company nor any Subsidiary (collectively, the “Entity”) nor, to the Company’s knowledge, any director, officer, employee, agent, affiliate or representative of the Entity, is a government, individual, or entity (in this paragraph (ss), “Person”) that is, or is owned or controlled by a Person that is:
(a)    currently the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor
(b)    located, organized or resident in a country or territory that is the subject of Sanctions.
(ii)    The Entity will not, directly or indirectly, knowingly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
(a)    to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or
(b)    in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

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(iii)    The Entity represents and covenants that, except as detailed in the Prospectus, for the past 5 years, it has not knowingly engaged in and is not now knowingly engaged in any dealing or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
ww.    Stock Transfer Taxes. On each Settlement Date, all material stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Placement Shares to be sold hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with by the Company in all material respects.
Any certificate signed by an officer of the Company and delivered to a FBR or to counsel for FBR pursuant to or in connection with this Agreement shall be deemed to be a representation and warranty by the Company, as applicable, to FBR as to the matters set forth therein.
7.Covenants of the Company.  The Company covenants and agrees with FBR that:  
a.Registration Statement Amendments. After the date of this Agreement and during any period in which a prospectus relating to any Placement Shares is required to be delivered by FBR under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act) (the “Prospectus Delivery Period”) (i) the Company will notify FBR promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference or amendments not related to any Placement, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus related to the Placement or for additional information related to the Placement, (ii) the Company will prepare and file with the Commission, promptly upon FBR’s request, any amendments or supplements to the Registration Statement or Prospectus that, in FBR’s  reasonable opinion, may be necessary or advisable in connection with the distribution of the Placement Shares by FBR (provided, however, that the failure of FBR to make such request shall not relieve the Company of any obligation or liability hereunder, or affect FBR’s right to rely on the representations and warranties made by the Company in this Agreement and provided, further, that the only remedy FBR shall have with respect to the failure to make such filing shall be to cease making sales under this Agreement until such amendment or supplement is filed); (iii) the Company will not file any amendment or supplement to the Registration Statement or Prospectus relating to the Placement Shares or a security convertible into the Placement Shares (other than an Incorporated Document) unless a copy thereof has been submitted to FBR within a reasonable period of time before the filing and FBR has not reasonably objected thereto (provided, however, that (A) the failure of FBR to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect FBR’s right to rely on the representations and warranties made by the Company in this Agreement and (B) the Company has no obligation to provide FBR any advance copy of such filing or to provide FBR an opportunity to object to such filing if the filing does not name FBR or does not relate to the transaction herein provided; and provided, further, that the only remedy FBR shall have with respect to the failure by 

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the Company to obtain such consent shall be to cease making sales under this Agreement) and the Company will furnish to FBR at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available via EDGAR; and (iv) the Company will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any document to be incorporated therein by reference, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed (the determination to file or not file any amendment or supplement with the Commission under this Section 7(a), based on the Company’s reasonable opinion or reasonable objections, shall be made exclusively by the Company).  
b.Notice of Commission Stop Orders. The Company will advise FBR, promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. The Company will advise FBR promptly after it receives any request by the Commission for any amendments to the Registration Statement or any amendment or supplements to the Prospectus or any Issuer Free Writing Prospectus or for additional information related to the offering of the Placement Shares or for additional information related to the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus. 
c.Delivery of Prospectus; Subsequent Changes. During the Prospectus Delivery Period, the Company will comply with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If the Company has omitted any information from the Registration Statement pursuant to Rule 430A under the Securities Act, it will use its commercially reasonable efforts to comply with the provisions of and make all requisite filings with the Commission pursuant to said Rule 430A and to notify FBR promptly of all such filings. If during the Prospectus Delivery Period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such Prospectus Delivery Period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify FBR to suspend the offering of Placement Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance; provided, however, that the Company may delay the filing of any amendment or supplement, if in the judgment of the Company, it is in the best interest of the Company.
d.Listing of Placement Shares. During the Prospectus Delivery Period, the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed 

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on the Exchange and to qualify the Placement Shares for sale under the securities laws of such jurisdictions in the United States as FBR reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign corporation or dealer in securities, file a general consent to service of process, or subject itself to taxation in any jurisdiction if it is not otherwise so subject.
e.Delivery of Registration Statement and Prospectus.  The Company will furnish to FBR and their counsel (at the reasonable expense of the Company) copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during the Prospectus Delivery Period (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as FBR may from time to time reasonably request and, at FBR’s request, will also furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to FBR to the extent such document is available on EDGAR.
f.Earnings Statement.  The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a) and Rule 158 of the Securities Act.  
g.Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”
h.Notice of Other Sales. Without the prior written consent of FBR, 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 Stock (other than the Placement Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire, Common Stock during the period beginning on the date on which any Placement Notice is delivered to FBR hereunder and ending on the third (3rd) Trading Day immediately following the final Settlement Date with respect to Placement Shares sold pursuant to such Placement Notice (or, if the Placement Notice has been terminated or suspended prior to the sale of all Placement Shares covered by a Placement Notice, the date of such suspension or termination); and will not directly or indirectly in any other “at-the-market” or continuous equity transaction offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any Common Stock (other than the Placement Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire, Common Stock prior to the termination of this Agreement; provided, however, that such restrictions will not apply in connection with the Company’s issuance or sale of (i) Common Stock, options to purchase Common Stock or Common Stock issuable upon the exercise of options, pursuant to any employee or director stock option or benefits plan, stock ownership plan or dividend reinvestment plan (but not Common Stock subject to a waiver to exceed plan limits in its dividend 

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reinvestment plan) of the Company whether now in effect or hereafter implemented; (ii) Common Stock issuable upon conversion of securities or the exercise of warrants, options or other rights in effect or outstanding, and disclosed in filings by the Company available on EDGAR or otherwise in writing to FBR, (iii) Common Stock, or securities convertible into or exercisable for Common Stock, offered and sold in a privately negotiated transaction to vendors, customers, strategic partners or potential strategic partners or other investors conducted in a manner so as not to be integrated with the offering of Common Stock hereby and (iv) Common Stock in connection with any acquisition, merger, strategic investment or other similar transaction (including any joint venture, strategic alliance or partnership).
i.Change of Circumstances. The Company will, at any time during the pendency of a Placement Notice advise FBR promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document required to be provided to FBR pursuant to this Agreement.
j.Due Diligence Cooperation. During the term of this Agreement, the Company will cooperate with any reasonable due diligence review conducted by FBR or their representatives in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as FBR may reasonably request.
k.Required Filings Relating to Placement of Placement Shares. The Company agrees that on such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act (each and every date a filing under Rule 424(b) is made, a “Filing Date”), which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares sold through FBR (provided that the Company may satisfy its obligations under this Section 7(k)(i) by effecting a filing in accordance with the Exchange Act with respect to such information), the Net Proceeds to the Company and the compensation payable by the Company to FBR with respect to such Placement Shares, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market.
l.Representation Dates; Certificate. Each time during the term of this Agreement that the Company:
(i)amends or supplements (other than a prospectus supplement relating solely to an offering of securities other than the Placement Shares) the Registration Statement or the Prospectus relating to the Placement Shares by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of documents by reference into the Registration Statement or the Prospectus relating to the Placement Shares;

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(ii)files an annual report on Form 10-K under the Exchange Act (including any Form 10-K/A containing amended audited financial information or a material amendment to the previously filed Form 10-K);
(iii)files its quarterly reports on Form 10-Q under the Exchange Act; or
(iv)files a current report on Form 8-K containing amended financial information (other than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) under the Exchange Act;
(Each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date.”)
the Company shall furnish to FBR (but in the case of clause (iv) above only if FBR reasonably determines that the information contained in such Form 8-K is material) with a certificate, in the form attached hereto as Exhibit 7(1). The requirement to provide a certificate under this Section 7(1) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, (i) upon the delivery of the first Placement Notice hereunder and (ii) if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide FBR with a certificate under this Section 7(1), then before FBR sells any Placement Shares, the Company shall provide FBR with a certificate, in the form attached hereto as Exhibit 7(1), dated the date of the Placement Notice.
m.Legal Opinion. On or prior to the date of the first Placement Notice given hereunder the Company shall cause to be furnished to FBR written opinions and a negative assurance letter of TroyGould PC (“Company Counsel”), or other counsel reasonably satisfactory to FBR, each in form and substance reasonably satisfactory to FBR. Thereafter, within five (5) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(l) for which no waiver is applicable, and not more than once per calendar quarter, the Company shall cause to be furnished to FBR a negative assurance letter of Company Counsel in form and substance reasonably satisfactory to FBR; provided that, in lieu of such negative assurance for subsequent periodic filings under the Exchange Act, counsel may furnish FBR with a letter (a “Reliance Letter”) to the effect that FBR may rely on the negative assurance letter previously delivered under this Section 7(m) to the same extent as if it were dated the date of such letter (except that statements in such prior letter shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented as of the date of the Reliance Letter). 
n.Comfort Letter. On or prior to the date of the first Placement Notice given hereunder and within five (5) Trading Days after each subsequent Representation Date, other than 

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pursuant to Section 7(l)(iii), the Company shall cause its independent accountants to furnish FBR letters (the “Comfort Letters”), dated the date the Comfort Letter is delivered, which shall meet the requirements set forth in this Section 7(n). The Comfort Letter from the Company’s independent accountants shall be in a form and substance reasonably satisfactory to FBR, (i) confirming that they are an independent public accounting firm within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.
o.Market Activities. The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or would constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of Common Stock or (ii) sell, bid for, or purchase Common Stock in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Placement Shares other than FBR.
p.Investment Company Act. The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor the Subsidiaries will be or become, at any time prior to the termination of this Agreement, an “investment company,” as such term is defined in the Investment Company Act.
q.No Offer to Sell. Other than an Issuer Free Writing Prospectus approved in advance by the Company and FBR in their capacity as agents hereunder pursuant to Section 23, neither FBR nor the Company (including its agents and representatives, other than FBR in their capacity as such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405), required to be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder. 
r.Sarbanes-Oxley Act. The Company will maintain and keep accurate books and records reflecting its assets and maintain internal accounting controls in a manner designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and including those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Company’s consolidated financial statements in accordance with GAAP, (iii) that receipts and expenditures of the Company are being made only in accordance with management’s and the Company’s directors’ authorization, and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. The Company will maintain disclosure controls and procedures that comply with the requirements of the Exchange Act.

