Exhibit 10.1

TOKAI PHARMACEUTICALS, INC.

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (“Agreement”) is made as of January 31, 2017 (the
“Effective Date”), by and among Tokai Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), each of those persons and entities, severally and
not jointly, listed as a Purchaser on the Schedule of Purchasers attached as
Exhibit A hereto (the “Schedule of Purchasers”). The persons and entities listed
as Purchasers on the Schedule of Purchasers are hereinafter collectively
referred to herein as “Purchasers” and each individually as a “Purchaser.”

BACKGROUND

A.    On December 21, 2016, the Company entered into a Share Purchase Agreement
with Otic Pharma, Ltd. (“Otic”) and its shareholders (as amended from time to
time, the “Otic Share Purchase Agreement”), pursuant to which the Company has
agreed to issue shares of its Common Stock (the “Otic Acquisition Shares”) to
the shareholders of Otic in consideration for the acquisition of 100% of the
issued and outstanding capital stock of Otic, whereupon Otic will become a
wholly-owned subsidiary of the Company (the “Otic Acquisition”).

B.    The closing of the transactions contemplated under the Otic Share Purchase
Agreement is conditioned upon, among other things, the approval of the issuance
of the Otic Acquisition Shares by the stockholders of the Company at a special
meeting of stockholders.

C.    The Company is entering into this Agreement with the Purchasers to provide
for the offering and sale of Common Stock, conditioned upon, and subject to, the
closing of the Otic Acquisition under the Otic Share Purchase Agreement.

AGREEMENT

In consideration of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company, and each Purchaser (severally and not jointly) hereby
agree as follows:

1.    AUTHORIZATION OF SALE OF THE SHARES.

The Company has authorized the sale and issuance of 3,603,601 shares of its
Common Stock, par value $0.0001 per share (the “Common Stock”), on the terms and
subject to the conditions set forth in this Agreement (subject to appropriate
adjustment for stock splits, stock dividends, recapitalizations and similar
transactions affecting the Common Stock). The shares of Common Stock sold
hereunder at the Closing (as defined below) shall be referred to as the
“Shares.”

2.    AGREEMENT TO SELL AND PURCHASE THE SHARES.

(a)    Sale of Shares. At the Closing (as defined in Section 3), the Company
will sell to each Purchaser, and each Purchaser will purchase from the Company,
the number of Shares set forth opposite such Purchaser’s name on the Schedule of
Purchasers at a purchase price of $1.11 per Share (subject to appropriate
adjustment for stock splits, stock dividends, recapitalizations and similar
transactions affecting the Common Stock). The aggregate purchase price for the
Shares purchased by each Purchaser is set forth opposite such Purchaser’s name
on the Schedule of Purchasers.

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(b)    Separate Agreement. Each Purchaser shall severally, and not jointly, be
liable for only the purchase of the Shares that appear on the Schedule of
Purchasers that relate to such Purchaser. The Company’s agreement with each of
the Purchasers, is a separate agreement, and the sale of Shares to each of the
Purchasers is a separate sale. The obligations of each Purchaser hereunder are
expressly not conditioned on the purchase by any or all of the other Purchasers
of the Shares such other Purchasers have agreed to purchase.

3.    CLOSING AND DELIVERY.

(a)    Closing. The closing of the purchase and sale of the Shares (which Shares
are set forth in the Schedule of Purchasers) pursuant to this Agreement (the
“Closing”) shall be held immediately following the satisfaction or waiver of the
closing conditions set forth in Sections 6 and 7, including the closing of the
Otic Acquisition, with the Closing to occur at the offices of the Company, or on
such other date and at such other place as may be agreed to by the Company and
the Purchasers (the “Closing Date”). At or prior to the Closing, each Purchaser
shall execute any related agreements or other documents required to be executed
hereunder, dated on or before the Closing Date.

(b)    Issuance of the Shares at the Closing. At the Closing, the Company shall
issue or deliver to each Purchaser evidence of a book entry position evidencing
the Shares purchased by such Purchaser hereunder, registered in the name of such
Purchaser, or in such nominee name(s) as designated by such Purchaser,
representing the number of Shares to be purchased by such Purchaser at such
Closing as set forth in the Schedule of Purchasers against payment of the
purchase price for such Shares. The name(s) in which the Shares are to be issued
to each Purchaser are set forth in the Selling Stockholder Notice and
Questionnaire in the form attached hereto as Appendix I (the “Selling
Stockholder Questionnaire”), as completed by each Purchaser. The Selling
Stockholder Questionnaire shall be provided to the Company no later than the
Closing Date.

(c)    Delivery of the Registration Rights Agreement. At or before the Closing,
the Company and each Purchaser shall execute and deliver the Registration Rights
Agreement in the form attached hereto as Appendix II (the “Registration Rights
Agreement”), with respect to the registration of the Shares under the Securities
Act of 1933, as amended (the “Securities Act”).

4.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

Except as set forth on the Schedule of Exceptions delivered to the Purchasers
concurrently with the execution of this Agreement (the “Schedule of Exceptions”)
or as otherwise described in the SEC Documents (as defined below), which
disclosures qualify these representations and warranties in their entirety, the
Company hereby represents and warrants as of the date hereof, and covenants
with, the Purchasers as follows:

(a)    Organization and Standing. The Company: (a) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
Delaware with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business as presently
conducted, and (b) is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction which requires such
qualification, except in the case of clause (b) above, to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to result in (i) a material adverse effect on the validity or
enforceability of this Agreement, (ii) a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Company, or (iii) a

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material adverse effect on the Company’s ability to perform in any material
respect its obligations under this Agreement (any of clauses (i), (ii) or (iii),
a “Material Adverse Effect”). The Company has no subsidiaries.

(b)    Corporate Power; Authorization. The Company has all requisite corporate
power and authority, and has taken all requisite corporate action, to execute
and deliver this Agreement and the Registration Rights Agreement (as defined
below, and together with the Agreement, the “Transaction Documents”), and,
subject to any required stockholder approval under the rules and regulations of
NASDAQ, to sell and issue the Shares and carry out and perform all of its
obligations under the Transaction Documents. Each Transaction Document
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforcement of creditors’ rights generally, (ii) as limited by equitable
principles generally, including any specific performance and (iii) with respect
to the Registration Rights Agreement, as rights to indemnity or contribution may
be limited by state or federal laws or public policy underlying such laws.

(c)    Issuance and Delivery of the Shares. The Shares have been duly authorized
and, when issued and paid for in compliance with the provisions of this
Agreement, will be validly issued, fully paid and non-assessable and free of any
security interest, lien, pledge, claim, charge, escrow, encumbrance, right of
first offer, right of first refusal, preemptive right, mortgage, indenture,
security agreement or other restriction (“Encumbrance”) other than restrictions
on transfer under the Transaction Documents, applicable state and federal
securities laws and Encumbrances created by or imposed by the Purchasers.
Assuming the accuracy of the representations made by each Purchaser in
Section 5, the offer and issuance by the Company of the Shares is exempt from
registration under the Securities Act.

(d)    SEC Documents; Financial Statements. The Company has filed in a timely
manner all documents that the Company was required to file with the Securities
and Exchange Commission (the “Commission”) under Sections 13, 14(a) and 15(d)
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since
becoming subject to the requirements of the Exchange Act. As of their respective
filing dates (or, if amended prior to the date of this Agreement, when amended),
all documents filed by the Company with the Commission since January 1, 2016
(the “SEC Documents”) complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder. None of the SEC Documents as of their respective dates contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the “Financial
Statements”) present fairly the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods indicated, comply
as to form with the applicable accounting requirements of the Exchange Act and
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). PricewaterhouseCoopers LLP, who
have certified certain financial statements of the Company delivered their
report with respect to the audited financial statements and schedules included
in the SEC Documents, are independent public accountants with respect to the
Company within the meaning of Regulation S-X.

(e)    Capitalization. The authorized capital stock of the Company is as set
forth in the SEC Documents. As of the Effective Date, there are no shares of
Preferred Stock issued and outstanding and there are 22,641,651 shares of Common
Stock issued and outstanding, of which no shares are owned by the Company. There
are no other shares of any other class or series of capital stock of the Company
issued or outstanding. The Company has no capital stock reserved

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for issuance, except that, as of the Effective Date, there are (i) 3,061,077
shares of Common Stock reserved for issuance pursuant to the Company’s stock
incentive plans, of which 3,061,077 shares are issuable upon the exercise of
stock options outstanding on the date hereof and zero shares are issuable upon
the vesting of restricted stock units outstanding on the date hereof, (ii)
225,000 shares of Common Stock reserved for issuance pursuant to the Company’s
employee stock purchase plan and (iii) zero shares of Common Stock reserved for
issuance upon the exercise of outstanding warrants. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) (“Voting Debt”) of the Company
issued and outstanding. Except as stated above, and except for the obligations
to issue the Otic Acquisition Shares under the Otic Share Purchase Agreement,
there are no existing options, warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments relating to the issued or unissued
capital stock of the Company, obligating the Company to issue, transfer, sell,
redeem, purchase, repurchase or otherwise acquire or cause to be issued,
transferred, sold, redeemed, purchased, repurchased or otherwise acquired any
capital stock or Voting Debt of, or other equity interest in, the Company or
securities or rights convertible into or exchangeable for such shares or equity
interests or obligations of the Company to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement or
commitment. The issuance of Common Stock or other securities pursuant to any
provision of this Agreement will not give rise to any preemptive rights or
rights of first refusal on behalf of any natural person or legal entity (each a
“Person”) or result in the triggering of any anti-dilution rights. There are no
agreements or arrangements under which the Company is obligated to register the
sale of any of its securities under the Securities Act.

(f)    Litigation. No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or its property is pending or, to the best knowledge of the Company, threatened
that will have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business.

(g)    Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement or the Registration Rights Agreement except for (a) the approval
by the NASDAQ Stock Market of the listing of the Shares and (b) the filing of
one or more registration statements and all amendments thereto with the
Commission as contemplated by the Registration Rights Agreement.

(h)    No Default or Consents. Neither the execution, delivery or performance of
the Transaction Documents by the Company nor the consummation of any of the
transactions contemplated thereby (including, without limitation, the issuance
and sale by the Company of the Shares) will conflict with, result in a breach or
violation of, or imposition of any lien, charge or Encumbrance upon any property
or assets of the Company pursuant to, (i) the certificate of incorporation or
by-laws of the Company, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company is a party or
bound or to which its or their property is subject, or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of its properties,
except in the case of clauses (ii) and (iii) above, for any conflict, breach or
violation of, or imposition that would not have a Material Adverse Effect.

(i)    No Material Adverse Change. Since September 30, 2016, there have not been
any material adverse changes in the assets, liabilities, financial condition,
business or operations of the Company from that reflected in the Financial
Statements except for the continued incurrence of losses and changes in the
ordinary course of business which have not had, either individually or in the
aggregate, a Material Adverse Effect.

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(j)    No General Solicitation. Neither the Company nor any Person acting on its
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D promulgated under the Securities Act) in
connection with the offer or sale of the Shares.

(k)    No Integrated Offering. Neither of the Company or any Person acting on
its behalf has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any Company security, under circumstances that
would adversely affect reliance by the Company on Section 4(a)(2) of the
Securities Act or require registration of any of the Shares under the Securities
Act or cause this offering of the Shares to be integrated with prior offerings
by the Company for purposes of the Securities Act.

