THE SHARES OF COMMON STOCK, PAR VALUE $0.0001 PER SHARE (“SHARES”), OF AIT
THERAPEUTICS, INC. (“AIT”) CONSTITUTE SECURITIES THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE
SECURITIES LAWS OF ANY STATE (“STATE LAWS”). THE SHARES MAY NOT, AT ANY TIME, BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE
ACT AND STATE LAWS, OR DELIVERY TO AIT OF AN OPINION OF LEGAL COUNSEL
SATISFACTORY TO AIT THAT SUCH REGISTRATION IS NOT REQUIRED. RESTRICTIONS ON
TRANSFER WILL BE IMPRINTED ON THE DOCUMENTS EVIDENCING THE SHARES TO THE
FOREGOING EFFECTS.

 

THE PURCHASE OF SHARES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED
ONLY BY PERSONS WHO CAN BEAR THE RISK OF LOSING THEIR ENTIRE INVESTMENT.

 

SUBSCRIPTION AGREEMENT

 

AIT Therapeutics, Inc.

825 East Gate Boulevard, Suite 320

Garden City, NY 11530

 

Ladies and Gentlemen:

 

The undersigned (the “Subscriber”) hereby subscribes for the number of shares of
common stock, par value $0.0001 per share, of AIT Therapeutics, Inc. (“AIT”) set
forth on page S-1 hereto (the “Shares”). The Subscriber understands that the
Shares have not been registered under the Act or any State Law and is being made
only to “accredited investors” (as defined in Rule 501 of Regulation D under the
Act).

 

1. Subscription. Subject to the terms and conditions hereof, the Subscriber
hereby irrevocably subscribes for the number of Shares set forth on page S-1
hereto at a purchase price of $5.00 per share (the “Subscription”). The total
amount due for such purchase shall be payable in full in readily available
funds, as described in Section 3. The Subscriber acknowledges that the Shares
will be subject to restrictions on transfer pursuant to applicable law and the
terms set forth in this Subscription Agreement.

 

2. Acceptance of Subscription and Issuance of Shares. It is understood and
agreed that AIT shall have the sole right, at its complete discretion, to accept
or reject this Subscription, in whole or in part, for any reason and that the
same shall be deemed to be accepted by AIT only when it is signed by a duly
authorized officer of AIT. It is understood and agreed that, upon execution of
this Subscription Agreement, AIT has, in reliance upon the representations and
warranties of the Subscriber and against payment for the Shares, accepted this
Subscription. Notwithstanding anything in this Subscription Agreement to the
contrary, there shall be no obligation to issue any Shares if such issuance
would constitute a violation of the Act or State Laws.

 

3. Payment for Shares. Payment for the Shares shall be received by AIT from the
Subscriber on or before execution of this Subscription Agreement by the
Subscriber, in cash, cashier’s check or by wire transfer.

 

1

 

 

4. Representations, Warranties and Covenants of the Subscriber. The Subscriber
hereby represents, warrants and covenants to AIT and each officer, director and
agent of AIT that:

 

(a) General:

 

(i) If the Subscriber is a natural person, he or she has the legal capacity and
all requisite authority to enter into, execute and deliver this Subscription
Agreement, to purchase the Shares and to perform all of the obligations required
to be performed by the Subscriber hereunder. If the Subscriber is a corporation,
partnership, trust or other entity, it is authorized to purchase the Shares and
otherwise to comply with its obligations under this Subscription Agreement. The
person signing this Subscription Agreement on behalf of such entity is duly
authorized by such entity to do so. This Subscription Agreement is the valid and
binding agreement of the Subscriber and enforceable against the Subscriber in
accordance with its terms.

 

(ii) The Subscriber is subscribing to invest in AIT solely for his, her or its
own account, and is not acquiring the Shares as an agent or otherwise for any
other person.