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8.Representations and Covenants of FBR. FBR represents and warrants that it is a duly registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the Placement Shares will be offered and sold, except such states in which FBR is exempt from registration or such registration is not otherwise required. FBR shall continue, for the term of this Agreement, to be duly registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the Placement Shares will be offered and sold, except such states in which it is exempt from registration or such registration is not otherwise required, during the term of this Agreement.  FBR shall comply with all applicable law and regulations, including but not limited to Regulation M, in connection with the transactions contemplated by this Agreement, including the issuance and sale through FBR of the Placement Shares.
9.Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, filing, including any fees required by the Commission, and printing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment and supplement thereto and each Free Writing Prospectus, in such number as FBR shall deem reasonably necessary, (ii) the printing and delivery to FBR of this Agreement and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Placement Shares, (iii) the preparation, issuance and delivery of the certificates, if any, for the Placement Shares to FBR, including any stock or other transfer taxes and any capital duties, stamp duties or other duties or taxes payable upon the sale, issuance or delivery of the Placement Shares to FBR, (iv) the fees and disbursements of the counsel, accountants and other advisors to the Company, (v) the reasonable and documented out-of-pocket fees and disbursements of counsel to FBR up to $25,000; (vi) the fees and expenses of the transfer agent and registrar for the Common Stock, (vii) the filing fees incident to any review by FINRA of the terms of the sale of the Placement Shares, and (viii) the fees and expenses incurred in connection with the listing of the Placement Shares on the Exchange.  
10.Conditions to FBR’s Obligations. The obligations of FBR hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein (other than those representations and warranties made as of a specified date or time), to the due performance in all material respects by the Company of its obligations hereunder, to the completion by FBR of a due diligence review satisfactory to it in its reasonable judgment, and to the continuing reasonable satisfaction (or waiver by FBR in their sole discretion) of the following additional conditions:
a.Registration Statement Effective. The Registration Statement shall have become effective and shall be available for the sale of all Placement Shares contemplated to be issued by any Placement Notice.
b.No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the Company of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission 

25

or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or receipt by the Company of notification of the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or receipt by the Company of notification of the initiation of, or a threat to initiate, any proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material Incorporated Document untrue in any material respect or that requires the making of any changes in the Registration Statement, the Prospectus or any material Incorporated Document so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus or any material Incorporated Document, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
c.No Misstatement or Material Omission. FBR shall not have advised the Company that the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in the FBR’s reasonable opinion is material, or omits to state a fact that in the FBR’s reasonable opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.
d.Material Changes. Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been any Material Adverse Effect, or any development that would cause a Material Adverse Effect, or a downgrading in or withdrawal of the rating assigned to any of the Company’s securities (other than asset backed securities) by any “nationally recognized statistical rating organization,” as such term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act (a “Rating Organization”), or a public announcement by any Rating Organization that it has under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such action by a Rating Organization described above, in the reasonable judgment of FBR (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and in the manner contemplated in the Prospectus.
e.Legal Opinion. FBR shall have received the opinion and negative assurance letter of Company Counsel required to be delivered pursuant to Section 7(m) on or before the date on which such delivery of such opinion and negative assurance letter are required pursuant to Section 7(m).
f.Comfort Letter. FBR shall have received the Comfort Letter required to be delivered pursuant Section 7(n) on or before the date on which such delivery of such letter is required pursuant to Section 7(n).
g.Representation Certificate. FBR shall have received the certificate required to be delivered pursuant to Section 7(1) on or before the date on which delivery of such certificate 

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is required pursuant to Section 7(1).
h.No Suspension. Trading in the Common Stock shall not have been suspended on the Exchange and the Common Stock shall not have been delisted from the Exchange.
i.Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 7(1), the Company shall have furnished to FBR such appropriate further information, certificates and documents as FBR may reasonably request and which are usually and customarily furnished by an issuer of securities in connection with a securities offering of the type contemplated hereby. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof.  
j.Securities Act Filings Made. All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.
k.Approval for Listing. The Placement Shares shall either have been approved for listing on the Exchange, subject only to notice of issuance, or the Company shall have filed an application for listing of the Placement Shares on the Exchange at, or prior to, the issuance of any Placement Notice.
l.No Termination Event. There shall not have occurred any event that would permit FBR to terminate this Agreement pursuant to Section 13(a).
11.Indemnification and Contribution.
(a)    Company Indemnification. The Company agrees to indemnify and hold harmless FBR, their partners, members, directors, officers, employees and agents and each person, if any, who controls FBR within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:
(i)against any and all loss, liability, claim, damage and expense whatsoever, as incurred, joint or several, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact included in any related Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii)against any and all loss, liability, claim, damage and expense whatsoever, as incurred, joint or several, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or 

27

omission, or any such alleged untrue statement or omission; provided that (subject to Section 11(d) below) any such settlement is effected with the written consent of the Company, which consent shall not unreasonably be delayed or withheld; and
(iii)against any and all expense whatsoever, as incurred (including the reasonable and documented out-of-pocket fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above,
provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made solely in reliance upon and in conformity with written information furnished to the Company by FBR expressly for use in the Registration Statement (or any amendment thereto), or in any related Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto).
(b)    Indemnification by FBR. FBR agrees to indemnify and hold harmless the Company and its directors and each officer of the Company who signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under common control with the Company against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 11(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or in any related Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with information relating to FBR and furnished to the Company in writing by FBR expressly for use therein.
(c)    Procedure. Any party that proposes to assert the right to be indemnified under this Section 11 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 11, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 11 and (ii) any liability that it may have to any indemnified party under the foregoing provisions of this Section 11 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other 

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expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict of interest exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable and documented out-of-pocket fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable and documented out-of-pocket fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such reasonable and documented out-of-pocket fees, disbursements and other charges will be reimbursed by the indemnifying party promptly after the indemnifying party receives a written invoice relating to fees, disbursements and other charges in reasonable detail. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 11 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent (1) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (2) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
(d)    Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 11 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or FBR, the Company and FBR will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than FBR, such as persons who control the Company within the meaning of the Securities Act or the Exchange Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and FBR may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and FBR on the other hand. The relative benefits received by the Company on the one hand and FBR on the other hand shall be deemed to be in the same proportion as the total Net Proceeds from the sale of the Placement Shares (before deducting expenses) received by the Company bear to the total compensation received by FBR (before deducting expenses) from the sale of Placement Shares 

29

on behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and such FBR, on the other hand, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering.  Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or FBR, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and FBR agree that it would not be just and equitable if contributions pursuant to this Section 11(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 11(d) shall be deemed to include, for the purpose of this Section 11(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 11(c) hereof. Notwithstanding the foregoing provisions of this Section 11(d), FBR shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11(d), any person who controls a party to this Agreement within the meaning of the Securities Act or the Exchange Act, and any officers, directors, partners, employees or agents of FBR, will have the same rights to contribution as that party, and each officer who signed the Registration Statement and director of the Company will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 11(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 11(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 11(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 11(c) hereof.
12.Representations and Agreements to Survive Delivery.  The indemnity and contribution agreements contained in Section 11 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any investigation made by or on behalf of FBR, any controlling persons, or the Company (or any of their respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.

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13.Termination.
a.FBR may terminate this Agreement, by notice to the Company, as hereinafter specified at any time (1) if there has been, since the time of execution of this Agreement or since the date as of which information is given in the Prospectus, any Material Adverse Effect, or any development that would have a Material Adverse Effect that, in the sole judgment of FBR, is material and adverse and makes it impractical or inadvisable to market the Placement Shares or to enforce contracts for the sale of the Placement Shares, (2) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of FBR, impracticable or inadvisable to market the Placement Shares or to enforce contracts for the sale of the Placement Shares, (3) if trading in the Common Stock has been suspended or limited by the Commission or the Exchange, or if trading generally on the Exchange has been suspended or limited, or minimum prices for trading have been fixed on the Exchange, (4) if any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market shall have occurred and be continuing, (5) if a major disruption of securities settlements or clearance services in the United States shall have occurred and be continuing, or (6) if a banking moratorium has been declared by either U.S. Federal or New York authorities. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination. If FBR elects to terminate this Agreement as provided in this Section 13(a), FBR shall provide the required notice as specified in Section 14 (Notices).
b.The Company shall have the right, by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.
c.FBR shall have the right, by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.
d.Unless earlier terminated pursuant to this Section 13, this Agreement shall automatically terminate upon the issuance and sale of all of the Placement Shares through FBR on 

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the terms and subject to the conditions set forth herein except that the provisions of Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) hereof shall remain in full force and effect notwithstanding such termination.
e.This Agreement shall remain in full force and effect unless terminated pursuant to Sections 13(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 9 (Payment of Expenses), Section 11 (Indemnification and Contribution), Section 12 (Representations and Agreements to Survive Delivery), Section 18 (Governing Law and Time; Waiver of Jury Trial) and Section 19 (Consent to Jurisdiction) shall remain in full force and effect. Upon termination of this Agreement, the Company shall not have any liability to FBR for any discount, commission or other compensation with respect to any Placement Shares not otherwise sold by FBR under this Agreement.
f.Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date of receipt of such notice by FBR or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.
14.Notices. All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified, and if sent to FBR, shall be delivered to:

FBR Capital Markets & Co. 
1300 North 17th Street
Suite 1400
Arlington, Virginia 22209 
Attention:    Legal Department
Telephone:       (703) 312-9500

with a copy to:

Duane Morris LLP
1037 Raymond Boulevard
Eighteenth Floor
Newark, NJ  07102
Attention:    Dean M. Colucci
Telephone:    (973) 424-2020
Email:    dmcolucci@duanemorris.com

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and if to the Company, shall be delivered to:

President and Chief Executive Officer
Kindred Biosciences, Inc.
1555 Bayshore Highway, Suite 200
Burlingame, California 94010
Attention:  Richard Chin, M.D.    
Telephone:  (650) 701-7901
Email: richard.chin@kindredbio.com
with a copy to:
TroyGould PC 
1801 Century Park East
16th Floor
Los Angeles, California 90067
Attention:  Marc Brown
Telephone: (310) 789-1269
Email:  mbrown@troygould.com
Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally, by email, or by verifiable facsimile transmission on or before 4:30 p.m., New York City time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New York are open for business.
An electronic communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section 14 if sent to the electronic mail address specified by the receiving party under separate cover. Electronic Notice shall be deemed received at the time the party sending Electronic Notice receives confirmation of receipt by the receiving party. Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper, in a nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice.
15.Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and FBR and their respective successors and the affiliates, controlling persons, 

33

officers and directors referred to in Section 11 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party.
16.Adjustments for Stock Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any share consolidation, stock split, stock dividend, corporate domestication or similar event effected with respect to the Placement Shares.
17.Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and FBR. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.
18.GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. THE COMPANY AND FBR EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19.CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. 