(l)    Sarbanes-Oxley Act. There is and has been no failure on the part of the
Company and any of the Company’s directors or officers, in their capacities as
such, to comply in any material respect with any applicable provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith, including, without limitation, Section 402 relating to
loans.

(m)    Intellectual Property. The Company owns, possesses, licenses or has other
rights to use, on reasonable terms, all patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the “Intellectual Property”) that it uses in the conduct
of the Company’s business (the “Company Intellectual Property”). To the
knowledge of the Company, there are no rights of third parties to any Company
Intellectual Property, other than as licensed by the Company. To the knowledge
of the Company, there is no infringement by third parties of any Company
Intellectual Property. There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
rights in or to any Company Intellectual Property. There is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Company Intellectual Property. There is
no pending or, to the Company’s knowledge, threatened action, suit, proceeding
or claim by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others. The
Company is not aware of any facts required to be disclosed to the U.S. Patent
and Trademark Office (“USPTO”) which have not been disclosed to the USPTO and
which would preclude the grant of a patent in connection with any patent
application of the Company Intellectual Property or would form the basis of a
finding of invalidity with respect to any issued patents of the Company
Intellectual Property that would have a Material Adverse Effect.

(n)    Compliance with NASDAQ Continued Listing Requirements. The Company is in
compliance with applicable NASDAQ continued listing requirements. There are no
proceedings pending or, to the Company’s knowledge, threatened against the
Company relating to the continued listing of the Common Stock on NASDAQ and the
Company has not received any notice of, nor to the Company’s knowledge is there
any reasonable basis for, the delisting of the Common Stock from NASDAQ.

(o)    Disclosure. The Company understands and confirms that the Purchasers will
rely on the foregoing representations in effecting transactions in securities of
the Company.

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(p)    Contracts. Each franchise, contract or other document of a character
required to be described in the SEC Documents or to be filed as an exhibit to
the SEC Documents under the Securities Act and the rules and regulations
promulgated thereunder is so described or filed.

(q)    Properties and Assets. The Company holds all the properties it owns free
from liens and encumbrances and leases all properties leased by it under valid
and enforceable leases, except as such would not have a Material Adverse Effect.

(r)    Compliance. Except as would not result in a Material Adverse Effect:
(i) the Company is and has been in compliance with statutes, laws, ordinances,
rules and regulations applicable to the Company for the ownership, testing,
development, manufacture, packaging, processing, use, labeling, storage, or
disposal of any product manufactured by or on behalf of the Company or
out-licensed by the Company (a “Company Product”), including without limitation,
the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq., the Public
Health Service Act, 42 U.S.C. § 262, similar laws of other governmental entities
and the regulations promulgated pursuant to such laws (collectively, “Applicable
Laws”); (ii) the Company possesses all licenses, certificates, approvals,
authorizations, permits and supplements or amendments thereto required by any
such Applicable Laws and/or for the ownership of its properties or the conduct
of its business as it relates to a Company Product and as described in the SEC
Documents (collectively, “Authorizations”) and such Authorizations are valid and
in full force and effect and the Company is not in violation of any term of any
such Authorizations; (iii) the Company has not received any written notice of
adverse finding, warning letter or other written correspondence or notice from
the U.S. Food and Drug Administration (the “FDA”) or any other governmental
entity alleging or asserting noncompliance with any Applicable Laws or
Authorizations relating to a Company Product; (iv) the Company has not received
written notice of any ongoing claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any governmental
entity or third party alleging that any Company Product, operation or activity
related to a Company Product is in violation of any Applicable Laws or
Authorizations or has any knowledge that any such governmental entity or third
party is considering any such claim, litigation, arbitration, action, suit,
investigation or proceeding, nor, to the Company’s knowledge, has there been any
noncompliance with or violation of any Applicable Laws by the Company that would
reasonably be expected to require the issuance of any such written notice or
result in an investigation, corrective action, or enforcement action by the FDA
or similar governmental entity with respect to a Company Product; (v) the
Company has not received written notice that any governmental entity has taken,
is taking or intends to take action to limit, suspend, modify or revoke any
Authorizations or has any knowledge that any such governmental entity has
threatened or is considering such action with respect to a Company Product; and
(vi) the Company has 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
and that all such reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments were complete, correct and not
misleading on the date filed (or were corrected or supplemented by a subsequent
submission). To the Company’s knowledge, neither the Company nor any of its
directors, officers, employees or agents, has made, or caused the making of, any
false statements on, or material omissions from, any other records or
documentation prepared or maintained to comply with the requirements of the FDA
or any other governmental entity.

(s)    Taxes. The Company has filed all tax returns that are required to be
filed or has requested extensions thereof (except in any case in which the
failure so to file would not have a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business.

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(t)    Transfer Taxes. There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Shares to the Purchasers.

(u)    Investment Company. The Company is not, and, immediately after giving
effect to the offering and sale of the Shares, will not be, an “investment
company” as defined in the Investment Company Act of 1940, as amended.

(v)    Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
reasonable and customary in the business in which it is engaged; all policies of
insurance and fidelity or surety bonds insuring the Company or its businesses,
assets, employees, officers and directors are in full force and effect; the
Company is in compliance with the terms of such policies and instruments in all
material respects; and there are no claims by the Company under any such policy
or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; the Company has not been refused
any insurance coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business.

(w)    Price of Common Stock. The Company has not taken, directly or indirectly,
any action designed to cause or result in, or that has constituted or that would
reasonably be expected to constitute the stabilization or manipulation of the
price of any securities of the Company to facilitate the sale or resale of the
Shares.

(x)    Governmental Permits, Etc. The Company possesses all licenses,
certificates, permits and other authorizations issued by all applicable
authorities necessary to conduct its business, and the Company has not received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which failure to possess or proceedings,
singly or in the aggregate, would have a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business.

(y)    Internal Control over Financial Reporting; Sarbanes-Oxley Matters. The
Company maintains a system of internal accounting controls which are 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 generally accepted accounting principles 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’s internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and the Company is not aware of any
material weakness in its internal controls over financial reporting. The Company
maintains “disclosure controls and procedures” (as such term is defined in Rule
13a-15(e) under the Exchange Act).

(z)    Foreign Corrupt Practices. The Company has not nor, to the knowledge of
the Company, has any director, officer, agent, or employee of the Company taken
any action,

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directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and the Company.

(aa)    Labor. No labor problem or dispute with the employees of the Company
exists or, to the knowledge of the Company, is threatened, and the Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers or contractors, that would have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business.

(bb)    ERISA. None of the following events has occurred or exists: (i) a
failure to fulfill the obligations, if any, under the minimum funding standards
of Section 302 of the United States Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and the regulations and published interpretations
thereunder with respect to a Plan that is required to be funded, determined
without regard to any waiver of such obligations or extension of any
amortization period; (ii) an audit or investigation by the Internal Revenue
Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation
or any other federal or state governmental agency or any foreign regulatory
agency with respect to the employment or compensation of employees by any of the
Company that could have a Material Adverse Effect; (iii) any breach of any
contractual obligation, or any violation of law or applicable qualification
standards, with respect to the employment or compensation of employees by the
Company that would reasonably be expected to have a Material Adverse Effect.
None of the following events has occurred or is reasonably likely to occur:
(i) a material increase in the aggregate amount of contributions required to be
made to all Plans in the current fiscal year of the Company compared to the
amount of such contributions made in the most recently completed fiscal year of
the Company except as a result of the Otic Acquisition; (ii) a material increase
in the “accumulated post-retirement benefit obligations” (within the meaning of
Statement of Financial Accounting Standards 106) of the Company compared to the
amount of such obligations in the most recently completed fiscal year of the
Company; (iii) any event or condition giving rise to a liability under Title IV
of ERISA that could have a Material Adverse Effect; or (iv) the filing of a
claim by one or more employees or former employees of the Company related to
their employment that could have a Material Adverse Effect. For purposes of this
paragraph, the term “Plan” means a plan (within the meaning of Section 3(3) of
ERISA) subject to Title IV of ERISA with respect to which the Company may have
any liability.

(cc)    Environmental Laws. The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
has received and is in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct its business and
(iii) has not received notice of any actual or potential liability under any
environmental law, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or liability
would not, individually or in the aggregate, have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of business. The
Company has not been named as a “potentially responsible party” under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended.

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(dd)    Money Laundering Laws. The operations of the Company are and have been
conducted at all times in compliance in all material respects with applicable
money laundering statutes and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

(ee)    OFAC. Neither the Company nor, to the knowledge of the Company, any
director, officer, agent or employee of the Company (i) is currently subject to
any sanctions administered or imposed by the United States (including any
administered or enforced by the Office of Foreign Assets Control of the U.S.
Treasury Department, the U.S. Department of State, or the Bureau of Industry and
Security of the U.S. Department of Commerce), the United Nations Security
Council, the European Union, or the United Kingdom (including sanctions
administered or controlled by Her Majesty’s Treasury) (such sanctions,
collectively, “Sanctions” and such persons, collectively, “Sanction Persons”) or
(ii) will, directly or indirectly, use the proceeds of this offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person in any manner that will result in a violation of
any economic Sanctions by, or could result in the imposition of Sanctions
against, any person (including any person participating in the offering, whether
as underwriter, advisor, Purchaser or otherwise). Neither the Company nor, to
the knowledge of the Company, any director, officer, agent, or employee of the
Company is a person that is, or is 50% or more owned or otherwise controlled by
a person that is: (x) the subject of any Sanctions; or (y) located, organized or
resident in a country or territory that is, or whose government is, the subject
of Sanctions that broadly prohibit dealings with that country or territory
(currently, Cuba, Iran, North Korea, Sudan, and Syria) (collectively,
“Sanctioned Countries” and each, a “Sanctioned Country”). Except as has been
disclosed to the Purchasers, or is not material to the analysis under any
Sanctions, the Company has not engaged in any dealings or transactions with or
for the benefit of a Sanctioned Person, or with or in a Sanctioned Country, in
the preceding three years, nor does the Company have any plans to increase its
dealings or transactions with Sanctioned Persons or with or in Sanctioned
Countries.

(ff)    Compliance in Clinical Trials. The clinical studies and tests conducted
by the Company or on behalf of the Company, have been and, if still pending, are
being conducted in all material respects pursuant to all Applicable Laws and
Authorizations; the descriptions of the results of such clinical studies and
tests contained in the SEC Documents are accurate in all material respects; the
Company is not aware of any clinical studies or tests, the results of which the
Company believes reasonably call into question the research, nonclinical or
clinical study or test results described or referred to in the SEC Documents
when viewed in the context in which such results are described; and the Company
has not received any written notices or correspondence from any governmental
entity requiring the termination, suspension or material modification of any
clinical study or test conducted by or on behalf of the Company.

5.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.

(a)    Each Purchaser, severally and not jointly, represents and warrants to and
covenants with the Company that:

i.    Such Purchaser (if an entity) is a validly existing corporation, limited
partnership or limited liability company and has all requisite corporate,
partnership or limited liability company power and authority to enter into and
consummate the transactions contemplated by the Transaction Documents and to
carry out its obligations hereunder and thereunder, and to invest in the Shares
pursuant to this Agreement.