 

(b) Information Concerning the Offering:

 

(i) The Subscriber has had access to all of the reports filed by AIT with the
Securities and Exchange Commission (“SEC”) since December 31, 2016
(collectively, the “SEC Documents”). In connection with the Subscription, the
Subscriber has had access to, and has relied solely upon, the SEC Documents and
the risk factors set forth in Exhibit A hereto.

 

(ii) In formulating a decision to invest in the Shares, the Subscriber has been
furnished by AIT with all of the information regarding the Company which the
Subscriber has requested or desired to know, has been afforded the opportunity
to ask questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the Shares and has received any
additional information which the Subscriber has requested. The Subscriber has
not relied or acted on the basis of any information purported to be given on
behalf of AIT, except as set forth in the SEC Documents and the risk factors set
forth in Exhibit A hereto (it being understood that no person has been
authorized by AIT to furnish any information except as set forth in the SEC
Documents and the risk factors set forth in Exhibit A hereto).

 

(iii) The Subscriber understands that the purchase of the Shares involves
various risks, including those outlined in the SEC Documents, and the risk
factors set forth in Exhibit A hereto and elsewhere in this Subscription
Agreement. Investment in the Shares being offered should be regarded as
speculative and involving a high degree of risk. The Subscriber is fully aware
of the nature of his, her or its investment in the Shares and the lack of
liquidity of his, her or its investment in the Shares.

 

(iv) The Subscriber understands that no federal or state agency has passed upon
the Shares or made any finding or determination concerning the fairness or
advisability of this Subscription Agreement.

 

(v) The undersigned understands that estimates and projections like those
contained in the SEC Documents, by their nature, involve significant elements of
subjective judgment and analysis that may or may not be correct; that there can
be no assurance that such projections or goals will be attained; and that the
projections and estimates contained in the SEC Documents should not be relied
upon as a promise or representation of the future performance of AIT.

 

(c) Status of Subscriber; Additional Information:

 

(i) The Subscriber has such knowledge, skill and experience in business,
financial and investment matters so that he, she or it is capable of evaluating
the merits and risks of an investment in the Shares. To the extent necessary,
the undersigned has retained, at his, her or its own expense, and relied upon,
appropriate professional advice regarding the investment, tax and legal merits
and consequences of this Subscription Agreement and owning the Shares. The
Subscriber is able to bear the economic risk of an investment in the Shares and,
at the present time, is able to afford a complete loss of such investment.

 

2

 

 

(ii) The Subscriber represents and warrants that he, she or it has read the
definition of “accredited investor” as defined in Rule 501 of Regulation D under
the Act, and acknowledges by his, her or its signature that he, she or it is an
“accredited investor,” fully capable of subscribing for the Shares by means of
meeting the requirements for an accredited investor.

 

(iii) The Subscriber agrees to furnish any additional information requested to
assure compliance with the Act and State Laws in connection with the purchase
and sale of the Shares.

 

(d) Restrictions on Transfer or Sale of Shares:

 

(i) The Subscriber is acquiring the Shares solely for his, her or its own
beneficial account, for investment purposes, and not with a view to, or for
resale in connection with, any distribution of the Shares. The Subscriber
understands that the Shares have not been registered under the Act or any State
Law by reason of specific exemptions under the provisions thereof, which depend
in part upon the investment intent of the Subscriber and of the other
representations made by the Subscriber in this Subscription Agreement. The
Subscriber understands that AIT is relying upon the representations and
agreements contained in this Subscription Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets the
requirements for such exemptions.

 

(ii) The Subscriber shall not sell, assign, pledge, give, transfer or otherwise
dispose of any Shares or any interest therein, or make any offer or attempt to
do any of the foregoing, except pursuant to a registration of the Shares under
the Act and State Laws or in a transaction that is exempt from the registration
provisions of the Act and any applicable State Laws.

 

5. Condition to Obligations. The Subscription made hereby may be accepted or
rejected by AIT at any time after the execution hereof by the Subscriber. No
Subscriber shall have the right to demand a return of his, her or its
Subscription under any circumstances.