34

EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF (CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
20.Use of Information. FBR may not use any information gained in connection with this Agreement and the transactions contemplated by this Agreement, including due diligence, to advise any party with respect to transactions not expressly approved by the Company.
21.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile transmission or email of a .pdf attachment.
22.Effect of Headings.  The section and Exhibit headings herein are for convenience only and shall not affect the construction hereof.
23.Permitted Free Writing Prospectuses.
The Company represents, warrants and agrees that, unless it obtains the prior consent of FBR, and FBR represents, warrants and agrees that, unless it obtains the prior consent of the Company, it has not made and will not make any offer relating to the Placement Shares that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by FBR or by the Company, as the case may be, is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents and warrants that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping. For the purposes of clarity, the parties hereto agree that all free writing prospectuses, if any, listed in Exhibit 23 hereto are Permitted Free Writing Prospectuses.
24.Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
a.FBR is acting solely as agent in connection with the public offering of the Placement Shares and in connection with each transaction contemplated by this Agreement and the process leading to such transactions, and no fiduciary or advisory relationship between the Company or any of its respective affiliates, stockholders (or other equity holders), creditors or employees or any other party, on the one hand, and FBR, on the other hand, has been or will be created in respect of any of the transactions contemplated by this Agreement, irrespective of whether or not FBR has advised or is advising the Company on other matters, and FBR does not have any 

35

obligation to the Company with respect to the transactions contemplated by this Agreement except the obligations expressly set forth in this Agreement;
b.It is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement;
c.FBR has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated by this Agreement and it has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate;
d.It is aware that FBR and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and FBR has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship or otherwise; and
e.It waives, to the fullest extent permitted by law, any claims it may have against FBR for breach of fiduciary duty or alleged breach of fiduciary duty in connection with the sale of Placement Shares under this Agreement and agrees that FBR shall not have any liability (whether direct or indirect, in contract, tort or otherwise) to it in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on its behalf or in right of it or the Company, employees or creditors of Company, other than in respect of FBR’s obligations under this Agreement and to keep information provided by the Company to FBR and its counsel confidential to the extent not otherwise publicly-available.
25.Definitions.  
As used in this Agreement, the following terms have the respective meanings set forth below:
“Applicable Time” means (i) each Representation Date and (ii) the time of each sale of any Placement Shares pursuant to this Agreement.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Placement Shares that (1) is required to be filed with the Commission by the Company, (2) is a “road show” that is a “written communication” within the meaning of Rule 433(d)(8)(i) whether or not required to be filed with the Commission, or (3) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Placement Shares or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.
“Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,” “Rule 424(b),” “Rule 430B,” and “Rule 433” refer to such rules under the Securities Act.
All references in this Agreement to financial statements and schedules and other information that is “contained,” “included” or “stated” in the Registration Statement or the Prospectus (and all 

36

other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that is incorporated by reference in the Registration Statement or the Prospectus, as the case may be.
All references in this Agreement to the Registration Statement, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to EDGAR; all references in this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free Writing Prospectuses that, pursuant to Rule 433, are not required to be filed with the Commission) shall be deemed to include the copy thereof filed with the Commission pursuant to EDGAR; and all references in this Agreement to “supplements” to the Prospectus shall include, without limitation, any supplements, “wrappers” or similar materials prepared in connection with any offering, sale or private placement of any Placement Shares by FBR outside of the United States.
[Remainder of the page intentionally left blank]

37

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

	
		
	KINDRED BIOSCIENCES, INC.

	By:
	/s/ Richard Chin

	 
	Name: Richard Chin, M.D.

	 
	Title: Chief Executive Officer

ACCEPTED as of the date first-above written:

	
		
	FBR CAPITAL MARKETS & CO.

	By:
	/s/ Patrice McNicoll

	 
	Name: Patrice McNicoll

	 
	Title: Co-Head of Capital Markets

38

SCHEDULE 1
________________________

FORM OF PLACEMENT NOTICE
________________________

From:        Kindred Biosciences, Inc.
To:        [Ÿ]
Attention:     [Ÿ]
Subject:    At Market Issuance--Placement Notice

Gentlemen:
Pursuant to the terms and subject to the conditions contained in the At Market Issuance Sales Agreement between Kindred Biosciences Inc., a Delaware corporation (the “Company”), and FBR Capital Markets & Co. (“FBR”), dated December 19, 2016, the Company hereby requests that FBR sell up to [_______] shares of the Company’s Common Stock,     $0.0001 par value per share, at a minimum market price of $[     ] per share, during the time period beginning [month, day, time] and ending [month, day, time].

SCHEDULE 2

________________________

Compensation
________________________

The Company shall pay                                                                    to FBR in cash, upon each sale of Placement Shares pursuant to this Agreement, an amount equal to 3% of the gross proceeds from each sale of Placement Shares.

SCHEDULE 3

________________________

Notice Parties
________________________

The Company

Richard Chin        richard.chin@kindredbio.com

Wendy Wee        wendy.wee@kindredbio.com

FBR

Matthew Feinberg        mfeinberg@fbr.com 

Margery Fischbein        mfischbein@fbr.com 

Ryan Loforte            rloforte@fbr.com  

Patrice McNicoll        pmcnicoll@fbr.com  

Keith Pompliano        kpompliano@fbr.com  

With a copy to atmdesk@fbr.com   

SCHEDULE 6(g)

________________________

Subsidiaries
________________________

KindredBio Equine, Inc.

EXHIBIT 7(1)
Form of Representation Date Certificate 
___________, 20___

This Representation Date Certificate (this “Certificate”) is executed and delivered in connection with Section 7(1) of the At Market Issuance Sales Agreement (the “Agreement”), dated December 19, 2016, and entered into between Kindred Biosciences Inc.(the “Company”) and FBR Capital Markets & Co. All capitalized terms used but not defined herein shall have the meanings given to such terms in the Agreement.
The Company hereby certifies as follows:
1.The representations and warranties of the Company in Section 6 of the Agreement (A) to the extent such representations and warranties are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date.
2.The Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date hereof.
The undersigned has executed this Officer’s Certificate as of the date first written above.

	
		
	KINDRED BIOSCIENCES, INC.

	By:
	 

	 
	Name: 

	 
	Title: 

EXHIBIT 23

Permitted Issuer Free Writing Prospectuses

None.Exhibit 10.1

 

 

 

AGREEMENT

 

BY AND AMONG

 

NEW YORK REIT, INC.,

 

NEW YORK RECOVERY OPERATING PARTNERSHIP,
L.P.,

 

AND

 

WINTHROP REIT ADVISORS LLC

 

Dated as of December 19, 2016

     

     

    

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	1.	DEFINITIONS	2
	 	 	 
	2.	APPOINTMENT	6
	 	 	 
	3.	DUTIES OF SERVICE PROVIDER	7
	 	 	 
	4.	AUTHORITY OF SERVICE PROVIDER	11
	 	 	 
	5.	FIDUCIARY RELATIONSHIP	11
	 	 	 
	6.	NO PARTNERSHIP OR JOINT VENTURE	11
	 	 	 
	7.	BANK ACCOUNTS	11
	 	 	 
	8.	RECORDS; ACCESS	12
	 	 	 
	9.	LIMITATIONS ON ACTIVITIES	12
	 	 	 
	10.	FEES	12
	 	 	 
	11.	EXPENSES	14
	 	 	 
	12.	OTHER SERVICES	16
	 	 	 
	13.	TRANSITION SERVICES	16
	 	 	 
	14.	OTHER ACTIVITIES OF SERVICE PROVIDER	16
	 	 	 
	15.	TERM OF AGREEMENT	17
	 	 	 
	16.	TERMINATION BY THE PARTIES	17
	 	 	 
	17.	ASSIGNMENT TO AN AFFILIATE	18
	 	 	 
	18.	PAYMENTS TO AND DUTIES OF SERVICE PROVIDER UPON TERMINATION	18
	 	 	 
	19.	INCORPORATION OF THE ARTICLES OF INCORPORATION	18
	 	 	 
	20.	INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP	19
	 	 	 
	21.	INDEMNIFICATION BY SERVICE PROVIDER	20
	 	 	 
	22.	NOTICES	20

 

    i 

     

    

 

	23.	MODIFICATION	22
	 	 	 
	24.	SEVERABILITY	22
	 	 	 
	25.	GOVERNING LAW	22
	 	 	 
	26.	ENTIRE AGREEMENT	22
	 	 	 
	27.	NO WAIVER	22
	 	 	 
	28.	PRONOUNS AND PLURALS	22
	 	 	 
	29.	HEADINGS	22
	 	 	 
	30.	EXECUTION IN COUNTERPARTS	22

 

    ii 

     

    

 

AGREEMENT

 

THIS AGREEMENT, dated as of December 19,
2016 (this “Agreement”), by and among New York REIT, Inc., a Maryland corporation (together with its subsidiaries,
the “Company”), New York Recovery Operating Partnership, L.P., a Delaware limited partnership (the “Operating
Partnership”), and Winthrop REIT Advisors LLC, a Delaware limited liability company (“Service Provider”);