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ii.    Such Purchaser acknowledges that it can bear the economic risk and
complete loss of its investment in the Shares and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment contemplated hereby.

iii.    Such Purchaser has had an opportunity to receive, review and understand
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Shares, and has conducted and
completed its own independent due diligence. Such Purchaser acknowledges that
the Company has made available the SEC Documents. Based on the information such
Purchaser has deemed appropriate, and without reliance upon any placement agent,
it has independently made its own analysis and decision to enter into the
Transaction Documents. Such Purchaser is relying exclusively on its own sources
of information, investment analysis and due diligence (including professional
advice it deems appropriate) with respect to the execution, delivery and
performance of the Transaction Documents, the Shares and the business, condition
(financial and otherwise), management, operations, properties and prospects of
the Company, including but not limited to all business, legal, regulatory,
accounting, credit and tax matters.

iv.    The Shares to be received by such Purchaser hereunder will be acquired
for such Purchaser’s own account, not as nominee or agent, and not with a view
to the resale or distribution of any part thereof in violation of the Securities
Act.

v.    Such Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the
Securities Act without prejudice, however, to such Purchaser’s right at all
times to sell or otherwise dispose of all or any part of such Shares in
compliance with applicable federal and state securities laws.

vi.    Such Purchaser is not a broker-dealer registered with the Commission
under the Exchange Act or an entity engaged in a business that would require it
to be so registered, nor is the Purchaser affiliated with a registered broker
dealer. Such Purchaser is not party to any agreement for distribution of any of
the Shares.

vii.    Such Purchaser understands that the Shares are characterized as
“restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act only in certain limited
circumstances. Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the securities purchased hereunder
except in compliance with the Securities Act, applicable blue sky laws, and the
rules and regulations promulgated thereunder.

viii.    Such Purchaser is an “accredited investor” within the meaning of Rule
501(a) under the Securities Act.

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ix.    Such Purchaser has determined based on its own independent review and
such professional advice as it deems appropriate that its purchase of the Shares
and participation in the transactions contemplated by the Transaction Documents
(i) are fully consistent with its financial needs, objectives and condition,
(ii) comply and are fully consistent with all investment policies, guidelines
and other restrictions applicable to such Purchaser, (iii) have been duly
authorized and approved by all necessary action, (iv) do not and will not
violate or constitute a default under such Purchaser’s charter, by-laws or other
constituent document or under any law, rule, regulation, agreement or other
obligation by which such Purchaser is bound and (v) are a fit, proper and
suitable investment for such Purchaser, notwithstanding the substantial risks
inherent in investing in or holding the Shares.

x.    The execution, delivery and performance by such Purchaser of the
Transaction Documents to which such Purchaser is a party have been duly
authorized and each has been duly executed and when delivered will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
such Purchaser in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights generally.

xi.    Such Purchaser shall have completed or caused to be completed and
delivered to the Company at no later than the Closing Date, the Purchaser
Questionnaire and the Selling Stockholder Questionnaire for use in preparation
of the registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the Purchasers of the
Registrable Securities (as defined in the Registration Rights Agreement) (the
“Registration Statement”), and the answers to the Purchaser Questionnaire and
the Selling Stockholder Questionnaire are true and correct as of the date of
this Agreement and will be true and correct as of the Closing and the effective
date of the Registration Statement; provided, that the Purchasers shall be
entitled to update the information in the Selling Stockholder Questionnaire by
providing notice thereof to the Company before the effective date of such
Registration Statement.

xii.    Such Purchaser understands that no United States federal or state
agency, or similar agency of any other country, has reviewed, approved, passed
upon, or made any recommendation or endorsement of the Company or the purchase
of the Shares.

xiii.    Such Purchaser has no present intent to effect a “change of control” of
the Company as such term is understood under the rules promulgated pursuant to
Section 13(d) of the Exchange Act.

xiv.    Such Purchaser has not taken any of the actions set forth in, and is not
subject to, the disqualification provisions of Rule 506(d)(1) of the Securities
Act.

xv.    Such Purchaser did not learn of the investment in the Shares as a result
of any general solicitation or general advertising.

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xvi.    Such Purchaser’s residence (if an individual) or offices in which its
investment decision with respect to the Shares was made (if an entity) are
located at the address immediately below such Purchaser’s name on its signature
page hereto.

xvii.    Such Purchaser (including any person controlling, controlled by, or
under common control with such Purchaser, as the term “control” is defined
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and its implementing regulations (the “HSR Act”)) in connection with
the consummation of the transactions contemplated by this Agreement will not be
required to and will not complete a filing with the U.S. government pursuant to
the HSR Act.

(b)    Other than consummating the transactions contemplated hereunder, such
Purchaser has not, nor has any person acting on behalf of or pursuant to any
understanding with such Purchaser, directly or indirectly executed any purchases
or sales, including all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock) (“Short Sales”), of the
securities of the Company during the period commencing as of the time that such
Purchaser was first contacted by the Company or any other person regarding the
transactions contemplated hereby and ending immediately prior to the Effective
Date. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Shares
covered by this Agreement. Other than to other persons party to this Agreement,
such Purchaser has maintained the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing
of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.

(c)    Purchaser understands that nothing in this Agreement or any other
materials presented to Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Shares.

(d)    Legends.

(a)    Purchaser understands that, until such time as the Shares have been sold
pursuant to the Registration Statement or the Shares may be sold pursuant to
Rule 144 under the Securities Act (“Rule 144”) without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the book entry notations evidencing the Shares may bear one or more legends in
substantially the following form and substance:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR

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ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS, AND IN THE CASE OF A TRANSACTION
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION, UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH
OTHER APPLICABLE LAWS.”

In addition, book entry notations representing the Shares may contain:

(i)    Any legend required by the laws of the State of California, including any
legend required by the California Department of Corporations.

(ii)    Any legend required by the blue sky laws of any other state to the
extent such laws are applicable to the sale of such Shares hereunder.

(iii)    A legend regarding affiliate status of the Purchasers set forth in
Schedule 1 hereto, in the form included therein.

(b)    The Company agrees that at such time as such legend is no longer required
under this section, it will, no later than three business days following the
delivery by a Purchaser to the Company or the Company’s transfer agent of a
certificate representing Shares, and if such Shares are certificated, issued
with a restrictive legend, together with such representations and covenants of
such Purchaser or such Purchaser’s executing broker as the Company may
reasonably require in connection therewith, deliver or cause to be delivered to
such Purchaser a book entry position representing such shares that is free from
any legend referring to the Securities Act. The Company shall not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this section. To
the extent that certificates or book entry positions are issued representing the
Shares, such certificates or book entry positions subject to legend removal
hereunder shall be transmitted by the transfer agent of the Company to the
Purchasers by crediting the account of such Purchaser’s prime broker with the
Depository Trust Company (“DTC”). All costs and expenses related to the removal
of the legends and the reissuance of any Shares shall be borne by the Company.

(c)    The restrictive legend set forth in this section above shall be removed
and the Company shall issue a certificate or book entry position without such
restrictive legend or any other restrictive legend to the holder of the
applicable shares upon which it is stamped or issue to such holder by electronic
delivery with the applicable balance account at DTC or in physical certificated
shares, if appropriate, if (i) such Shares are registered for resale

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under the Securities Act (provided that, if the Purchaser is selling pursuant to
an effective registration statement registering the Shares for resale, the
Purchaser agrees to only sell such Shares during such time that such
registration statement is effective and such Purchaser is not aware or has not
been notified by the Company that such registration statement has been withdrawn
or suspended, and only as permitted by such registration statement); (ii) such
Shares are sold or transferred pursuant to Rule 144 (if the transferor is not an
affiliate of the Company); or (iii) such Shares are eligible for sale without
the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such securities and without volume or
manner-of-sale restrictions. Subject to receipt of such representations, and
covenants as are contemplated hereby, following the earlier of (i) the effective
date of the Registration Statement or (ii) Rule 144 becoming available for the
resale of the Shares, without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to the
Shares and without volume or manner-of-sale restrictions, the Company shall
issue to the Company’s transfer agent the instructions with respect to legend
removal consistent with this section. Any fees (with respect to the transfer
agent, the Company’s counsel or otherwise) associated with the issuance of such
opinion or the removal of such legend shall be borne by the Company.

(e)    Restricted Shares. Purchaser understands that the Shares are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares may be resold without registration under the Securities Act only in
certain limited circumstances. In this connection, such Purchaser represents
that it is familiar with Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.

(f)    Exculpation Among Purchasers. Purchaser acknowledges that it is not
relying upon any other Purchaser, or any officer, director, employee, agent,
partner, member or affiliate of any such other Purchaser, in making its
investment or decision to invest in the Company. Purchaser agrees that neither
any Purchaser nor the respective controlling Persons, officers, directors,
partners, agents, or employees of any Purchaser shall be liable to any other
Purchaser for any action heretofore taken or omitted to be taken by any of them
in connection with the purchase of the Shares.

6.    CONDITIONS TO COMPANY’S OBLIGATIONS AT THE CLOSING.

The Company’s obligation to complete the sale and issuance of the Shares and
deliver Shares to each Purchaser, individually, as set forth in the Schedule of
Purchasers at the Closing shall be subject to the fulfillment of the following
conditions to the extent not waived by the Company:

(a)    Receipt of Payment. The Company shall have received payment, by wire
transfer of immediately available funds, in the full amount of the purchase
price for the number of Shares being purchased by such Purchaser at the Closing
as set forth in the Schedule of Purchasers.

(b)    Representations and Warranties. The representations and warranties made
by the Purchasers in Section 5 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.

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6.3    Performance. The Purchasers shall have performed in all material respects
all obligations and covenants herein required to be performed by them on or
prior to the Closing Date.

(c)    Receipt of Executed Documents. Each of the Purchasers shall have executed
and delivered to the Company the Registration Rights Agreement, the Purchaser
Questionnaire and the Selling Stockholder Questionnaire.

(d)    Share Purchase Agreement. The Company and the other parties thereto shall
have executed and delivered to the Purchasers copies of the Share Purchase
Agreement.

(e)    Otic Acquisition. The Otic Acquisition shall have been completed pursuant
to the Otic Share Purchase Agreement.

7.    CONDITIONS TO PURCHASERS’ OBLIGATIONS AT THE CLOSING.

Each Purchaser’s obligation to accept delivery of the Shares and to pay for the
Shares shall be subject to the fulfillment of the following conditions to the
extent not waived by such Purchaser:

(a)    Performance. The Company shall have performed in all material respects
all obligations and covenants herein required to be performed by it on or prior
to the Closing Date.

(b)    Receipt of Executed Registration Rights Agreement. The Company shall have
executed and delivered to the Purchasers the Registration Rights Agreement.

(c)    Legal Opinion. The Purchasers shall have received an opinion, dated as of
the Closing Date, in form and substance reasonably acceptable to the Purchasers.

(d)    Certificate. Each Purchaser shall have received a certificate signed by
the Chief Executive Officer or the Chief Financial Officer to the effect the
Company has satisfied in all material respects all of the conditions set forth
in this Section 7.

(e)    Good Standing. The Company is validly existing as a corporation in good
standing under the laws of Delaware.

(f)    Nasdaq Approval. The Company shall have filed with NASDAQ a Notification
Form: Listing of Additional Shares for the listing of the Shares, and, if
required, shall have obtained stockholder approval of the issuance of the Shares
hereunder

(g)    Judgments. No judgment, writ, order, injunction, award or decree of or by
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby.

(h)    Share Purchase Agreement. The Company shall have executed and delivered
to the Purchasers copies of the Share Purchase Agreement.

(i)    Stop Orders. No stop order or suspension of trading shall have been
imposed by the NASDAQ Stock Market, the Commission or any other governmental
regulatory body with respect to public trading in the Common Stock (any such
order or suspension, a “Suspension”).

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(j)    Otic Acquisition. The Otic Acquisition shall have been completed pursuant
to the Otic Share Purchase Agreement.