 

6. Waiver, Amendment, Binding Effect. Neither this Subscription Agreement nor
any provisions hereof shall be modified, changed, discharged or terminated
except by an instrument in writing, signed by the party against whom any waiver,
change, discharge or termination is sought. The provisions of this Subscription
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.

 

7. Assignability. Neither this Subscription Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by AIT or the Subscriber without the prior written consent of the
other.

 

8. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of New York, without regard to the
conflict of laws provisions thereof.

 

9. Counterparts. This Subscription Agreement may be executed in any number of
counterparts and by facsimile, each of which when so executed and delivered
shall be deemed to be an original and all of which together shall be deemed to
be one and the same agreement.

 

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10. Notices. All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given if delivered personally
or sent by registered or certified mail, return receipt requested, postage
prepaid:

 

(a) If to AIT, to it at the following address:

 

AIT Therapeutics, Inc.

825 East Gate Boulevard, Suite 320

Garden City, NY 11530

 

(b) If to the Subscriber, to him, her or it at the address set forth on the
signature page hereto; or at such other address as either party shall have
specified by notice in writing to the other.

 

11. Survival. All representations, warranties and covenants contained in this
Subscription Agreement shall survive (i) the acceptance of the Subscription by
AIT and (ii) the death or disability of the Subscriber.

 

12. Notification of Changes. The Subscriber hereby covenants and agrees to
notify AIT upon the occurrence of any event prior to the closing of the purchase
of the Shares pursuant to this Subscription Agreement which would cause any
representation, warranty or covenant of the Subscriber contained in this
Subscription Agreement to be false or incorrect.

 

[SIGNATURE PAGES TO FOLLOW]

 

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This Subscription Agreement is executed effective as of the __ day of _______,

 

BY: (CHECK ONE)

 

_______ INDIVIDUAL         _______ CORPORATION         _______ PARTNERSHIP      
  _______ TRUST  

 

          Please print the EXACT name   (registration)
the purchaser desires to appear in   the records of the Company.                
  Address of Purchaser           Social Security or Taxpayer Identification  
Number of Purchaser  

 

Number of Shares Purchased: _______________   Aggregate Purchase Price:
_______________  

 

S-1

 

 

Please execute this Subscription Agreement by completing the appropriate section
below.

 

1. If the subscriber is an INDIVIDUAL, complete the following:

 

    Signature of Purchaser  

 

    Name (Please type or print)  

 

2. If the subscriber is a CORPORATION, complete the following:

 

  The undersigned hereby represents, warrants and covenants that the undersigned
has been duly authorized by all requisite action on the part of the corporation
listed below (the “Corporation”) to acquire the Shares, that the Corporation has
all requisite authority to acquire such Shares, and that the Corporation was not
formed for the purposes of acquiring such Shares.       The officer signing
below represents and warrants that each of the above representations or
agreements or understandings set forth herein has been made by the Corporation
and that he or she has authority under the Articles of Incorporation, bylaws and
resolutions of the Board of Directors of such Corporation to execute and deliver
this Subscription Agreement on behalf of the Corporation.

 

     Name of Corporation (Please type or print)  

 

By:     Name:     Title:    

 

S-2

 

 

3. If the subscriber is a PARTNERSHIP, complete the following:

 

  The undersigned hereby represents, warrants and covenants that the undersigned
is a general partner of the Partnership named below (the “Partnership”), the
undersigned has been duly authorized by the Partnership to acquire the Shares,
the Partnership has all requisite authority to acquire such Shares, and that the
Partnership was not formed for the purposes of acquiring such Shares.       The
undersigned represents and warrants that each of the above representations or
agreements or understandings set forth herein has been made by the Partnership
and that he or she is authorized by such Partnership to execute and deliver this
Subscription Agreement.