 

WITNESSETH:

 

WHEREAS, the Company, the Operating Partnership,
and New York Recovery Advisors, LLC, a Delaware limited liability company (“ARG”), are party to that
certain Seventh Amended and Restated Advisory Agreement, dated as of June 25, 2015 (as amended, the “ARG Agreement”),
pursuant to which ARG serves as advisor to the Company and the Operating Partnership and performs the services set forth therein;

 

WHEREAS, the simultaneously with the execution
hereof, the ARG Agreement is being amended (the ARG Agreement as so amended the “Prior Agreement”) to
provide, among other things, (i) that, upon three (3) business days’ written notice from the Independent Directors
to ARG following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 with the Securities
and Exchange Commission, ARG shall no longer serve as the advisor to the Company and the Operating Partnership and the sole service
to be provided by ARG shall be to cooperate with the Company and Board in making an orderly transition of the advisory function
in accordance with the Prior Agreement, (ii) that the scope of services of ARG shall exclude those services for which Service
Provider is being retained hereunder including, without limitation, the POL Matters and (iii) an acknowledgement by ARG
that ARG shall work in good faith and cooperate with the reasonable requests of the Board, the Company and the Operating Partnership
to enable an orderly transition of advisory services from ARG to Service Provider;

 

WHEREAS, the Company and the Operating Partnership,
acting on the determination of the Independent Directors, wish to appoint Service Provider to serve as (i) their exclusive
advisor with respect to the POL Matters and consultant on other matters during the period from January 3, 2017 through the Transition
Date (such period, the “Interim Period”) and (ii) their advisor from and after the Transition
Date, in each case, to perform the services set forth herein on the terms and subject to the conditions set forth herein subject
to the supervision of the Board;

 

WHEREAS, Service Provider wishes to accept
such appointment subject to the terms and conditions set forth herein; and

 

WHEREAS, at a duly convened meeting of Stockholders
to be held on or about January __, 2017, the Stockholders will vote on whether to approve a plan of liquidation and dissolution
of the Company and the Operating Partnership (“Proposed Plan of Liquidation”) previously submitted to
the Stockholders by the Board for approval and adoption;

 

NOW, THEREFORE, in consideration of the
foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:

 

     

     

    

 

1.    
      DEFINITIONS. As used in this Agreement, the following terms have the
definitions set forth below; provided, however, that in no event is this Agreement intended to modify any
substantive provision of the Articles of Incorporation. Except as provided in Section 10(e), in the event of a
conflict between the terms of this Agreement and the terms of the Articles of Incorporation, the terms of the Articles of
Incorporation shall control.

 

“Acquisition Expenses”
means any and all reasonable and documented out-of-pocket expenses incurred by the Company, the Operating Partnership, Service
Provider, or any of their respective Affiliates in connection with the selection, acquisition or development of any Asset, whether
or not acquired, including legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option
payments on property not acquired, accounting fees and expenses, and title insurance premiums.

 

“Affiliate” or
“Affiliated” means with respect to any Person, (i) any other Person directly or indirectly
owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such
Person; (ii) any other Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly
owned, controlled or held, with the power to vote, by such Person; (iii) any other Person directly or indirectly controlling,
controlled by or under common control with such Person; (iv) any executive officer, director, manager, trustee or general
partner of such Person or its Affiliates; and (v) any legal entity for which such Person acts as an executive officer,
director, manager, trustee or general partner. For purposes of this definition, the terms “controls,” “is controlled
by,” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of an entity, whether through ownership or voting rights, by contract or
otherwise.

 

“Agreement” has
the meaning set forth in the preamble to this Agreement, and such term shall include any amendment or supplement hereto from time
to time.

 

“ARG” has the
meaning set forth in the recitals to this Agreement.

 

“ARG Agreement”
has the meaning set forth in the recitals to this Agreement.

 

“Articles of Incorporation”
means the charter of the Company, as the same may be amended from time to time.

 

“Asset” means
any Property, Mortgage or other investment (other than investments in bank accounts, money market funds or other current assets)
owned by the Company, directly or indirectly through one or more of its Affiliates, and any other investment made by the Company,
directly or indirectly through one or more of its Affiliates.

 

“Asset Management Fee”
means the fee payable to Service Provider and its Affiliates pursuant to Section 10(a).

 

“Automatic Renewal Term”
has the meaning set forth in Section 15.

 

“Board” means
the Board of Directors of the Company.

 

     2

     

    

 

“Bylaws” has the
meaning set forth in the Articles of Incorporation.

 

“Cause” means
(i) fraud, criminal conduct, willful misconduct or illegal or negligent breach of fiduciary duty by Service Provider,
or (ii) if any of the following events occurs: (A) Service Provider shall breach any material provision
of this Agreement, and after written Notice of such breach, shall not cure such default within thirty (30) days; (B) Service
Provider shall be adjudged bankrupt or insolvent by a court of competent jurisdiction, or an order shall be made by a court of
competent jurisdiction for the appointment of a receiver, liquidator, or trustee of Service Provider, for all or substantially
all its property by reason of the foregoing, or if a court of competent jurisdiction approves any petition filed against Service
Provider for reorganization, and such adjudication or order shall remain in force or unstayed for a period of thirty (30) days;
or (C) Service Provider shall institute proceedings for voluntary bankruptcy or shall file a petition seeking reorganization
under the federal bankruptcy laws, or for relief under any law for relief of debtors, or shall consent to the appointment of a
receiver for itself or for all or substantially all its property, or shall make a general assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts, generally, as they become due.

 

“Change of Control”
means a change of control of the Company, other than as a result of transactions contemplated by a Plan of Liquidation, of a nature
that would be required to be reported in response to the disclosure requirements of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, whether or not the Company is then subject to such reporting requirements; provided, however,
that, without limitation, a Change of Control shall be deemed to have occurred if any “person” (within the meaning
of Section 13(d) of the Exchange Act, as enacted and in force on the date hereof) is or becomes the “beneficial owner”
(as that term is defined in Rule 13d-3, as enacted and in force on the date hereof, under the Exchange Act) of securities of the
Company representing a majority of the combined voting power of the Company’s securities then outstanding.

 

“Commencement Date”
means January 3, 2017.

 

“Common Stock”
means the shares of the Company’s common stock, par value $0.01 per share.

 

“Company” has
the meaning set forth in the preamble to this Agreement.

 

“Cost of Assets”
means, with respect to all Assets in the aggregate, the purchase price, including Acquisition Expenses, capital expenditures and
other customarily capitalized costs.

 

“Director” means
a director of the Company.

 

“Distributions”
means any distributions of money or other property by the Company to Stockholders, including distributions that may constitute
a return of capital for U.S. federal income tax purposes.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto. Reference to any provision
of the Exchange Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision
thereto, as interpreted by any applicable regulations as in effect from time to time.

 

     3

     

    

 

“Hurdle Amount”
has the meaning set forth in Section 10(b).

 

“Incentive Fee”
means the fee payable to Service Provider and its Affiliates pursuant to Section 10(b).

 

“Indemnitee” has
the meaning set forth in Section 20.

 

“Independent Director”
means a Director who qualifies as “independent” under Rules 303A.01 and 303A.02 of the New York Stock Exchange Listed
Company Manual.

 

“Initial Term”
has the meaning set forth in Section 15.

 

“Interim Period”
has the meaning set forth in the recitals to this Agreement.

 

“Joint Ventures”
means the joint venture or partnership or other similar arrangements (other than between the Company and the Operating Partnership)
in which the Company or the Operating Partnership or any of their subsidiaries is a co-venturer, limited liability company member,
limited partner or general partner, which are established to acquire or hold Assets.

 

“Mortgages” means,
in connection with mortgage financing provided by the Company, all of the notes, deeds of trust, security interests or other evidences
of indebtedness or obligations, which are secured or collateralized by Real Property owned by the borrowers under such notes, deeds
of trust, security interests or other evidences of indebtedness or obligations.

 

“Net Assets” means
the total Assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves,
less total liabilities, calculated at least quarterly by the Company on a basis consistently applied.

 

“Notice” has the
meaning set forth in Section 22.

 

“Operating Partnership”
has the meaning set forth in the preamble to this Agreement.

 

“Operating Partnership Agreement”
means the Third Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated as of November 12, 2012,
among the Company, New York Recovery Special Limited Partnership, LLC and ARG, as the same may be amended from time to time.

 

“Person” has the
meaning set forth in the Articles of Incorporation.

 

“Plan of Liquidation”
means the Proposed Plan of Liquidation or an alternate plan of liquidation and dissolution of the Company approved by the Board
(including a majority of the Independent Directors) and the Stockholders.

 

     4

     

    

 

“POL Matters”
means the implementation and oversight of, and the taking of all actions in connection with, the Plan of Liquidation and all matters
primarily related thereto including, without limitation, (i) all actions relating to the Plan of Liquidation set forth in the Company’s
proxy statement delivered to the Stockholders with respect to the meeting of Stockholders at which the Plan of Liquidation was
approved and (ii) maintaining the Company’s books and records and preparing the Company’s financial statements under
Generally Accepted Accounting Principles liquidation basis accounting for the period beginning with shareholder approval of the
Plan of Liquidation. For the avoidance of doubt, matters relating to either the Company’s interest in Worldwide Plaza or
financing activities shall be the responsibility of, and subject to the direction of, the Board and shall not be deemed POL Matters
(it being understood that ARG shall have responsibility for completing the financing with Credit Suisse).

 

“Prior Agreement”
has the meaning set forth in the recitals to this Agreement.

 

“Property” or
“Properties” means, as the context requires, any, or all, respectively, of the Real Property acquired
by the Company, directly or indirectly through one or more of its Affiliates or through joint venture arrangements or other partnership
or investment interests.

 

“Proposed Plan of Liquidation”
has the meaning set forth in the recitals to this Agreement.

 

“Real Property”
means land, rights in land (including leasehold interests), and any buildings, structures, improvements, furnishings, fixtures
and equipment located on or used in connection with land and rights or interests in land.