8.    TERMINATION OF OBLIGATIONS TO EFFECT CLOSING; EFFECTS.

(a)    This Agreement may be terminated, on a Purchaser-by-Purchaser basis, as
follows:

i.    upon the mutual written consent of the Company and such Purchaser;

ii.    by the Company if any of the conditions set forth in Sections 6 shall
have become incapable of fulfillment, and shall not have been waived by the
Company or satisfied by April 30, 2017; or

iii.    by such Purchaser if the Otic Share Purchase Agreement shall have been
terminated without the Company having consummated the Otic Acquisition;

provided, however, that, except in the case of clause (b) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

(b)    If this Agreement is terminated by either the Company or a Purchaser
pursuant to the provisions of Section 8(a), this Agreement with respect to the
Company and such Purchaser shall forthwith become void and there shall be no
further obligations or liability on the part of the Company or such Purchaser or
their respective stockholders, directors, officers, employees, agents or
representatives, except for the provisions of Sections 10.4 with respect to the
Confidentiality Obligations (as defined below), 12 and 13, which shall survive
any termination of this Agreement; provided, that nothing in this Section 8
shall be deemed (i) to release any party from any liability for any knowing or
intentional breach by such party of the terms and provisions of this Agreement
or the other Transaction Documents, or (ii) to impair the right of any party to
compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents, in either case, which may have
arisen prior to termination of this Agreement.

9.    BROKER’S FEES.

The Company and each Purchaser (severally and not jointly) hereby represent that
there are no other brokers or finders entitled to compensation, commissions,
placement agent’s fees or similar payments in connection with the sale of the
Shares, and shall indemnify each other for any such fees for which they are
responsible.

10.    ADDITIONAL AGREEMENTS OF THE PARTIES.

(a)    NASDAQ Listing. The Company will use commercially reasonable efforts to
continue the listing and trading of its Common Stock on NASDAQ and, in
accordance, therewith, will use commercially reasonable efforts to comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of such market or exchange, as applicable.

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(b)    Termination of Covenants. The provisions of Section 10.1 shall terminate
and be of no further force and effect on the date on which the Company’s
obligations under the Registration Rights Agreement to register or maintain the
effectiveness of any registration covering the Registrable Securities (as such
term is defined in the Registration Rights Agreement) shall terminate.

(c)    Integration. The Company shall not, and shall use its commercially
reasonable efforts to ensure that no affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that will be integrated
with the offer or sale of the Shares in a manner that would require the
registration under the Securities Act of the sale of the Shares to the
Purchasers, or that will be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of any trading market such that it would
require stockholder approval prior to the closing of such other transaction
unless stockholder approval is obtained before the closing of such subsequent
transaction.

(d)    Short Sales and Confidentiality After the Date Hereof. Each Purchaser
covenants that neither it nor any affiliates acting on its behalf or pursuant to
any understanding with it will execute any Short Sales during the period from
the date hereof until the earlier of such time as (i) after the transactions
contemplated by this Agreement are first publicly announced or (ii) this
Agreement is terminated in full. Except (x) as required by applicable law or the
listing rules of any applicable national or regional securities exchange, (y) as
required to be disclosed in filings or other submissions to any court,
regulatory body, administrative agency, governmental body, arbitrator or other
legal authority having jurisdiction over a party hereto made to obtain necessary
consents, approvals or filings, or (z) as provided by the terms and provisions
of the existing confidentiality and non-use obligations of the parties hereto
(including the existence and terms of this transaction) (such obligations, the
“Confidentiality Obligations”). Each Purchaser understands and acknowledges that
the Commission currently takes the position that coverage of short sales of
shares of the Common Stock “against the box” prior to effectiveness of a resale
registration statement with securities included in such registration statement
would be a violation of Section 5 of the Securities Act, as set forth in
Item 239.10 of the Securities Act Rules Compliance and Disclosure
Interpretations compiled by the Office of Chief Counsel, Division of Corporation
Finance.

(e)    Securities Laws Disclosure; Publicity. By 5:00 P.M., New York City time,
on the second trading day immediately following the Effective Date, the Company
shall issue a press release disclosing the material terms of the transactions
contemplated hereby. On or before 9:00 A.M., New York City time, on the third
trading day immediately following the execution of this Agreement, the Company
will file a Current Report on Form 8-K (the “8-K”) with the Commission
describing the material terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the agreements required to be filed
in connection therewith). Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any public filing with the Commission or any regulatory agency or
NASDAQ, without the prior written consent of such Purchaser, which consent shall
not be unreasonably withheld, conditioned or delayed, except: (a) as required by
federal securities law in connection with (i) any registration statement
contemplated by the Registration Rights Agreement, (ii) the filing of a proxy
statement seeking stockholder approval of the issuance and sale of the Shares
and (iii) the filing of final Transaction Documents with the Commission; and
(b) as otherwise required by law or Nasdaq regulations , provided that to the
extent disclosure is permitted by law or NASDAQ regulations, the Company shall
provide the Purchaser with prior notice of such disclosure under this clause
(b). As of the time of the filing of the 8-K, the Company shall not be aware
that any Purchaser shall be in possession of any material, non-public
information received from the Company, any subsidiary of the Company or any of
their respective officers, directors, employees or agents, pursuant to the
transactions contemplated by this Agreement that is not disclosed in the 8-K,
press release or other disclosure by the Company that complies with the
requirements of Regulation FD.

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11.    INDEMNIFICATION.

(a)    Indemnification by the Company. The Company agrees to indemnify and hold
harmless each of the Purchasers and each Person, if any, who controls any
Purchaser within the meaning of the Securities Act (each, an “Indemnified
Party”), against any losses, claims, damages, liabilities or expenses, joint or
several, to which such Indemnified Party may become subject under the Securities
Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based in whole or in part on the
inaccuracy in the representations and warranties of the Company contained in
this Agreement or the failure of the Company to perform its obligations
hereunder, and will reimburse each Indemnified Party for legal and other
expenses reasonably incurred as such expenses are reasonably incurred by such
Indemnified Party in connection with investigating, defending, settling,
compromising or paying such loss, claim, damage, liability, expense or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon (i) the failure of such Indemnified Party to comply with the
covenants and agreements contained in Sections 5 and 4 above respecting sale of
the Shares, or (ii) the inaccuracy of any representations made by such
Indemnified Party herein.

(b)    Indemnification by Purchasers. Each Purchaser shall severally, and not
jointly, indemnify and hold harmless the other Purchasers and the Company, each
of its directors, and each Person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses to which the Company, each of its directors or each of its
controlling Persons may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure by such
Purchaser to comply with the covenants and agreements contained in Sections 5
and 4 above respecting the sale of the Shares unless such failure by such
Purchaser is directly caused by the Company’s failure to provide written notice
of a Suspension to such Purchaser or (ii) the inaccuracy of any representation
made by such Purchaser herein, in each case to the extent, and will reimburse
the Company, each of its directors, and each of its controlling Persons for any
legal and other expense reasonably incurred, as such expenses are reasonably
incurred by the Company, each of its directors, and each of its controlling
Persons in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. No Purchaser
shall be liable for the indemnification obligations of any other Purchaser.

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12.    NOTICES.

All notices, requests, consents and other communications hereunder shall be in
writing, shall be sent by confirmed electronic mail, or mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, and shall be deemed given when so sent in the case of
electronic mail transmission, or when so received in the case of mail or
courier, and addressed as follows:

if to the Company, to:

Tokai Pharmaceuticals, Inc.

255 State Street, 6th Floor

Boston, MA 02109

Attention: Chief Executive Officer

E-Mail: jmorrison@tokaipharma.com

with copies (which shall not constitute notice) to:

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

Attn: Stuart M. Falber, Esq.

Attn: Hal J. Leibowitz, Esq.

Otic Pharma, Ltd.

Gregory J. Flesher

Chief Executive Officer

19900 MacArthur Blvd., Suite 550

Irvine, California 92612

Gibson, Dunn & Crutcher, LLP

555 Mission Street, Suite 3000

San Francisco, CA 94105

Attn: Ryan A. Murr

or to such other person at such other place as the Company shall designate to
the Purchasers in writing; and

if to the Purchasers, at the address as set forth at the end of this Agreement,
or at such other address or addresses as may have been furnished to the Company
in writing.

13.    MISCELLANEOUS.

(a)    Waivers and Amendments. Neither this Agreement nor any provision hereof
may be changed, waived, discharged, terminated, modified or amended with respect
to the Company and a Purchaser only with the written consent of the Company and
such Purchaser .

(b)    Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.

(c)    Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

(d)    Replacement of Shares. If the Shares are certificated and any certificate
or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence

--------------------------------------------------------------------------------

reasonably satisfactory to the Company and the Company’s transfer agent of such
loss, theft or destruction and the execution by the holder thereof of a
customary lost certificate affidavit of that fact and an agreement to indemnify
and hold harmless the Company and the Company’s transfer agent for any losses in
connection therewith or, if required by the transfer agent, a bond in such form
and amount as is required by the transfer agent. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares. If a
replacement certificate or instrument evidencing any Shares is requested due to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

(e)    Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under this
Agreement. Nothing contained herein and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchaser as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group,
or are deemed affiliates (as such term is defined under the Exchange Act) with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.

(f)    Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in New
York, New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City and County of
New York for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), 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 improper or is an inconvenient
venue for such proceeding. 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 via registered or certified mail or
overnight delivery (with evidence of delivery) 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 other manner permitted by law.

(g)    Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect as if
such facsimile of “.pdf” signature were the original thereof.

--------------------------------------------------------------------------------

(h)    Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that a Purchaser may not assign its rights and delegate its
duties hereunder in whole or in part to an affiliate or to a third party
acquiring some or all of its Shares in a transaction complying with applicable
securities laws without the prior written consent of the Company, provided such
assignee agrees in writing to be bound by the provisions hereof that apply to
Purchasers.

(i)    Entire Agreement. This Agreement and other documents delivered pursuant
hereto, including the exhibit and the Schedule of Exceptions, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.

(j)    Payment of Fees and Expenses. Each of the Company and the Purchasers
shall bear its own expenses and legal fees incurred on its behalf with respect
to this Agreement and the transactions contemplated hereby. If any action at law
or in equity is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney’s fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

(k)    Survival. The representations, warranties, covenants and agreements made
in this Agreement shall survive any investigation made by the Company or the
Purchasers and the Closing.

[signature pages follow]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

TOKAI PHARMACEUTICALS, INC. By:  

/s/ Jodie Morrison

Name:   Jodie Morrison Title:   Chief Executive Officer   Tokai Pharmaceuticals,
Inc.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Peregrine Ventures Management

By:  

/s/ Eyal Lifschitz, Boaz Lifschitz

Name:  

Eyal Lifschitz, Boaz Lifschitz

Title:  

General Partners

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Pontifax (Israel) III L.P., Pontifax (Cayman) III L.P.

By:  

/s/ Tomar Kariv

Name:  

Tomar Kariv

Title:  

CEO

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Gregory J. Flesher

By:  

/s/ Gregory J. Flesher

Name:  

Gregory J. Flesher

Title:  

Chief Executive Officer

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Catherine Turkel

By:  

/s/ Catherine Turkel

Name:  

Catherine Turkel

Title:  

Chief Development Officer

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Christine Ocampo

By:  

/s/ Christine Ocampo

Name:  

Christine Ocampo

Title:  

Chief Financial Officer

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Michael Cruse

By:  

/s/ Michael Cruse

Name:  

Michael Cruse

Title:  

Vice President Corporate Operations

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

 

PURCHASERS:

Mai Sirimanne

By:  

/s/ Mai Sirimanne

Name:  

Mai Sirimanne

Title:  

Senior Director, Clinical Development

Address:  

 

 

 

 

Email:  

 

--------------------------------------------------------------------------------

EXHIBIT A

SCHEDULE OF PURCHASERS

 

Name

   Number of
Shares      Aggregate
Purchase Price of
Shares ($)  

Peregrine Ventures Management

     1,801,801         1,999,999.11   

Pontifax (Israel) III L.P.