 

    Name of Partnership (Please type or print)  

 

By:     Name:     Title:    

 

4. If the subscriber is a TRUST, complete the following:

 

  The undersigned hereby represents, warrants and covenants that he or she is
duly authorized by the terms of the trust agreement described below (the “Trust
Instrument”) to acquire the Shares and that the undersigned, as trustee, has all
requisite authority to acquire such Shares for the Trust.       The undersigned,
as trustee, executing this Subscription Agreement on behalf of the Trust,
represents and warrants that each of the above representations or agreements or
understandings set forth herein has been made by the Trust and that he or she is
authorized by such Trust to execute and deliver this Subscription Agreement.

 

    Name of Trust (Please type or print)  

 

By:     Name:     Title:    

 

S-3

 

 

Accepted by AIT Therapeutics, Inc. this day of _________, 201 .

 

  AIT THERAPEUTICS, INC.         By:                     Name:     Title:  

 

S-4

 

 

Exhibit A

 

RISK FACTORS

 

Investing in our securities involves a high degree of risk. Before deciding
whether to invest in our securities, you should carefully consider the risk
factors we describe below, in the Subscription Agreement and in the SEC
Documents. Although we discuss key risks in those risk factor descriptions,
additional risks not currently known to us or that we currently deem immaterial
also may impair our business. Our subsequent filings with the SEC may contain
amended and updated discussions of significant risks. We cannot predict future
risks or estimate the extent to which they may affect our financial performance.

 

There is no firm commitment to purchase the Shares being offered, and as a
result initial investors assume additional risk.

 

We expect, but do not guarantee, that we will offer up to $7 million Shares in
this offering. This is a best efforts, no minimum offering of Shares of our
common stock being conducted solely by certain members of our management. There
is no commitment by anyone to purchase any of the Shares being offered. We
cannot give any assurance that any or all of the Shares will be sold. We will
retain any amount of proceeds received from the sale of the Shares. Therefore,
you will bear the risk that we will accept subscriptions for a nominal number of
Shares. Moreover, there is no assurance that our estimate of our liquidity needs
is accurate or that new business development or other unforeseen events will not
occur, resulting in the need to raise additional funds. As this offering is a
best efforts financing, there is no assurance that this financing will be
completed or that any future financing will be affected. Initial investors
assume additional risk on whether the offering will be fully subscribed and how
AIT will utilize the proceeds.

 

The value of our shares of Circassia Pharmaceuticals, plc is volatile

 

We granted Circassia Pharmaceuticals, plc (“Circassia”) an exclusive
royalty-bearing license to distribute, market and sell certain rights and
licenses held by AIT. Circassia shall pay AIT an aggregate of $32.55 milestone
payments and a significant amount of royalties. The milestone payments shall be
in cash or ordinary shares of Circassia (the “Circassia Shares”), at Circassia’s
option. Royalty payments shall be made in cash. Circassia Shares are traded on
the AIM (a sub-market of the London Stock Exchange). The trading price of
Circassia Shares could be volatile and could fluctuate widely in response to a
variety of factors, many of which are beyond our control. If we receive
Circassia Shares as the payment, we may lose significant amount of value in this
stock as its market price decreases.

 

We have not yet filed our Annual Report for the fiscal year ending March 31,
2019, and many factors could cause our actual activities and results to differ
materially from the activities and results disclosed in our previously filed SEC
Documents.

 

Risks and uncertainties, the occurrence of which could adversely affect our
business, include, without limitation, the following:

 

  ● We have incurred significant losses since our inception and anticipate that
we will continue to incur losses for the foreseeable future. We are a
clinical-stage company with no approved products, and have generated no revenue
to date and may never generate revenue or achieve profitability.         ● It is
highly likely that we will need to raise additional capital to meet our business
requirements in the future, and such capital raising may be costly or difficult
to obtain and could dilute current stockholders’ ownership interests.         ●
We are heavily dependent on the success of our product candidates, which are in
the early stages of clinical development. We cannot give any assurance that any
of our product candidates will receive regulatory approval, which is necessary
before they can be commercialized.