 

“REIT” has the
meaning set forth in the Articles of Incorporation.

 

“Sale” or “Sales”
means (i) any transaction or series of transactions whereby: (A) the Company or the Operating Partnership directly
or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes
its ownership of any Property or portion thereof, including the lease of any Property consisting of a building only, and including
any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the
Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells,
grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Operating
Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture in which the Company or
the Operating Partnership is a co-venturer or partner directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any
event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (D) the
Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells,
grants, conveys or relinquishes its interest in any Mortgage or portion thereof, including any payments thereunder or in satisfaction
thereof (other than regularly scheduled interest and principal payments) or any amounts owed pursuant to such Mortgage, and including
any event with respect to any Mortgage which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the
Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells,
grants, transfers, conveys, or relinquishes its ownership of any other Asset not previously described in this definition or any
portion thereof, but (ii) not including any transaction or series of transactions specified in clause (i) (A) through
(E) above in which the proceeds of such transaction or series of transactions are reinvested by the Company in one or more Assets
within one hundred eighty (180) days thereafter.

 

     5

     

    

 

“SEC” means the
United States Securities and Exchange Commission.

 

“Securities” has
the meaning set forth in the Articles of Incorporation.

 

“Securities Act”
means the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of
the Securities Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision
thereto, as interpreted by any applicable regulations as in effect from time to time.

 

“Service Provider”
has the meaning set forth in the preamble to this Agreement.

 

“Services” means
the services described in Section 3(b), Section 3(c) and Section 3(d).

 

“Shares” has the
meaning set forth in the Articles of Incorporation.

 

“Stockholders”
has the meaning set forth in the Articles of Incorporation.

 

“Termination Date”
means the date of termination of this Agreement.

 

“Transition Date”
means the earlier of (i) the third business day after written notice from the Independent Directors to ARG following the
filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 with the Securities and Exchange
Commission and (ii) April 1, 2017.

 

“Treasury Rate”
means the yield to maturity as of the applicable date of United States Treasury securities with a constant maturity of two years
(as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two (2) business days prior to such date (or, if such Statistical Release is no longer published, any publicly available
source of similar market data)).

 

2.       
   APPOINTMENT. The Company and the Operating Partnership hereby appoint Service Provider to
(i) serve during the Interim Period as their exclusive advisor with respect to the POL Matters and provide those
services set forth in Section 3(a) hereof, and (ii) serve as their advisor from and after the Transition Date, to
perform the Services set forth herein in each case on the terms and subject to the conditions set forth in this Agreement and
subject to the supervision of the Board, and Service Provider hereby accepts such appointment.

 

     6

     

    

 

3.   
       DUTIES OF SERVICE PROVIDER.

 

(a)          During
the Interim Period, Service Provider shall use its reasonable best efforts to (i) cooperate with ARG, the Company and the
Operating Partnership with respect to implementing the transition services contemplated by Section 13, (ii) assume
exclusive responsibility for the POL Matters, (iii) provide advice with respect to an investment program consistent with
the investment objectives and policies of the Company, if a Plan of Liquidation has not been approved and adopted, in each case
subject to the supervision of the Board, consistent with the provisions of the Articles of Incorporation, the Bylaws, the Operating
Partnership Agreement and consistent and subject to ARG’s role as advisor to the Company and the Operating Partnership during
such period and (iv) make recommendations to the Board with respect to any leases, or renewals thereof, for space at any
of the properties owned by the Company, which recommendations shall not be binding on the Board. For the avoidance of doubt, prior
to the Transition Date, Service Provider shall not be responsible for (A) maintaining the Company’s accounting, tax,
regulatory and other records with respect to periods prior to January 1, 2017, (B) filing, certifying or assisting
the Company in filing any reports required to be filed by it with the SEC, the Internal Revenue Service and other regulatory agencies
or any applicable stock exchange (provided that the Service Provider shall provide any required subcertifications as to events
occuring solely after January 1, 2017 for which Service Provider provided services hereunder and are required to be disclosed in
any such report) or (C) providing any management representation letters in connection with the filings referenced in
the forgoing clause (B) or any Plan of Liquidation adopted prior to the Transition Date.

 

(b)          Commencing
on the Transition Date, Service Provider shall use its reasonable best efforts to continue to provide the services set forth in
clauses (ii)-(iv) in Section 3(a), subject to the supervision of the Board and, consistent with the provisions of the Articles
of Incorporation, the Bylaws, the Operating Partnership Agreement and the Plan of Liquidation, Service Provider shall as expeditiously
as possible:

 

(i)  execute the Plan
of Liquidation, and sell or otherwise dispose of all of the Company’s assets, as expeditiously as practicable, but in an
orderly, businesslike and good faith manner;

 

(ii)  cause the Company
and the Operating Partnership to pay or provide for the liabilities and expenses of the Company and the Operating Partnership solely
out of the assets of the Company and the Operating Partnership, which may include establishing a reserve fund to provide for payment
of contingent or unknown liabilities;

 

(iii)  subject to approval
of the Board, facilitate the distribution of the excess cash of the Company and the Operating Partnership and the remaining proceeds
of the liquidation to the Stockholders after the payment of or provision for the liabilities and expenses of the Company, the Operating
Partnership and their respective subsidiaries;

 

(iv)  as set forth in
the Plan of Liquidation, or if the Board otherwise determines that it is advisable to do so, transfer and assign the Company’s
remaining assets and liabilities to a liquidating trust; and

 

(v)  wind up the operations
of and dissolve the Company, the Operating Partnership and their respective subsidiaries.

 

(c)          If,
as of the Transition Date, a Plan of Liquidation has not been approved and adopted, then, until a Plan of Liquidation is approved
and adopted, Service Provider shall, commencing on the Transition Date, use its reasonable best efforts to present to the Company
and the Operating Partnership potential investment opportunities and to provide a continuing and suitable investment program consistent
with the investment objectives and policies of the Company as determined and adopted from time to time by the Board.

 

     7

     

    

 

(d)          In
performance of the undertakings set forth in Section 3(b) and Section 3(c), subject to Section 4
and the supervision of the Board and, consistent with the provisions of the Articles of Incorporation, the Bylaws and the Operating
Partnership Agreement and, if applicable, a Plan of Liquidation, Service Provider shall also, from and after the Transition Date:

 

(i)  serve as the Company’s
and the Operating Partnership’s investment and financial advisor;

 

(ii)  provide the daily
management for the Company and the Operating Partnership and perform and supervise the various administrative functions necessary
for the day-to-day management of the operations of the Company and the Operating Partnership;

 

(iii)  investigate, select
and, on behalf of the Company and the Operating Partnership, engage and conduct business with and supervise the performance of
such Persons as Service Provider deems necessary to the proper performance of its obligations hereunder (including consultants,
accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, real
estate management companies, real estate operating companies, securities investment advisors, mortgagors, the registrar and the
transfer agent and any and all agents for any of the foregoing), including Affiliates of Service Provider and Persons acting in
any other capacity deemed by Service Provider necessary or desirable for the performance of any of the foregoing services (including
entering into contracts in the name of the Company and the Operating Partnership with any of the foregoing), in each case on competitive
terms that, in the reasonable judgment of Service Provider, are fair and reasonable to the Company;

 

(iv)  consult with the
officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s financial
policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments and dispositions
consistent with the objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the
Company or the Operating Partnership;

 

     8

     

    

 

(v)  (A) participate
in formulating an investment and disposition strategy and asset allocation framework; (B) locate, analyze and select
potential disposition and, if applicable, investment opportunities; (C) structure and negotiate the terms and conditions
of transactions pursuant to which dispositions and, if applicable, acquisitions of investments shall be made; (D) research,
identify, review and recommend dispositions and, if applicable, acquisitions of investments to the Board and make investments and
dispositions on behalf of the Company and the Operating Partnership in compliance with the objectives and policies of the Company;
(E) review and analyze each Property’s operating and capital budget, (F) arrange for financing and refinancing
and make other changes in the asset or capital structure of, and dispose of, reinvest or distribute the proceeds from the sale
of, or otherwise deal with, investments and dispositions; (G) negotiate and execute and deliver on behalf of the Company
and the Operating Partnership, and any subsidiary thereof, all leases and service contracts for Properties and, to the extent necessary,
perform, or cause a third party to perform, all other operational functions for the maintenance and administration of such Properties;
(H) actively oversee and manage investments for purposes of meeting the Company’s investment and disposition objectives,
including the investment and disposition objectives of a Plan of Liquidation, and review and analyze financial information for
each of the investments and the overall portfolio; (I) if applicable, select Joint Venture partners, structure corresponding
agreements and oversee and monitor these relationships; (J) oversee, supervise and evaluate Affiliated and non-Affiliated
property managers who perform services for the Company or the Operating Partnership; (K) oversee, supervise and evaluate
the Affiliated and non-Affiliated Persons with whom Service Provider contracts to perform certain of the services required to be
performed under this Agreement; (L) manage accounting and other record-keeping functions for the Company and the Operating
Partnership, including reviewing and analyzing the capital and operating budgets for the Properties and generating an annual budget
for the Company; (M) recommend various liquidity events to the Board when appropriate; and (N) source and structure
Mortgages, in each case subject to approval of the Board;

 

(vi)  upon request, provide
the Board with periodic reports regarding prospective dispositions and, if applicable, investments;

 

(vii)  make investments
in, and dispositions of, investments subject to the approval of, and within the discretionary limits and authority as granted by,
the Board;

 

(viii)  negotiate on behalf
of the Company and the Operating Partnership with banks or other lenders for loans to be made to the Company, the Operating Partnership
or any of their subsidiaries, and negotiate with investment banking firms and broker-dealers on behalf of the Company, the Operating
Partnership or any of their subsidiaries, or obtain loans for the Company, the Operating Partnership or any of their subsidiaries,
but in no event in such a manner that Service Provider shall be acting as broker-dealer or underwriter;

 

(ix)  obtain reports (which
may, but are not required to, be prepared by Service Provider or its Affiliates), where appropriate, concerning the value of investments
or contemplated investments of the Company and the Operating Partnership;