     614,171         681,729.81   

Pontifax (Cayman) III L.P.

     286,729         318,269.19   

Gregory J. Flesher

     530,630         588,999.30   

Catherine C. Turkel

     100,000         111,000.00   

Christine Ocampo

     90,090         99,999.90   

Michael Cruse

     135,135         149,999.85   

Mai Sirimanne

     45,045         49,999.95      

 

 

    

 

 

 

TOTAL

     3,603,601         3,999,997.11      

 

 

    

 

 

 

--------------------------------------------------------------------------------

APPENDIX I

SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE

 

 

Name of Selling Stockholder (please print)

TOKAI PHARMACEUTICALS, INC.

QUESTIONNAIRE FOR SELLING STOCKHOLDERS

IMPORTANT: IMMEDIATE ATTENTION REQUIRED

This Questionnaire is being furnished to all persons or entities (the
“Purchasers”) electing to purchase shares of Common Stock (“Common Stock”) of
Tokai Pharmaceuticals, Inc. (the “Company”) pursuant to the Securities Purchase
Agreement by and among the Company and the Purchasers (the “Purchase Agreement”)
to which this Questionnaire is an Appendix. This Questionnaire relates to
certain information required to be disclosed in the Registration Statement on
Form S-3 (the “Registration Statement”) being prepared by the Company for filing
with the United States Securities and Exchange Commission (the “SEC”) pursuant
to the Registration Rights Agreement entered into by and among the Company and
the Purchasers (the “Registration Rights Agreement”) in connection with the
Purchase Agreement. The Company must receive a completed Questionnaire from each
Purchaser in order to include such Purchaser’s shares of Common Stock in the
Registration Statement.

The furnishing of accurate and complete responses to the questions posed in this
Questionnaire is an extremely important part of the registration process. The
inclusion of inaccurate or incomplete disclosures in the Registration Statement
can result in potential liabilities, both civil and criminal, to the Company and
to the individuals who furnish the information. Accordingly, Purchasers are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the
Registration Statement and related prospectus.

PLEASE GIVE A RESPONSE TO EVERY QUESTION, indicating “None” or “Not Applicable”
where appropriate. Please complete, sign, and return one copy of this
Questionnaire by facsimile, email or overnight courier as soon as possible.

[●]

Unless stated otherwise, answers should be given as of the date you complete
this Questionnaire. However, it is your responsibility to inform us of any
changes that may occur to your situation. If there is any situation about which
you have any doubt, or if you are uncertain as to the meaning of any terms used
in this Questionnaire, please contact [●] at [●] or [●].

--------------------------------------------------------------------------------

PART I - STOCK OWNERSHIP

Item 1. Beneficial Ownership.

a. Deemed Beneficial Ownership. Please state the amount of securities of the
Company you own on the date you complete this Questionnaire. (If none, please so
state in each case.)

 

     Number of Shares of  

Amount Beneficially Owned1

   Common Stock Owned   

Please state the number of shares owned by you or by family members, trusts and
other organizations with which you have a relationship, and any other shares of
which you may be deemed to be the “beneficial owner”1:

  

Total Shares:

     

 

 

 

Of such shares:

  

Shares as to which you have sole voting power:

     

 

 

 

Shares as to which you have shared voting power:

     

 

 

 

Shares as to which you have sole investment power:

     

 

 

 

Shares as to which you have shared investment power:

     

 

 

 

Shares which you will have a right to acquire before 60 days after the date you
complete this questionnaire through the exercise of options, warrants or
otherwise:

     

 

 

 

 

2

--------------------------------------------------------------------------------

Do you have any present plans to exercise options or otherwise acquire, dispose
of or to transfer shares of Common Stock of the Company between the date you
complete this Questionnaire and the date which is 60 days after the date in
which the Registration Statement is filed?

Answer:

If so, please describe.

b.    Pledged Securities. If any of such securities have been pledged or
otherwise deposited as collateral or are the subject matter of any voting trust
or other similar agreement or of any contract providing for the sale or other
disposition of such securities, please give the details thereof.

Answer:

c.    Disclaimer of Beneficial Ownership. Do you wish to disclaim beneficial
ownership1 of any of the shares reported in response to Item 1(a)?

Answer:

If the answer is “Yes”, please furnish the following information with respect to
the person or persons who should be shown as the beneficial owner(s)1 of the
shares in question.

 

Name and Address of

Actual Beneficial Owner

 

Relationship of

Such Person To You

 

Number of Shares

Beneficially Owned

           

d.    Shared Voting or Investment Power over Securities. Will any person be
deemed to have beneficial ownership over any of the Securities purchased by you
pursuant to the Purchase Agreement?

Answer:

If the answer is “Yes”, please furnish the following information with respect to
the person or persons who should be shown as the beneficial owner(s)1 of the
Securities in question.

 

Name and Address of

Beneficial Owner

 

Relationship of

Such Person To You

 

Number of Shares

Beneficially Owned

           

 

3

--------------------------------------------------------------------------------

Item 2. Major Shareholders. Please state below the names of persons or groups
known by you to own beneficially1 more than 5% of the Company’s Common Stock.

Answer:

Item 3. Change of Control. Do you know of any contractual arrangements,
including any pledge of securities of the Company, the operation of which may at
a subsequent date result in a change of control of the Company?

Answer:

Item 4. Relationship with the Company. Please state the nature of any position,
office or other material relationship you have, or have had within the past
three years, with the Company or its affiliates.

 

Name

   Nature of
Relationship           

Item 5. Broker-Dealer Status. Is the Purchaser a broker-dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)?

☐  Yes.

☐  No.

If so, please answer the remaining questions under this Item 5.

Note that the Company will be required to identify any registered broker-dealer
as an underwriter in the Registration Statement and related prospectus.

a.    If the Purchaser is a registered broker-dealer, please indicate whether
the Purchaser purchased its Common Stock for investment or acquired them as
transaction-based compensation for investment banking or similar services.

Answer:

Note that if the Purchaser is a registered broker-dealer and received its Common
Stock other than as transaction-based compensation, the Company is required to
identify the Purchaser as an underwriter in the Registration Statement and
related prospectus.

 

4

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b.    Is the Purchaser an affiliate of a registered broker-dealer? For purposes
of this Question, an “affiliate” of a specified person or entity means a person
or entity that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the person or
entity specified.

☐  Yes.

☐  No.

If so, please answer questions (i)-(iii) below under this Item 5(b).

i.    Please describe the affiliation between the Purchaser and any registered
broker-dealers:

ii.    If the Common Stock was received by the Purchaser other than in the
ordinary course of business, please describe the circumstances:

iii.    If the Purchaser, at the time of its receipt of Common Stock, has had
any agreements or understandings, directly or indirectly, with any person to
distribute the Common Stock, please describe such agreements or understandings:

Note that if the Purchaser is an affiliate of a broker-dealer and did not
receive its Common Stock in the ordinary course of business or at the time of
receipt had any agreements or understandings, directly or indirectly, to
distribute the securities, the Company must identify the Purchaser as an
underwriter in the Registration Statement and related prospectus.    

Item 6. Nature of Beneficial Holding. The purpose of this question is to
identify the ultimate natural person(s) or publicly held entity that exercise(s)
sole or shared voting or dispositive power over the Registrable Securities (as
defined in the Registration Rights Agreement).

a.    Is the Purchaser a natural person?

☐  Yes.

☐  No.

 

5

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b.    Is the Purchaser required to file, or is it a wholly owned subsidiary of a
company that is required to file, periodic and other reports (for example, Form
10-K, 10-Q, 8-K) with the SEC pursuant to Section 13(a) or 15(d) of the Exchange
Act?

☐  Yes.

☐  No.

c.    Is the Purchaser an investment company, or a subsidiary of an investment
company, registered under the Investment Company Act of 1940, as amended?

☐  Yes.

☐  No.

If a subsidiary, please identify the publicly held parent entity:

d.    If you answered “no” to questions (a), (b) and (c) above, please identify
the controlling person(s) of the Purchaser (the “Controlling Entity”). If the
Controlling Entity is not a natural person or a publicly held entity, please
identify each controlling person(s) of such Controlling Entity. This process
should be repeated until you reach natural persons or a publicly held entity
that exercises sole or shared voting or dispositive power over the Registrable
Securities:

 

 

 

***PLEASE NOTE THAT THE SEC REQUIRES THAT THESE NATURAL PERSONS BE NAMED IN THE
PROSPECTUS***

PART II - CERTAIN TRANSACTIONS

Item 7. Transactions with the Company. If you, any of your associates2, or any
member of your immediate family3 had or will have any direct or indirect
material interest in any transactions4 or series of transactions to which the
Company or any of its subsidiaries was a party at any time since January 1,
2015, or in any currently proposed transactions or series of transactions in
which the Company or any of its subsidiaries will be a party, in which the
amount involved exceeds $120,000, please specify (a) the names of the parties to
the transaction(s) and their relationship to you, (b) the nature of the interest
in the transaction, (c) the amount involved in the transaction, and (d) the
amount of the interest in the transaction. If the answer is “none”, please so
state.

Answer:

 

6

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Item 8. Third Party Payments. Please describe any compensation paid to you by a
third party pursuant to any arrangement between the Company and any such third
party.

Answer:

PART III – PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees,
assignees or other successors-in-interest may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices. The selling stockholders may use one or more
of the following methods when disposing of the shares or interests therein:

 

  •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

  •   block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

  •   through brokers, dealers or underwriters that may act solely as agents;

 

  •   purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;

 

  •   an exchange distribution in accordance with the rules of the applicable
exchange;

 

  •   privately negotiated transactions;

 

  •   through the writing or settlement of options or other hedging transactions
entered into after the effective date of the registration statement of which
this prospectus is a part, whether through an options exchange or otherwise;

 

  •   broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 

  •   a combination of any such methods of disposition; and

 

  •   any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, or Securities Act, if available, or Section
4(a)(1) under the Securities Act, rather than under this prospectus.

 

7

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Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under a supplement or amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.

Upon being notified in writing by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, we will file a
supplement to this prospectus, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such shares of common stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon being notified in writing by a selling stockholder that a donee or pledge
intends to sell more than 500 shares of common stock, we will file a supplement
to this prospectus if then required in accordance with applicable securities
law.

The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of the shares of common stock or interests in shares
of common stock, the selling stockholders may enter into hedging transactions
after the effective date of the registration statement of which this prospectus
is a part with broker-dealers or other financial institutions, which may in turn
engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of common stock short
after the effective date of the registration statement of which this prospectus
is a part and deliver these securities to close out their short positions, or
loan or pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions after the effective date of the registration statement of which
this prospectus is a part with broker-dealers or other financial institutions or
the creation of one or more derivative securities which require the delivery to
such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

 

8

--------------------------------------------------------------------------------

The selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The maximum commission or discount to be
received by any member of the Financial Industry Regulatory Authority (FINRA) or
independent broker-dealer will not be greater than 8% of the initial gross
proceeds from the sale of any security being sold.