 

A-1

 

 

  ● The regulatory approval processes of the FDA and comparable foreign
authorities are lengthy, time consuming and inherently unpredictable. If we are
ultimately unable to obtain regulatory approval for our product candidates, our
business will be substantially harmed.         ● Medical device development
involves a lengthy and expensive process with an uncertain outcome, and results
of earlier studies may not be predictive of future study results.         ● We
are working on NTM Abscessus, which is very rare.         ● We are working on
bronchiolitis in infants that usually is caused by the RSV virus. RSV is a
seasonal virus and the length of the disease and the severity of the disease
might change every year.         ● We are heavily dependent on the Aeronox
system to conduct our trial outside the United States.         ● The value of
the Circassia Shares at March 31, 2019, used to calculate stockholders equity in
our financial statements, was at a 52-week low.

 

Our delivery system is classified as a Class III medical device by the FDA and
requires 510(k) or PMA approval by the FDA, which can be a rigorous,
time-consuming and expensive process.

 

The dilution in the net tangible book value per share of the common stock you
purchase is not ascertainable.

 

Since the offering price per Share is substantially higher than the net tangible
book value per share of our common stock, you will suffer substantial dilution
in the net tangible book value of the common stock you purchase in this
offering. However, we do not have a minimum or maximum offering amount so cannot
ascertain with any specificity the dilution in the net tangible book value per
share of common stock until the completion of the offering.

 

Investors in this offering may experience future dilution as a result of future
equity offerings.

 

In order to raise additional capital, we may in the future offer additional
shares of our common stock or other securities convertible into or exchangeable
for our common stock. We cannot assure you that we will be able to sell shares
or other securities in any other offering at a price per share that is equal to
or greater than the price per share paid by investors in this offering, and
investors purchasing our shares or other securities in the future could have
rights superior to existing common stockholders. The price per share at which we
sell additional shares of our common stock or other securities convertible into
or exchangeable for our common stock in future transactions may be higher or
lower than the price per share in this offering.

 

If we fail to comply with the continuing listing standards of The NASDAQ Capital
Market, our securities could be delisted.

 

Our common stock is currently traded on The NASDAQ Capital Market under the
symbol “AITB.” If we fail to meet any of the continued listing standards of The
NASDAQ Capital Market, our common stock could be delisted from The NASDAQ
Capital Market. These continued listing standards include specifically
enumerated criteria, such as:

 

● a $1.00 minimum closing bid price; ● stockholders’ equity of $2.5 million; ●
500,000 shares of publicly-held common stock with a market value of at least $1
million; ● 300 round-lot stockholders; and ● compliance with NASDAQ’s corporate
governance requirements, as well as additional or more stringent criteria that
may be applied in the exercise of NASDAQ’s discretionary authority.

 

A-2

 

 

If we fail to comply with NASDAQ’s continued listing standards, we may be
delisted and our common stock will trade, if at all, only on the
over-the-counter market, such as the OTC Bulletin Board or OTCQX market, and
then only if one or more registered broker-dealer market makers comply with
quotation requirements. In addition, delisting of our common stock could depress
our stock price, substantially limit liquidity of our common stock and
materially adversely affect our ability to raise capital on terms acceptable to
us, or at all. Further, delisting of our common stock would likely result in our
common stock becoming a “penny stock” under the Exchange Act.

 

Our management will have broad discretion over the use of any net proceeds from
this offering, you may not agree with how we use the proceeds, and the proceeds
may not be invested successfully.

 

Our management will have broad discretion as to the use of any net proceeds from
this offering and could use them for purposes other than those contemplated at
the time of this offering. Accordingly, you will be relying on the judgment of
our management with regard to the use of any proceeds from the sale of the
Shares in this offering, and you will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used
appropriately. It is possible that the proceeds will be invested in a way that
does not yield a favorable, or any, return for you.

 

The issuance and sale of the Shares could cause our stock price to decline.

 

Sales of substantial amounts of our common stock in the public market, or the
perception that such sales could occur, could adversely affect the market price
of our common stock. Sale of our Shares and the potential for such sales, could
cause our stock price to decline.

 

A-3