 

(x)  from time to time,
or at any time reasonably requested by the Board, make reports to the Board of its performance of services to the Company and the
Operating Partnership under this Agreement, including reports with respect to potential conflicts of interest involving Service
Provider or any of its Affiliates and cooperate in good faith to eliminate or minimize any such conflicts;

 

     9

     

    

 

(xi)  as requested by
the Board, provide the Company and the Operating Partnership with all necessary cash management services;

 

(xii)  deliver to, or
maintain on behalf of, the Company copies of all appraisals obtained in connection with the investments in any Properties as may
be required to be obtained by the Board;

 

(xiii)  notify the Board
of all proposed material transactions as far in advance as practicable before they are completed;

 

(xiv)  perform investor
relations and Stockholder communications functions for the Company and assist with logistics related to meeting of the Board;

 

(xv)  as requested by
the Board, maintain the Company’s accounting, tax, regulatory and other records and assist the Company in filing all reports
required to be filed by it with the SEC, the Internal Revenue Service and other regulatory agencies and any applicable stock exchange;

 

(xvi)  render such other
services as may be reasonably determined by the Board consistent with the terms and conditions herein;

 

(xvii)  when requested
by the Board, calculate the Company’s Net Asset value and obtain valuations in connection therewith; and

 

(xviii)  do all things
reasonably necessary to assure its ability to render the services described in this Agreement and devote sufficient resources and
personnel to the Company’s business to discharge Service Provider’s obligations hereunder, including the services of
a Chief Executive Officer and Chief Financial Officer.

 

Notwithstanding the foregoing or anything
else that may be to the contrary in this Agreement, Service Provider may delegate any of the foregoing duties to any Person so
long as Service Provider or its Affiliate remains responsible for the performance of the duties set forth in this Section 3.

 

(e)          On
the Transition Date, the Company shall appoint Wendy Silverstein as the chief executive officer of the Company and John Garilli
as the chief financial officer of the Company. From and after such time, Service Provider shall (i) notify the Board, as
far in advance as practicable, of any planned change in the chief executive officer, chief financial officer or other senior executive
officer of the Company and (ii) promptly upon request provide the Board or the Independent Directors, as applicable, with
a list of the personnel of Service Provider, its Affiliates and any third parties to which Service Provider delegates any of its
responsibilities hereunder who are performing services for or on behalf of the Company, the Operating Partnership or their respective
subsidiaries. Service Provider shall provide the Board, as reasonably requested, with access to the senior executives and other
personnel performing services for or on behalf of the Company, the Operating Partnership or their respective subsidiaries, and
shall provide the Board upon request with information about the compensation and employment arrangements of such executives and
other personnel relating to their services for or on behalf of the Company, the Operating Partnership or their respective subsidiaries
as well as information about their other duties for Service Provider and its Affiliates to the extent they are not engaged full
time for or on behalf of the Company, the Operating Partnership or their respective subsidiaries. Notwithstanding the foregoing
(A) the appointment of a new chief executive officer or chief financial officer of the Company shall require the consent
of a majority of the Independent Directors and (B) a majority of the Independent Directors may remove any chief executive
officer, chief financial officer or other senior executive officer of the Company with or without cause, except as otherwise provided
in any services or employment agreement approved by the Board between such officer and the Company or any of its subsidiaries.
The Company shall cause all officers of the Company to be covered by any directors and officers insurance policies in place with
respect to its senior executives or the Board.

 

     10

     

    

 

4.     
     AUTHORITY OF SERVICE PROVIDER.

 

(a)          Pursuant
to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 9), and subject
to the continuing and exclusive authority of the Board over the supervision of the Company, the Company, acting on the authority
of the Board, hereby delegates to Service Provider the authority to perform the services described in Section 3.

 

(b)          Notwithstanding
anything herein to the contrary, any investment and any acquisition, Sale or disposition of a Property or Asset shall require the
prior approval of the Board, any particular Directors specified by the Board or any committee of the Board specified by the Board,
as the case may be.

 

(c)          If
a transaction requires approval by the Independent Directors, Service Provider shall deliver to the Independent Directors all documents
and other information reasonably required by them to evaluate properly the proposed transaction.

 

(d)          The
Board may, at any time upon the giving of Notice to Service Provider, modify or revoke the authority set forth in this Section
4; provided, however, that such modification or revocation shall be effective upon receipt by Service Provider
and shall not be applicable to investment or disposition transactions to which Service Provider has committed the Company or the
Operating Partnership prior to the date of receipt by Service Provider of such Notice.

 

5.    
      FIDUCIARY RELATIONSHIP. Service Provider, as a result of its
relationship with the Company and the Operating Partnership pursuant to this Agreement, has a fiduciary responsibility and
duty to the Company, the Stockholders and the partners in the Operating Partnership.

 

6.     
     NO PARTNERSHIP OR JOINT VENTURE. The parties to this Agreement are not
partners or joint venturers with each other and nothing herein shall be construed to make them partners or joint venturers or
impose any liability as such on either of them.

 

7.   
       BANK ACCOUNTS. Service Provider may establish and maintain one or
more bank accounts in the name of the Company or the Operating Partnership and may collect and deposit into any such account
or accounts, and disburse from any such account or accounts any money on behalf of the Company or the Operating Partnership,
under such terms and conditions as the Board may approve; provided, however, that no funds shall be commingled
with the funds of Service Provider; and, upon request, Service Provider shall render appropriate accountings of such
collections and payments to the Board and to the auditors of the Company.

 

     11

     

    

 

8.    
      RECORDS; ACCESS. Service Provider shall maintain appropriate records of
all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and
authorized agents of the Company or the Independent Directors, at any time and from time to time. Service Provider shall at
all reasonable times have access to the books and records of the Company and the Operating Partnership.

 

9.    
      LIMITATIONS ON ACTIVITIES.

 

(a)          Notwithstanding
anything herein to the contrary, Service Provider shall refrain from taking any action which, in its sole judgment, or in the sole
judgment of the Company or a majority of the Independent Directors, made in good faith, would (a) adversely affect
the status of the Company as a REIT, unless the Board has determined that REIT qualification is not in the best interests of the
Company and its Stockholders, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended,
or (c) violate in any material respect any law, rule, regulation or statement of policy of any governmental body or
agency having jurisdiction over the Company, the Operating Partnership or the Shares to the extent such violation could reasonably
be expected to have an adverse effect on the Company or the Operating Partnership that is not immaterial, or otherwise not be permitted
by the Articles of Incorporation or Bylaws, except, in all such cases, if such action shall be ordered by the Board, in which case
Service Provider shall notify promptly the Board of Service Provider’s judgment of the potential impact of such action and
shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, Service
Provider shall have no liability for acting in accordance with the specific instructions of the Board so given.

 

(b)          Service
Provider shall not, and shall cause its Affiliates not to, acquire or offer to acquire any Property or other Asset from the Company,
the Operating Partnership or any of their respective subsidiaries, including any Property or other Asset being disposed of pursuant
to a Plan of Liquidation.

 

10.    
     FEES.

 

(a)          Asset
Management Fee.

 

(i)  Beginning on March
1, 2017, the Company shall pay an Asset Management Fee to Service Provider as compensation for Services rendered by Service Provider
and its Affiliates in connection with the management of the Company’s Assets in an amount equal to 0.325% per annum of the
Cost of Assets (determined on a monthly basis on the first business day of each month); provided, however, that if
the Cost of Assets exceed $3.0 billion on the applicable determination date, then the Asset Management Fee shall be equal to 0.325%
per annum of the Cost of Assets up to $3.0 billion and 0.25% per annum of the Cost of Assets in excess of $3.0 billion.

 

     12

     

    

 

(ii)  The Asset Management
Fee shall be payable in advance in monthly installments on March 1, 2017 and thereafter on the first business day of each month,
in the amount of 0.027083% of the Cost of Assets as of such date, provided, however, that if the Cost of Assets exceed
$3.0 billion on the applicable determination date, the monthly installments shall be 0.027083% of the Cost of Assets up to $3.0
billion and 0.020833% of the Cost of Assets in excess of $3.0 billion.

 

(b)          Incentive
Fee.

 

(i)  In connection with
the payment of (x) Distributions during the term of this Agreement and (y) any other amounts paid to the Stockholders
on account of their Common Shares in connection with a merger or other Change in Control transaction pursuant to an agreement with
the Company entered into after the Transition Date (such Distributions and payments, the “Hurdle Payments”),
in excess of $11.00 per share (the “Hurdle Amount”), when taken together with all other Hurdle Payments,
the Company shall pay an Incentive Fee to Service Provider as compensation for Services rendered by Service Provider and its Affiliates
in an amount equal to 10.0% of such excess; provided, however, that the Hurdle Amount shall be increased on an annualized
basis by an amount equal to the product of (a) the Treasury Rate plus 200 basis points and (b) the Hurdle Amount
minus all previous Hurdle Payments.

 

(ii)  The Incentive Fee
shall be payable within two (2) business days of any applicable Hurdle Payment.

 

(c)          Transition
Period Fee. On each of the Commencement Date and February 1, 2017, the Company shall pay a fee to Service Provider as compensation
for consulting services rendered by Service Provider and its Affiliates prior to the Transition Date in an amount equal to $500,000.

 

(d)          Property
Management Fee. If Service Provider or any of its Affiliates provides property management services, such services shall
be provided at a rate of 1.75% of gross revenues, inclusive of all third party property management fees.

 

(e)          Exclusion
of Certain Transactions.

 

(i)  If the Company or
the Operating Partnership shall propose to enter into any transaction in which Service Provider or any Affiliate thereof has a
direct or indirect interest, then such transaction shall be (A) approved by a majority of the Board (including a majority
of the Independent Directors) not otherwise interested in such transaction as fair and reasonable to the Company and (B)
on terms and conditions not less favorable to the Company or Operating Partnership, as applicable, than those available from unaffiliated
third parties.