We have advised the selling stockholders that they are required to comply with
Regulation M promulgated under the Securities Exchange Act of 1934, as amended,
during such time as they may be engaged in a distribution of the shares. The
foregoing may affect the marketability of the common stock.

The aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering.

We are required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act or otherwise.

We have agreed with the selling stockholders to keep the registration statement
of which this prospectus constitutes a part effective until the earlier of
(a) such time as all of the shares covered by this prospectus have been disposed
of pursuant to and in accordance with the registration statement or (b) the date
on which the shares of common stock covered by this prospectus may be sold or
transferred by non-affiliates without any volume limitations or pursuant to Rule
144 of the Securities Act.

*        *        *

The undersigned has reviewed the Plan of Distribution set forth above and does
not have a present intention of effecting a sale in a manner not described
therein.

☐     Agree             ☐     Disagree

         (If left blank, response will be deemed to be “Agree”.)

The undersigned hereby represents that the undersigned understands, pursuant to
Interpretation A.65 in the Securities and Exchange Commission, Division of
Corporation Finance, Manual of Publicly Available Telephone Interpretations
dated July 1997, a copy of which is attached hereto as Exhibit 1, that the
undersigned may not make any short sale of the Common Stock prior to the
effectiveness of the Registration Statement, and further covenants to the
Company that the undersigned will not engage in any short sales of such stock to
be registered under the Registration Statement prior to its effectiveness.

 

9

--------------------------------------------------------------------------------

SIGNATURE

The undersigned understands that the Company anticipates filing the Registration
Statement within the time frame set forth in the Registration Rights Agreement.
If at any time any of the information set forth in my responses to this
Questionnaire has materially changed due to passage of time (other than due to
the receipt of the Common Stock set forth opposite the undersigned’s name in the
Schedule of Purchasers in the Purchase Agreement), or any development occurs
which requires a change in any of my answers, or has for any other reason become
incorrect, the undersigned agrees to furnish as soon as practicable to the
individual to whom a copy of this Questionnaire is to be sent, as indicated and
at the address shown on the first page hereof, any necessary or appropriate
correcting information. Otherwise, the Company is to understand that the above
information continues to be, to the best of my knowledge, information and
belief, complete and correct.

Upon any sale of Common Stock pursuant to the Registration Statement, the
undersigned hereby agrees to deliver to the Company and the Company’s transfer
agent the Certificate of Subsequent Sale set forth in Exhibit I hereto.

The undersigned understands that the information that the undersigned is
furnishing to the Company herein will be used by the Company in the preparation
of the Registration Statement.

 

  Name of Purchaser:  

 

Date:             , 2016   Signature:  

 

  Print Name:  

 

  Title (if applicable):  

 

  Address:  

 

 

  Street      

 

  Street      

 

  City   State   Zip Code  

 

  Telephone Number      

 

  Email Address    

 

10

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FOOTNOTES

 

1. Beneficial Ownership. You are the beneficial owner of a security, as defined
in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), if
you, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise have or share: (1) voting power, which includes the
power to vote, or to direct the voting of, such security, and/or (2) investment
power, which includes the power to dispose, or to direct the disposition of,
such security. You are also the beneficial owner of a security if you, directly
or indirectly, create or use a trust, proxy, power of attorney, pooling
arrangement or any other contract, arrangement or device with the purpose or
effect of divesting yourself of beneficial ownership of a security or preventing
the vesting of such beneficial ownership.

You are deemed to be the beneficial owner of a security if you have the right to
acquire beneficial ownership of such security at any time within 60 days
including, but not limited to, any right to acquire such security (a) through
the exercise of any option, warrant or right, (b) through the conversion of a
security, or (c) pursuant to the automatic termination of, or the power to
revoke a trust, discretionary account, or similar arrangement.

Ordinarily, shares held in the name of your spouse or minor child should be
considered as beneficially owned by you absent special circumstances to indicate
that you do not have, as a practical matter, voting power or investment power
over such shares. Similarly, absent countervailing facts, securities held in the
name of relatives who share your home are to be reported as being beneficially
owned by you. In addition, securities held for your benefit in the name of
others, such as nominees, trustees and other fiduciaries, securities held by a
partnership of which you are a partner, and securities held by a corporation
controlled by you should be regarded as beneficially owned by you.

This definition of beneficial ownership is very broad; therefore, even though
you may not actually have or share voting or investment power with respect to
securities owned by persons in your family or living in your home, you should
include such shares in your beneficial ownership disclosure and may then
disclaim beneficial ownership of such securities.

 

2. Associate. The term “associate”, as defined in Rule 14a-1 under the Exchange
Act, means (a) any corporation or organization (other than the Company or any of
its majority owned subsidiaries) of which you are an officer or partner or are,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (b) any trust or other estate in which you have a substantial
beneficial interest or as to which you serve as trustee or in a similar
capacity, and (c) your spouse, or any relative of yours or relative of your
spouse living in your home or who is a director or officer of the Company or of
any subsidiary. The term “relative of yours” as used in this Questionnaire
refers to any relative or spouse of yours, or any relative of such spouse, who
has the same home as you or who is a director or officer of any subsidiary of
the Company.

Please identify your associate referred to in your answer and indicate your
relationship.

 

11

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3. Immediate Family. The members of your “immediate family” are deemed to
include the following: your spouse; your parents; your children; your siblings;
your mother-in-law or father-in-law; your sons- and daughters-in-law; and your
brothers- and sisters-in-law.

4. Transactions. The term “transaction” is to be understood in its broadest
sense, and includes the direct or indirect receipt of anything of value. Please
note that indirect as well as direct material interests in transactions are to
be disclosed. Transactions in which you would have a direct interest would
include your purchasing or leasing anything (stock in a business acquired by the
Company, office space, plants, Company apartments, computers, raw materials,
finished goods, etc.) from or selling or leasing anything to, or borrowing or
lending cash or other property from or to, the Company, or any subsidiary.

 

12

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Exhibit 1

Securities Act Sections Compliance and Disclosure Interpretations
Section 239.10: “An issuer filed a Form S-3 registration statement for a
secondary offering of common stock which is not yet effective. One of the
selling shareholders wanted to do a short sale of common stock “against the box”
and cover the short sale with registered shares after the effective date. The
issuer was advised that the short sale could not be made before the registration
statement becomes effective, because the shares underlying the short sale are
deemed to be sold at the time such sale is made. There would, therefore, be a
violation of Section 5 if the shares were effectively sold prior to the
effective date.”

 

13

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Exhibit I

CERTIFICATE OF SUBSEQUENT SALE

[American Stock Transfer & Trust Company, LLC]

 

  RE: Sale of Shares of Common Stock of Tokai Pharmaceuticals, Inc. (the
“Company”) pursuant to the Company’s Prospectus dated             ,         
(the “Prospectus”)

Dear Sir/Madam:

The undersigned hereby certifies, in connection with the sale of shares of
Common Stock of the Company included in the table of Selling Stockholders in the
Prospectus, that the undersigned has sold the shares pursuant to the Prospectus
and in a manner described under the caption “Plan of Distribution” in the
Prospectus and that such sale complies with all securities laws applicable to
the undersigned, including, without limitation, the Prospectus delivery
requirements of the Securities Act of 1933, as amended.

 

Selling Stockholder (the beneficial owner):   

 

Record Holder (e.g., if held in name of nominee):   

 

Book Entry Position or Restricted Stock Certificate No.(s):   

 

Number of Shares Sold:   

 

Date of Sale:   

 

In the event that you receive a stock certificate(s) or evidence of a book entry
position representing more shares of Common Stock than have been sold by the
undersigned, then you should return to the undersigned a newly issued
certificate or book entry position for such excess shares in the name of the
Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you should place a stop
transfer on your records with regard to such certificate. Notwithstanding the
foregoing, in the event that the undersigned executes and delivers to you and to
the Company the certification set forth on Annex I, upon instructions from the
Company, you should return to the undersigned a newly issued certificate or book
entry position for such excess shares of Common Stock in the name of the Record
Holder without any restrictive legend. In addition, no subsequent certification
will be required to be delivered to you by the undersigned provided that the
representations and warranties set forth on Annex I have been delivered to you
and continue to be accurate.

 

14

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    Very truly yours,

Dated:                                                                        

    By:  

 

    Print Name:  

 

    Title:  

 

 

cc: Tokai Pharmaceuticals, Inc.

255 State Street, 6th Floor

Boston, Massachusetts 02109

Attn:

 

15

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Annex I

In connection with any excess shares to be returned to the Selling Stockholder
upon a sale of shares of Common Stock of Tokai Pharmaceuticals, Inc. (the
“Company”) included in the table of Selling Stockholders in the Prospectus, the
undersigned hereby certifies to the Company and [American Stock Transfer & Trust
Company, LLC], that:

1.    In connection with the sale by the undersigned stockholder of any of the
shares of Common Stock, the undersigned stockholder will deliver a copy of the
Prospectus included in the Registration Statement to the purchaser directly or
through the undersigned stockholder’s broker-dealer in compliance with the
requirements of the Securities Act of 1933 and the Securities Exchange Act of
1934.

2.    Any such sale will be made only in the manner described under “Plan of
Distribution” in the Prospectus.

3.    The undersigned stockholder will only sell the shares of Common Stock
while the Registration Statement is effective, unless another exemption from
registration is available.

4.    The Company and its attorneys may rely on this letter to the same extent
as if it were addressed to them.

5.    The undersigned stockholder agrees to notify you immediately of any
development or occurrence which to his, her or its knowledge would render any of
the foregoing representations and agreements inaccurate.

All terms not defined herein are as defined in the Securities Purchase Agreement
entered into on January 31, 2017 among the Company and the Purchasers.

 

    Very truly yours,

Dated:                                                                        

    By:  

 

    Print Name:  

 

    Title:  

 

 

16

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APPENDIX II

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of [        ] [    ], 201[  ], by and among Tokai Pharmaceuticals, Inc., a
Delaware corporation (the “Company”) and each of the other parties signatory
hereto (each a “Purchaser” and together, the “Purchasers”). This Agreement is
made pursuant to the Securities Purchase Agreement, dated as of January 31,
2017, among the Company and the Purchasers (the “Purchase Agreement”).

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

1.    Definitions. Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following terms shall
have the respective meanings set forth in this Section 1:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

“Commission” means the United States Securities and Exchange Commission, or any
successor entity or entities, including, if applicable, the staff of the
Commission.

“Common Stock” means the common stock, par value $0.001 per share, of the
Company.

“Closing Date” shall have the meaning set forth in the Purchase Agreement.

“Effectiveness Deadline” means: (a) with respect to the Initial Registration
Statement required to be filed hereunder, the 120th day following the Closing
Date (or the 150th day following the Closing Date in the event the Initial
Registration Statement is reviewed by the Commission), (b) with respect to any
additional Registration Statements which may be required pursuant to Section 2,
the 120th day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required under
such Section (or the 150th day following such date in the event such additional
Registration Statement is reviewed by the Commission). If the Effectiveness
Deadline falls on a Saturday, Sunday or other date that the Commission is closed
for business, the Effectiveness Deadline shall be extended to the next day on
which the Commission is open for business.

--------------------------------------------------------------------------------

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Filing Date” means: (a) with respect to the Initial Registration Statement, the
45th calendar day following the Closing Date, and (b) with respect to any
additional Registration Statements that may be required pursuant to Section 2
hereof, the 45th day following the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement is
required under such Section.

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

“Initial Registration Statement” shall mean the initial Registration Statement
required to be filed to cover the resale by the Holders of the Registrable
Securities pursuant to Section 2(a).

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A or Rule 430B promulgated by the Commission
pursuant to the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

“Registrable Securities” means (i) the Shares issued pursuant to the Purchase
Agreement and (ii) any other shares of Common Stock issued as (or issuable upon
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, in exchange for or in
replacement of the Shares; provided, however, that any such Registrable
Securities shall cease to be Registrable Securities (and the Company shall not
be required to maintain the effectiveness of any, or file another, Registration
Statement hereunder with respect thereto) for so long as (a) a Registration
Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holder in accordance with such effective
Registration Statement, (b) such Registrable Securities have been previously
sold or transferred in accordance with Rule 144, or (c) such securities become
eligible for resale without volume or manner-of-sale restrictions and without
current public information requirements pursuant to Rule 144 as set forth in a
written opinion letter to such effect, addressed, delivered

 

2

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and acceptable to the Company’s transfer agent and the affected Holders
(assuming that such securities and any securities issuable upon exercise,
conversion or exchange of which, or as a dividend upon which, such securities
were issued or are issuable, were at no time held by any Affiliate of the
Company), as reasonably determined by the Company, upon the advice of counsel to
the Company.

“Registration Statement” means each of the following: (i) an initial
registration statement which is required to register the resale of the
Registrable Securities, and (ii) each additional registration statement, if any,
contemplated by Section 2, and including, in each case, the Prospectus,
amendments and supplements to each such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” shall have the meaning set forth in the Purchase Agreement.

“Trading Day” means any day on which the Common Stock is traded on the Nasdaq
Global Market, or, if the Nasdaq Global Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

“Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

“Underwritten Offering” means a registration in which Registrable Securities are
sold to an underwriter for reoffering to the public.

2.    Registration.

(a)    On or prior to each Filing Date, the Company shall prepare and file with
the Commission a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement filed hereunder shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another

 

3

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appropriate form in accordance herewith) and shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review
of such Registration Statement) the “Plan of Distribution” in substantially the
form attached hereto as Annex A (which may be modified to respond to comments,
if any, provided by the Commission). The Company shall use its commercially
reasonable efforts to cause a Registration Statement filed under this Agreement
to be declared effective under the Securities Act promptly but, in any event, no
later than the Effectiveness Deadline for such Registration Statement, and
shall, subject to Section 7(d) hereof, use its commercially reasonable efforts
to keep the Registration Statement continuously effective under the Securities
Act until the earlier of (i) the date that is three years after the Closing Date
and (ii) the date on which all securities under such Registration Statement have
ceased to be Registrable Securities (the “Effectiveness Period”).
Notwithstanding the foregoing, the Company shall be entitled to suspend the
effectiveness of the Registration Statement at any time prior to the expiration
of the Effectiveness Period for up to an aggregate of 30 consecutive Trading
Days or an aggregate of 60 Trading Days (which need not be consecutive) in any
given 360-day period. It is agreed and understood that the Company shall, from
time to time, be obligated to file one or more additional Registration
Statements to cover any Registrable Securities which are not registered for
resale pursuant to a pre-existing Registration Statement.

(b)    Notwithstanding anything contained herein to the contrary, in the event
that the Commission limits the amount of Registrable Securities that may be
included and sold by Holders in any Registration Statement, including the
Initial Registration Statement, pursuant to Rule 415 or any other basis, the
Company may reduce the number of Registrable Securities included in such
Registration Statement on behalf of the Holders in whole or in part (in case of
an exclusion as to a portion of such Registrable Securities, such portion shall
be allocated pro rata among such Holders in proportion to the respective numbers
of Registrable Securities represented by Shares requested to be registered by
each such Holder over the total amount of Registrable Securities represented by
Shares) (such Registrable Securities, the “Reduction Securities”). In such event
the Company shall give the Holders prompt notice of the number of such Reduction
Securities excluded and the Company will not be liable for any damages under
this Agreement in connection with the exclusion of such Reduction Securities.
The Company shall use its commercially reasonable efforts at the first
opportunity that is permitted by the Commission to register for resale the
Reduction Securities. Such new Registration Statement shall be on Form S-3, or
any successor short form registration statement (except if the Company is not
then eligible to register for resale the Reduction Securities on Form S-3, in
which case such registration shall be on another appropriate form for such
purpose) and shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” in substantially the form attached hereto
as Annex A (which may be modified to respond to comments, if any, provided by
the Commission). The Company shall use its commercially reasonable efforts to
cause each such Registration Statement to be declared effective under the
Securities Act as soon as possible but, in any event, no later than the
Effectiveness Deadline, and shall use its commercially reasonable efforts to
keep such Registration Statement continuously effective under the Securities Act
during the entire Effectiveness Period, subject to Section 7(d) hereof.
Notwithstanding the foregoing, the Company shall be entitled to suspend the
effectiveness of such Registration Statement at any time prior to the expiration
of the Effectiveness Period for an aggregate of no more than 30 consecutive
Trading Days or an aggregate of 60 Trading Days (which need not be consecutive)
in any given 360-day period.

 

4

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(c)    If: (i) the Initial Registration Statement is not filed with the
Commission on or prior to the Filing Date, (ii) the Initial Registration
Statement is not declared effective by the Commission (or otherwise does not
become effective) on or prior to the Effectiveness Deadline or (iii) after the
date it is declared effective by the Commission and except as provided in
Section 3(i), (A) such Registration Statement ceases for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement), to remain continuously effective as to all
Registrable Securities included in such Registration Statement or (B) the
Holders are not permitted to utilize the Prospectus therein to resell such
Registrable Securities for any reason (other than due to a change in the “Plan
of Distribution” or the inaccuracy of any information regarding the Holders) in
each case for more than an aggregate of 30 consecutive Trading Days or 60
Trading Days (which need not be consecutive) in any given 360-day period (other
than as a result of a breach of this Agreement by such Holder), or (iv) the
Company fails to satisfy the current public information requirement pursuant to
Rule 144(c)(1) as a result of which the Holders who are not affiliates are
unable to sell Registrable Securities without restriction under Rule 144 (or any
successor thereto), (any such failure or breach in clauses (i) through
(iv) above being referred to as an “Event,” and, for purposes of clauses (i),
(ii) or (iv), the date on which such Event occurs, or for purposes of clause
(iii), the date on which such 30 or 60 Trading Day period is exceeded, being
referred to as an “Event Date”), then in addition to any other rights the
Holders may have hereunder or under applicable law, on each such Event Date and
on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the earlier of (1) the applicable
Event is cured or (2) the Registrable Securities are eligible for resale
pursuant to Rule 144 without manner of sale or volume restrictions or the
current public information requirement, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty (“Liquidated
Damages”), equal to 1% of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for any unregistered Registrable Securities
then held by such Holder. The parties agree that (1) notwithstanding anything to
the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be
payable with respect to any period after the expiration of the Effectiveness
Period (except in respect of an Event described in Section 2(c)(iv) herein), (it
being understood that this sentence shall not relieve the Company of any
Liquidated Damages accruing prior to the Effectiveness Deadline) and in no event
shall, the aggregate amount of Liquidated Damages (excluding Liquidated Damages
payable in respect of an Event described in Section 2(c)(iv) herein) payable to
a Holder exceed, in the aggregate, 5% of the aggregate purchase price paid by
such Holder pursuant to the Purchase Agreement) and (2) in no event shall the
Company be liable in any 30 day period for Liquidated Damages under this
Agreement in excess of 1% of the aggregate purchase price paid by the Holders
pursuant to the Purchase Agreement. The Liquidated Damages pursuant to the terms
hereof shall apply on a daily pro-rata basis for any portion of a month prior to
the cure of an Event, except in the case of the first Event Date. The Company
shall not be liable for Liquidated Damages under this Agreement as to any
Registrable Securities which are not permitted by the Commission to be included
in a Registration Statement. In such case, the Liquidated Damages shall be
calculated to only apply to the percentage of Registrable Securities which are
permitted to be included in such Registration Statement. The Effectiveness
Deadline for a Registration Statement shall be extended without default or
Liquidated Damages hereunder

 

5

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in the event that the Company’s failure to obtain the effectiveness of the
Registration Statement on a timely basis results from the failure of a Purchaser
to timely provide the Company with information requested by the Company and
necessary to complete the Registration Statement in accordance with the
requirements of the Securities Act (in which case the Effectiveness Deadline
would be extended with respect to Registrable Securities held by such
Purchaser).

3.    Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company
shall:

(a)    Not less than three Trading Days prior to the filing of a Registration
Statement or any related Prospectus or any amendment or supplement thereto,
furnish to the Holders copies of all such documents proposed to be filed (other
than those incorporated by reference). Notwithstanding the foregoing, the
Company shall not be required to furnish to the Holders any prospectus
supplement being prepared and filed solely to name new or additional selling
stockholders unless such Holders are named in such prospectus supplement. In
addition, in the event that any Registration Statement is on Form S-1 (or other
form which does not permit incorporation by reference), the Company shall not be
required to furnish to the Holders any prospectus supplement containing
information included in a report or proxy statement filed under the Exchange Act
that would be incorporated by reference in such Registration Statement if such
Registration Statement were on Form S-3 (or other form which permits
incorporation by reference). The Company shall duly incorporate any comments
made by Holders acting reasonably and received by the Company not later than two
Trading Days prior to the filing of the Registration Statement, but shall not be
required to accept any such comments to which it reasonably objects.

(b)    (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the applicable Registrable Securities for
its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible to any comments received from the
Commission with respect to each Registration Statement or any amendment thereto
and, as promptly as reasonably possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to such
Registration Statement that pertains to the Holders as selling stockholders but
not any comments that would result in the disclosure to the Holders of material
and non-public information concerning the Company; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the Registration Statements and the disposition of all
Registrable Securities covered by each Registration Statement.

(c)    Notify the Holders as promptly as reasonably possible (and, in the case
of (i)(A) below, not less than three Trading Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day following the day: (i)(A)

 

6

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when a Prospectus or any prospectus supplement (but only to the extent notice is
required under Section 3(a) above) or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (in which case the
Company shall provide true and complete copies thereof and all written responses
thereto to each of the Holders that pertain to the Holders as a selling
stockholder or to the Plan of Distribution, but not information which the
Company believes would constitute material and non-public information); and
(C) with respect to each Registration Statement or any post-effective amendment,
when the same has been declared effective; (ii) of any request by the Commission
or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for additional
information that pertains to the Holders as selling stockholders or the Plan of
Distribution; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement covering any or all of
the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included or
incorporated by reference in a Registration Statement ineligible for inclusion
or incorporation by reference therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any 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 light of the circumstances under which they were
made, not misleading; and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus; provided, that any and all of such information shall
remain confidential to each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by law; provided, further,
that notwithstanding each Holder’s agreement to keep such information
confidential, each such Holder makes no acknowledgement that any such
information is material, non-public information.

(d)    Use its reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

(e)    If requested by a Holder, furnish to each Holder, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto and all exhibits to the extent reasonably requested by such Person
(including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission; provided, that the
Company shall have no obligation to provide any document pursuant to this clause
that is available on the EDGAR system.

 

7

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(f)    If requested by a Holder, promptly deliver to each Holder, without
charge, as many copies of each Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. Subject to Section 7(d) hereof, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

(g)    Prior to any public offering of Registrable Securities, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of those
jurisdictions within the United States as any Holder reasonably requests in
writing to keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statements; provided,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

(h)    Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates or book-entry statements representing Registrable
Securities to be delivered to a transferee pursuant to the Registration
Statements, which certificates or book-entry statements shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request.