 

(ii)  Neither the Company
nor the Operating Partnership shall make loans to Service Provider or any Affiliate thereof except loans to wholly owned subsidiaries
of the Company. Neither Service Provider nor any Affiliate thereof shall make loans to the Company or the Operating Partnership,
or to Joint Ventures, unless (A) approved by a majority of the Directors (including a majority of the Independent Directors)
not otherwise interested in such transaction as fair and reasonable to the Company or Operating Partnership, as applicable, and
(B) no less favorable to the Company or Operating Partnership, as applicable, than comparable loans between unaffiliated
third parties.

 

     13

     

    

 

(iii)  The Company and
the Operating Partnership may enter into Joint Ventures with Service Provider or its Affiliates, provided, however,
that (A) a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction
approves the transaction as fair and reasonable to the Company or Operating Partnership, as applicable, and (B) the
investment by the Company or Operating Partnership, as applicable, is on substantially the same terms as those received by other
joint venturers with unaffiliated third parties.

 

(iv)  If the Board elects
to internalize any management services provided by Service Provider, neither the Company nor the Operating Partnership shall pay
any compensation or other remuneration to Service Provider or its Affiliates in connection with such internalization of management
services; provided, however, that nothing in this Section 10(d) shall create any right to (A) any
assets, intellectual property, personnel or pipeline of assets of Service Provider or its Affiliates or (B) terminate
the Agreement other than as set forth in Section 16 and provided, further, that, in connection with any such
internalization, Service Provider shall be entitled to receive from the Company or the Operating Partnership within thirty (30)
days following the effective date thereof any accrued Incentive Fee, calculated as of the most recent financial statements of the
Company prepared in accordance with GAAP liquidation basis accounting.

 

(f)          Waiver
of Certain Fees. Notwithstanding anything to the contrary in the first paragraph of Section 1 or in Section 19,
Service Provider hereby waives any and all fees not expressly contemplated in this Section 10, including any acquisition,
oversight, disposition or financing fee.

 

(g)          Audit
Committee. The audit committee of the Board shall have the authority to review in advance the payment of fees to Service
Provider pursuant to this Section 10.

 

11.    
     EXPENSES.

 

(a)          Expenses.
In addition to the compensation paid to Service Provider pursuant to Section 10, the Company or the Operating Partnership
shall pay directly or reimburse Service Provider for all the following expenses paid or incurred by Service Provider or its Affiliates
in connection with the Services it provides to the Company and the Operating Partnership pursuant to this Agreement to the extent
such expenses are reasonable and documented out-of-pocket expenses, provided, however, that all such expenses
in respect of the period prior to the Transition Date shall not exceed $100,000:

 

(i)  Acquisition Expenses
in connection with an acquisition approved by the Board;

 

(ii)  the actual cost
of goods and services used by the Company and obtained from entities not Affiliated with Service Provider, including property management
and leasing fees and expenses;

 

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(iii)  fees and costs
(including interest costs) payable to third parties incurred by Service Provider in connection with (A) loans to be made
to the Company, the Operating Partnership or any of their subsidiaries, (B) negotiations with investment banking firms and
broker-dealers on behalf of the Company, the Operating Partnership or any of their subsidiaries, or (C) loans obtained
for the Company, the Operating Partnership or any of their subsidiaries;

 

(iv)  taxes and assessments
on income of the Company or Assets;

 

(v)  costs associated
with insurance required in connection with the business of the Company or by the Board;

 

(vi)  expenses of managing
and operating Assets owned by the Company, other than those payable to Service Provider or an Affiliate of Service Provider;

 

(vii)  expenses in connection
with payments to the Directors for attending meetings of the Board and Stockholders;

 

(viii)  expenses connected
with payments of Distributions;

 

(ix)  expenses of organizing,
converting, modifying, terminating or dissolving the Company, the Operating Partnership or any subsidiary thereof or revising,
amending, modifying or terminating the Articles of Incorporation, Bylaws or governing documents of the Operating Partnership or
any subsidiary of the Company or the Operating Partnership;

 

(x)  expenses of maintaining
communications with Stockholders, including the cost of preparation, printing, and mailing of annual reports and other Stockholder
reports, proxy statements and other reports required by governmental entities;

 

(xi)  audit, accounting
and legal fees; and

 

(xii)  prior to the Transition
Date, expenses in connection with any travel incurred in connection with providing the Services.

 

For the avoidance of doubt, Service Provider
hereby acknowledges that no internal selling, general or administrative expense of Service Provider or its Affiliates, including
salaries and wages, benefits or overhead, shall be due, payable or reimbursable to Service Provider or any of its Affiliates.

 

(b)          Payment
of Expenses. Expenses incurred by Service Provider on behalf of the Company and the Operating Partnership and payable pursuant
to this Section 11 shall be reimbursed no less than monthly to Service Provider.

 

(c)          Audit
Committee. The audit committee of the Board shall have the authority to review in advance the payment of expenses to Service
Provider pursuant to this Section 11.

 

     15

     

    

 

12.         OTHER
SERVICES. Should the Board request that Service Provider or any Affiliate thereof or any of their respective officers or employees
render services for the Company and the Operating Partnership other than those set forth in Section 3, such services shall
be separately compensated at such customary rates and in such customary amounts as are agreed upon by Service Provider and the
Board, including a majority of the Independent Directors, subject to the limitations contained in Section 10(d) and the
Articles of Incorporation, and shall not be deemed to be Services pursuant to the terms of this Agreement.

 

13.         TRANSITION
SERVICES; PRIOR AGREEMENT.

 

(a)          During
the Interim Period, Service Provider shall use its reasonable best efforts to cooperate with ARG, the Company and the Operating
Partnership to enable an orderly transition of advisory services from ARG to Service Provider, to minimize any fees or expense
reimbursement payable to ARG with respect to the foregoing and to obtain any assistance required from ARG with respect thereto
and to the services set forth herein, including with respect to (a) maintaining a consistent level of personnel, processes,
and technology sufficient to enable the Company and the Operating Partnership to comply in a timely manner with all of their respective
financial, tax and legal reporting obligations, (b) maintaining the processes, systems, controls and procedures implemented
to oversee, plan for and comply with such obligations, (c) maintaining the Company and the Operating Partnership’s
information technology, cash management, treasury and other systems and services and (d) unless otherwise determined by
a majority of the Independent Directors, retaining the Company and the Operating Partnership’s current third party services
providers.

 

(b)          The
Company hereby represents and warrants that a true and correct copy of the Prior Agreement has been provided to Service Provider.
Service Provider hereby acknowledges receipt of the Prior Agreement and the terms thereof.

 

14.         OTHER
ACTIVITIES OF SERVICE PROVIDER.

 

(a)          Except
as set forth in this Section 14, nothing herein contained shall prevent Service Provider or any of its Affiliates from
engaging in or earning fees from other activities, including the rendering of advice to other Persons (including other REITs) and
the management of other programs advised, sponsored or organized by Service Provider or its Affiliates; nor shall this Agreement
limit or restrict the right of any director, officer, member, partner, employee or stockholder of Service Provider or any of its
Affiliates to engage in or earn fees from any other business or to render services of any kind to any other Person and earn fees
for rendering such services; provided, however, that (i) Service Provider must devote sufficient resources
to the Company’s business to discharge its obligations to the Company under this Agreement, (ii) Service Provider
shall not provide any services to any other publicly traded REIT and (iii) Wendy Silverstein shall (A) devote substantially
all of her professional time to the Company and the Operating Partnership; provided, however, that she shall be entitled to continue
to serve as a director or trustee on such corporate and charitable boards as she currently serves as a director or trustee and
such other boards as may be approved by the Board, and (B) not participate in any investment opportunity that becomes available
to and is suitable for the Company, in each case, unless the Independent Directors remove her as chief executive officer in accordance
with Section 3(e).

 

     16

     

    

 

(b)          Service
Provider shall (i) report to the Board the existence of, or change in, any condition or circumstance, existing or anticipated,
of which it has knowledge, which creates or could create a conflict of interest between Service Provider’s obligations to
the Company and its obligations to or its interest in any other Person, including any business relationship with any Director,
ARG or any lender to the Company, the Operating Partnership or their respective subsidiaries or with respect to any Property, and
(ii) cooperate in good faith to eliminate or minimize any such conflict.

 

(c)          During
the term of this Agreement, Affiliates of Service Provider shall hold at least 1,000,000 shares of Common Stock. Other than as
set forth in the immediately preceding sentence, in no event shall Service Provider or any of its Affiliates (i) acquire
or offer to acquire any Asset, whether in connection with a Plan of Liquidation or otherwise, or (ii) contribute debt or
equity financing to, or otherwise invest in, the Company, the Operating Partnership or any of their respective subsidiaries.

 

(d)          In
no event shall Service Provider or any of its Affiliates solicit for employment, employ or attempt to employ or divert any Director,
employee or agent of the Company, the Operating Partnership or any of their respective subsidiaries, provided, however,
that the foregoing shall not apply to (i) persons who have not been employed or engaged by the Company, the Operating Partnership
or any of their respective subsidiaries or agents for a period of six months prior to such solicitation, employment or attempted
employment or (ii) solicitations of employment not specifically directed at such persons (but no hiring pursuant thereto).

 

15.         TERM
OF AGREEMENT. This Agreement shall continue in force until February 28, 2018 (the “Initial Term”)
and thereafter shall renew automatically for successive six month periods (each, an “Automatic Renewal Term”)
unless a majority of the Independent Directors or Service Provider elect to terminate this Agreement in accordance with Section
16 hereof; provided, however, that this Agreement shall terminate automatically at the effective time of the
dissolution of the Company in accordance with a Plan of Liquidation or, if the assets of the Company are transferred to a liquidating
trust, the final disposition of the assets transferred by the liquidating trust.

 

16.         
TERMINATION BY THE PARTIES. This Agreement may be terminated at the expiration of the Initial Term or any Automatic Renewal
Term by a majority of the Independent Directors or Service Provider, without Cause and without penalty, upon written Notice thirty
(30) days’ prior to the end of such term. Notwithstanding the foregoing, this Agreement (a) shall terminate automatically
upon a Change of Control, (b) may be terminated upon thirty (30) days’ written Notice by a majority of the Independent
Directors with Cause and (c) may be terminated upon thirty (30) days’ written Notice by a majority of the Independent
Directors if (i) Wendy Silverstein resigns or is otherwise unavailable to serve as the chief executive officer of the Company
for any reason and (ii) Service Provider has not proposed a new chief executive officer who is ready, willing and able to
serve as chief executive officer and is acceptable to a majority of the Independent Directors in the good faith exercise of their
discretion. The provisions of Sections 18 through 30 (inclusive) of this Agreement shall survive any expiration or earlier
termination of this Agreement.

 

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17.         ASSIGNMENT
TO AN AFFILIATE. This Agreement may be assigned by Service Provider to an Affiliate with the approval of a majority of the
Directors (including a majority of the Independent Directors). This Agreement shall not be assigned by the Company or the Operating
Partnership without the consent of Service Provider, except in the case of an assignment by the Company or the Operating Partnership
to a Person which is a successor to all the assets, rights and obligations of the Company or the Operating Partnership, in which
case such successor Person shall be bound hereunder and by the terms of said assignment in the same manner as the Company or the
Operating Partnership, as applicable, is bound by this Agreement.

 

18.         PAYMENTS
TO AND DUTIES OF SERVICE PROVIDER UPON TERMINATION.

 

(a)          Amounts
Owed. After the Termination Date, Service Provider shall be entitled to receive from the Company or the Operating Partnership
within thirty (30) days after the Termination Date all amounts then accrued and owing to Service Provider, including (i) any
accrued Incentive Fee, calculated as of the most recent financial statements of the Company prepared in accordance with GAAP liquidation
basis accounting, and (ii) all other its interest, if any, in the Company’s income, losses, distributions and
capital by payment of an amount equal to the then-present fair market value of Service Provider’s interest.

 

(b)          Service
Provider’s Duties. Service Provider shall promptly upon termination of this Agreement:

 

(i)  pay over to the Company
and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant
to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

 

(ii)  deliver to the Board
a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, and all
accrued compensation and reimbursement deducted pursuant to Section 18(b)(i), covering the period following the date of
the last accounting furnished to the Board;

 

(iii)  deliver to the
Board all assets, including all Assets, and documents of the Company and the Operating Partnership then in the custody of Service
Provider; and

 

(iv)  cooperate with the
Company and Board in making an orderly transition of advisory function.

 

19.         INCORPORATION
OF THE ARTICLES OF INCORPORATION . Except as provided in Section 10(e), to the extent that the Articles of Incorporation
imposes obligations or restrictions on Service Provider or grants Service Provider any rights which are not set forth in this Agreement,
Service Provider shall abide by such obligations or restrictions and such rights shall inure to the benefit of Service Provider
with the same force and effect as if they were set forth herein.

 

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20.         INDEMNIFICATION
BY THE COMPANY AND THE OPERATING PARTNERSHIP.

 

(a)          The
Company and the Operating Partnership shall indemnify and hold harmless Service Provider and its Affiliates, as well as their respective
officers (and persons serving as officers of the Company at the request of Service Provider or the Board), directors, equity holders,
members, partners, stockholders, other equity holders and employees (collectively, the “Indemnitees,”
and each, an “Indemnitee”), from all liability, claims, damages or losses arising in the performance
of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by insurance, and to the extent that such indemnification would
not be inconsistent with the laws of the State of New York or the Articles of Incorporation. Notwithstanding the foregoing, the
Company and the Operating Partnership shall not provide for indemnification of an Indemnitee for any loss or liability suffered
by such Indemnitee, nor shall they provide that an Indemnitee be held harmless for any loss or liability suffered by the Company
and the Operating Partnership, unless all the following conditions are met:

 

(i)  the Indemnitee has
determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company
and the Operating Partnership;

 

(ii)  the Indemnitee was
acting on behalf of, or performing Services for, the Company or the Operating Partnership;

 

(iii)  such liability
or loss was not the result of negligence or misconduct by the Indemnitee; and

 

(iv)  such indemnification
or agreement to hold harmless is recoverable only out of the Company’s Net Assets and not from the Stockholders.

 

(b)          Notwithstanding
the foregoing, an Indemnitee shall not be indemnified by the Company or the Operating Partnership for any loss, liability or expense
arising from or out of an alleged violation of federal or state securities laws by such Indemnitee unless one or more of the following
conditions are met:

 

(i)  there has been a
successful adjudication on the merits of each count involving alleged securities law violations as to the Indemnitee;

 

(ii)  such claims have
been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Indemnitee; or

 

(iii)  a court of competent
jurisdiction approves a settlement of the claims against the Indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for indemnification has been advised of the position of the
SEC and of the published position of any state securities regulatory authority in which Securities were offered or sold as to indemnification
for violation of securities laws.

 

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(c)          The
Company or the Operating Partnership shall pay or reimburse reasonable legal expenses and other costs incurred by an Indemnitee
in advance of final disposition of a proceeding only if: (i) the proceeding relates to acts or omissions with respect
to the performance of Services on behalf of the Company or the Operating Partnership; (ii) the Indemnitee provides
the Company or the Operating Partnership with a written affirmation of the Indenmitee’s good faith belief that the Indemnitee
has met the standard of conduct necessary for indemnification by the Company or the Operating Partnership as authorized by this
Section 20; (iii) the proceeding was initiated by a third party who is not a Stockholder or, if by a Stockholder
acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and (iv) the Indemnitee
provides the Company or the Operating Partnership with a written undertaking to repay the amount paid or reimbursed by the Company
or the Operating Partnership, together with the applicable legal rate of interest, if it is ultimately determined that the Indemnitee
did not comply with the requisite standard of conduct.

 

21.         INDEMNIFICATION
BY SERVICE PROVIDER . Service Provider shall indemnify and hold harmless the Company and the Operating Partnership from contract
or other liability, claims, damages, taxes or losses and related expenses, including reasonable attorneys’ fees, to the extent
that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred
by reason of Service Provider’s bad faith, fraud, willful misfeasance, intentional misconduct, negligence or reckless disregard
of its duties; provided, however, that Service Provider shall not be held responsible for any action of the Board
in following or declining to follow any advice or recommendation given by Service Provider.

 

22.         NOTICES.
Any notice, report or other communication (each a “Notice”) required or permitted to be given hereunder shall
be in writing unless some other method of giving such Notice is required by the Articles of Incorporation or Bylaws, and shall
be given by being delivered by hand, by courier or overnight carrier or by registered or certified mail to the addresses set forth
below:

 

	To the Company:	New York REIT, Inc.
	 	405 Park Avenue
	 	New York, New York 10022
	 	Attention:  Chief Executive Officer
	 	 
	 	with copies (which shall not constitute Notice) to:
	 	 
	 	Proskauer Rose LLP
	 	Eleven Times Square
	 	New York, New York 10036
	 	Attention:	Michael Choate
	 	 	Steven Lichtenfeld

 

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	 	and:
	 	 
	 	Debevoise & Plimpton LLP
	 	919 Third Avenue
	 	New York, New York 10022
	 	Attention:	William D. Regner, Esq.
	 	 
	To the Operating Partnership:	New York Recovery Operating Partnership, L.P.
	 	c/o New York REIT, Inc., its General Partner
	 	405 Park Avenue
	 	New York, New York 10022
	 	Attention:	Chief Executive Officer
	 	 
	 	with copies (which shall not constitute Notice) to:
	 	 
	 	Proskauer Rose LLP
	 	Eleven Times Square
	 	New York, New York 10036
	 	Attention:	Michael Choate, Esq.
	 	 	Steven Lichtenfeld, Esq.
	 	 
	 	and:
	 	 
	 	Debevoise & Plimpton LLP
	 	919 Third Avenue
	 	New York, New York 10022
	 	Attention:	William D. Regner, Esq.
	 	 
	To Service Provider:	Winthrop REIT Advisors LLC
	 	7 Bulfinch Place
	 	Suite 500
	 	Boston, Massachusetts 02114
	 	Attention:	Carolyn Tiffany
	 	 
	 	with a copy (which shall not constitute Notice) to:
	 	 
	 	Meltzer, Lippe, Goldstein & Breitstone, LLP
	 	190 Willis Avenue 
	 	Mineola, New York 11501
	 	Attention:	David J. Heymann, Esq.

 

Any party may at any time give Notice in writing to the other
parties of a change in its address for the purposes of this Section 22.

 

     21

     

    

 

23.         MODIFICATION.
This Agreement shall not be amended, supplemented, terminated, or discharged, in whole or in part, except by an instrument in writing
signed by the parties hereto, or their respective successors or permitted assignees.

 

24.         SEVERABILITY.
The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

 

25.         GOVERNING
LAW. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York
as at the time in effect, without regard to the principles of conflicts of laws thereof.

 

26.         ENTIRE
AGREEMENT. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or
implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control
and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

 

27.         NO
WAIVER. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted
to have granted such waiver.

 

28.         PRONOUNS
AND PLURALS. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. Whenever
the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed
to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words
of like import. References to any Person include the successors and permitted assigns of that Person. References from or through
any date mean, unless otherwise specified, from and including or through and including, respectively.

 

29.         HEADINGS.
The titles of sections and subsections contained in this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation hereof.

 

30.         EXECUTION
IN COUNTERPARTS. This Agreement may be executed (including by facsimile, PDF or other electronic transmission) with counterpart
signature pages or in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument.

 

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blank]

 

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

 

	 	NEW YORK REIT, INC.
	 	 	 
	 	By: 	/s/ Randolph C. Read
	 	 	Name: Randolph C. Read
	 	 	Title:  Chairman
	 	 	 
	 	NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P.
	 	 	 
	 	By:	New York REIT, Inc. its General Partner
	 	 	 
	 	By:	/s/ Randolph C. Read
	 	 	Name: Randolph C. Read
	 	 	Title:  Chairman
	 	 	 
	 	WINTHROP REIT ADVISORS LLC
	 	 	 
	 	By:	/s/ Carolyn B. Tiffany
	 	 	Name: Carolyn B. Tiffany
	 	 	Title: President

  

[Signature Page to Agreement]

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