(i)    Upon the occurrence of any event contemplated by Section 3(c)(v), as
promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
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, in
light of the circumstances under which they were made, not misleading.

(j)    The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and any Affiliate thereof, the natural persons thereof that
have voting and dispositive control over the shares and any other information
with respect to such Holder as the Commission requests.

4.    Holder’s Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder shall be entitled to sell any of such
Registrable Securities pursuant to a Registration Statement or to receive a
Prospectus relating thereto, unless such Holder has furnished the Company with
all material information required to be set forth in the Purchaser Questionnaire
and Selling Stockholder Questionnaire pursuant to the Purchase Agreement. Any
sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by

 

8

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such Holder that the information regarding such Holder is as set forth in the
Prospectus delivered by such Holder in connection with such disposition, and
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact regarding such Holder or omit to state any material
fact regarding such Holder necessary to make the statements in such Prospectus,
in the light of the circumstances under which they were made, not misleading,
solely to the extent such facts are based upon information regarding such Holder
furnished in writing to the Company by such Holder for use in such Prospectus.

5.    Registration Expenses. All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions) shall be borne by
the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the principal stock exchange on which the Common Stock
is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested by
the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) reasonable fees and disbursements of counsel for the Company,
(v) reasonable fees and disbursements of one counsel to the Holders, in an
amount not to exceed $50,000, chosen by the Holders of a majority of the
then-outstanding Registrable Securities to be included in such Registration
Statement, (vi) Securities Act liability insurance, if the Company so desires
such insurance, and (vii) reasonable fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders. To the extent that underwriting discounts and selling
commissions are incurred in connection with the registration, pursuant to a
Registration Statement, of Registrable Securities in an Underwritten Offering
hereunder, such underwriting discounts and selling commissions shall be borne by
the Holders of Registrable Securities covered by such Registration Statement,
pro rata on the basis of the number of Registrable Securities registered on
their behalf in such Registration Statement and included in such Underwritten
Offering.

6.    Indemnification.

(a)    Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, partners, members, stockholders and employees of
each Holder, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents, partners, members, stockholders and

 

9

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employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose), or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except to the extent, but only to the extent, that (1) such untrue
statements, alleged untrue statements, omissions or alleged omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has validly notified such Holder in writing (in
accordance with Section 7(i) below) that the Prospectus is outdated or defective
and prior to the receipt by such Holder of an Advice (as defined below) or an
amended or supplemented Prospectus, but only if and to the extent that following
the receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been corrected. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.

(b)    Indemnification by Holders. Each Holder shall, notwithstanding any
termination of this Agreement, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents,
partners, members, stockholders or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon: (x) for so long as the
Company is not eligible to use Form S-3 under the Securities Act for a primary
offering in reliance on General Instruction I.B.1 of such form the prospectus
delivery requirements of the Securities Act apply to sales by such Holder, such
Holder’s failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus, or any form of
prospectus or supplement thereto, in light of the circumstances under which they
were made) not misleading to the extent, but only to the extent that, (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the

 

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Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has validly notified
such Holder in writing (in accordance with Section 7(i) below) that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have been
corrected. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

(c)    Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party); provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified Parties
pursuant to this Section 6(c). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.

 

11

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All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

(d)    Contribution. If a claim for indemnification under Section 6(a) or 6(b)
is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section 6 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties and are not in diminution or limitation of the
indemnification provisions under the Purchase Agreement.

 

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7.    Miscellaneous.

(a)    Remedies. The parties agree that, in the event of a breach of this
Agreement, the parties will, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
be entitled to specific performance of its rights under this Agreement. The
parties agree that monetary damages may not provide adequate compensation for
any losses incurred by reason of a breach of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.

(b)    Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

(c)    Subsequent Registration Rights. Until the Initial Registration Statement
required hereunder is declared effective by the Commission, the Company shall
not enter into any agreement granting any registration rights with respect to
any of its securities to any Person without the written consent of Holders
representing no less than a majority of the then outstanding Registrable
Securities; provided, that this Section 7(c) shall not prohibit the Company from
fulfilling its obligations under any other registration rights agreements
existing as of the date hereof.

(d)    Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

(e)    Furnishing of Information. Each Holder shall furnish in writing to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably requested by the Company to effect the registration of
such Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request.

(f)    Piggy-Back Registrations. If at any time during the Effectiveness Period,
except as contemplated by Section 2(b) hereof, there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
(other than an offering pursuant to that certain Fifth Amended and Restated
Investor Rights Agreement dated May 13, 2013 among the Company and the investors
party thereto) under the Securities Act of any of its equity securities, other
than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, then

 

13

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the Company shall send to each Holder a written notice of such determination
and, if within 15 days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement all
or any part of such Registrable Securities such Holder requests to be
registered; provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 7(f) that are
eligible for resale pursuant to Rule 144 promulgated under the Securities Act
without volume or manner of sale limitations or that are the subject of a then
effective Registration Statement; provided, further, however, if there is not an
effective Registration Statement covering all of the Registrable Securities
during the Effectiveness Period, the Company may file a registration statement
with the Commission to register equity securities of the Company to be sold on a
primary basis, provided that the Company does not sell any such shares until
there is an effective Registration Statement covering all of the Registrable
Securities. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 7(f) prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration.

(g)    Amendments and Waivers. No provision of this Agreement may be waived or
amended with respect to the Company and a Purchaser except with the written
consent of the Company and such Purchaser. The Company shall provide prior
notice to all Holders of any proposed waiver or amendment. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

(h)    Termination of Registration Rights. For the avoidance of doubt, it is
expressly agreed and understood that (i) in the event that there are no
Registrable Securities outstanding as of a Filing Date, then the Company shall
have no obligation to file, cause to be declared effective or to keep effective
any Registration Statement hereunder (including any Registration Statement
previously filed pursuant to this Agreement) and (ii) all registration rights
granted to the Holders hereunder (including the rights set forth in Sections
7(c) and 7(f)), shall terminate in their entirety effective on the first date on
which there shall cease to be any Registrable Securities outstanding. If not
previously terminated pursuant to the foregoing sentence, it is expressly agreed
and understood that all registration rights granted to the Holder pursuant to
this Agreement shall terminate as to the Holder on the earlier of (a) such time
following the date that is five (5) years following the date of this Agreement
that the Holders own in the aggregate less than 25% of the number of Registrable
Securities that the Holders owned in the aggregate as of the date hereof (as
adjusted for stock splits, combinations, dividends, recapitalizations and the
like) and (b) the date that is ten (10) years following the date of this
Agreement.

 

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(i)    Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be sent by confirmed electronic mail, or
mailed by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, and shall be deemed given when so
sent in the case of electronic mail transmission, or when so received in the
case of mail or courier, and addressed as follows:

if to the Company, to:

Tokai Pharmaceuticals, Inc.

255 State Street, 6th Floor

Boston, MA 02109

Attention: Chief Executive Officer

Email: jmorrison@tokaipharma.com

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

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

Attention: Stuart M. Falber, Esq.

Attention: Hal J. Leibowitz, Esq.

Otic Pharma, Ltd.

Gregory J. Flesher

Chief Executive Officer

19900 MacArthur Blvd., Suite 550

Irvine, CA 92612

Gibson, Dunn & Crutcher, LLP

555 Mission Street, Suite 3000

San Francisco, CA 94105

Attention: Ryan A. Murr

 

If to a Purchaser:    To the address set forth under such Purchaser’s name on
the signature pages hereto If to any other Person who is then the registered
Holder:    To the address of such Holder as it appears in the stock transfer
books of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

(j)    Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.

(k)    Execution and Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and,

 

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all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile or “.pdf” signature were the original thereof.

(l)    Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in New York, New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City and County of New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), 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 improper or is an inconvenient venue for such
proceeding. 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 via registered or certified mail or overnight delivery
(with evidence of delivery) 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 other
manner permitted by law.

(m)    Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

(n)    Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

(o)    Use of Terms. The parties agree and acknowledge that when, in this
Agreement, the Company is required to use its reasonable best efforts to perform
any covenant under this Agreement, such requirement shall not obligate the
Company, in the reasonable judgment of the disinterested members of its Board of
Directors, to perform any act that will have a material adverse effect on the
Company.

 

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(p)    Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

(q)    Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser hereunder is several and not joint with the obligations of any
other Purchaser hereunder, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser hereunder. The
decision by each Purchaser to purchase Shares pursuant to the Transaction
Documents has been made independently of any other Purchaser. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Shares or
enforcing its rights under the Transaction Documents. Each Purchaser shall be
entitled to protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

[signature pages follow]

 

17

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

 

TOKAI PHARMACEUTICALS, INC. By:  

 

Name:   Title:  

 

--------------------------------------------------------------------------------

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

 

PURCHASERS:

 

By:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

 

Email:  

 

 

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ANNEX A

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees,
assignees or other successors-in-interest may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices. The selling stockholders may use one or more
of the following methods when disposing of the shares or interests therein:

 

  •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

  •   block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

  •   through brokers, dealers or underwriters that may act solely as agents;

 

  •   purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;

 

  •   an exchange distribution in accordance with the rules of the applicable
exchange;

 

  •   privately negotiated transactions;

 

  •   through the writing or settlement of options or other hedging transactions
entered into after the effective date of the registration statement of which
this prospectus is a part, whether through an options exchange or otherwise;

 

  •   broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 

  •   a combination of any such methods of disposition; and

 

  •   any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, or Securities Act, if available, or Section
4(a)(1) under the Securities Act, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

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The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under a supplement or amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.

Upon being notified in writing by a selling stockholder that any particular
offer of shares of common stock is made, including that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing (i) the name of each such selling stockholder and of the
participating broker-dealer(s), (ii) the number of shares involved, (iii) the
price at which such shares of common stock were sold, (iv) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), where applicable,
(v) that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and
(vi) other facts material to the transaction. In addition, upon being notified
in writing by a selling stockholder that a donee or pledge intends to sell more
than 500 shares of common stock, we will file a supplement to this prospectus if
then required in accordance with applicable securities law.

The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of the shares of common stock or interests in shares
of common stock, the selling stockholders may enter into hedging transactions
after the effective date of the registration statement of which this prospectus
is a part with broker-dealers or other financial institutions, which may in turn
engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of common stock short
after the effective date of the registration statement of which this prospectus
is a part and deliver these securities to close out their short positions, or
loan or pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions after the effective date of the registration statement of which
this prospectus is a part with broker-dealers or other financial institutions or
the creation of one or more derivative securities which require the delivery to
such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

The selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The maximum commission or discount to be
received by any member of the Financial Industry Regulatory Authority (FINRA) or
independent broker-dealer will not be greater than 8% of the initial gross
proceeds from the sale of any security being sold.

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We have advised the selling stockholders that they are required to comply with
Regulation M promulgated under the Securities Exchange Act of 1934, as amended,
during such time as they may be engaged in a distribution of the shares. The
foregoing may affect the marketability of the common stock.

The aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering.

We are required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act or otherwise.

We have agreed with the selling stockholders to keep the registration statement
of which this prospectus constitutes a part effective until the earlier of
(a) such time as all of the shares covered by this prospectus have been disposed
of pursuant to and in accordance with the registration statement, (b) the date
on which the shares of common stock covered by this prospectus may be sold or
transferred by non-affiliates without any volume limitations or pursuant to Rule
144 of the Securities Act or (c) date that is three years after the Closing
Date.