Exhibit 10.1

 

Execution Version

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (the “Agreement”), dated as of August 13, 2020, by and
between ACLARIS THERAPEUTICS, INC., a Delaware corporation (the “Company”), and
LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the
“Investor”). Capitalized terms used herein and not otherwise defined herein are
defined in Section 1 hereof.

 

WHEREAS:

 

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Investor, and the Investor wishes to buy from the Company,
up to Fifteen Million Dollars ($15,000,000) of the Company’s common stock,
$0.00001 par value per share (the “Common Stock”). The shares of Common Stock to
be purchased hereunder are referred to herein as the “Purchase Shares.”

 

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 Investor hereby
agree as follows:

 

1.CERTAIN DEFINITIONS.

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

(a)                “Accelerated Purchase Date” means, with respect to any
Accelerated Purchase made pursuant to Section 2(b) hereof or any Additional
Accelerated Purchase pursuant to Section 2(c) hereof, the Business Day
immediately following the applicable Purchase Date with respect to the
corresponding Regular Purchase made pursuant to Section 2(a) hereof.

 

(b)                “Accelerated Purchase Floor Price” means $0.50, which shall
be adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction and, effective upon the
consummation of any of the foregoing, the Accelerated Purchase Floor Price shall
mean the lower of (i) the adjusted price and (ii) $0.50.

 

(c)                “Accelerated Purchase Period” means, with respect to an
Accelerated Purchase made pursuant to Section 2(b) hereof, such period of time
on the Accelerated Purchase Date beginning at the official open of trading on
the Principal Market, and ending at the earliest of (i) the official close of
trading on the Principal Market on such Accelerated Purchase Date, (ii) such
time that the total number (or volume) of shares of Common Stock traded on the
Principal Market has exceeded the quotient of (A) the Accelerated Purchase Share
Amount, divided by (B) 0.3, and (iii) such time on the Accelerated Purchase Date
that the Sale Price has fallen below any minimum price threshold set forth in
the applicable Purchase Notice by the Company.

 

(d)                “Accelerated Purchase Share Amount” means, with respect to an
Accelerated Purchase made pursuant to Section 2(b) hereof or an Additional
Accelerated Purchase made pursuant to Section 2(c) hereof, the number of
Purchase Shares directed by the Company to be purchased by the Investor in an
Purchase Notice, which number of Purchase Shares shall not exceed the lesser of
(i) 300% of the applicable Regular Purchase Share Limit for the corresponding
Regular Purchase and (ii) 30% of the total volume of shares of Common Stock
traded on the Principal Market during the Accelerated Purchase Period or the
Additional Accelerated Purchase Period, as applicable; provided, that the
parties may mutually agree to increase the Accelerated Purchase Share Amount for
any Accelerated Purchase or Additional Accelerated Purchase.

 

 

 

 

(e)                “Additional Accelerated Purchase Period” means, with respect
to an Additional Accelerated Purchase pursuant to Section 2(c) hereof, such
period of time on the Accelerated Purchase Date beginning at the latest of (i)
the end of the Accelerated Purchase Period for the corresponding Accelerated
Purchase made pursuant to Section 2(b) hereof on such Accelerated Purchase Date,
(ii) the end of the Additional Accelerated Purchase Period for the most recently
completed prior Additional Accelerated Purchase pursuant to Section 2(c) hereof
on such Accelerated Purchase Date, as applicable, and (iii) the time at which
all Purchase Shares for all prior Purchases, including, those effected on the
applicable Accelerated Purchase Date have theretofore been received by the
Investor as DWAC Shares in accordance with this Agreement, and ending at the
earliest of (i) the official close of trading on the Principal Market on the
Accelerated Purchase Date, (ii) such time that the total number (or volume) of
shares of Common Stock traded on the Principal Market has exceeded the quotient
of (A) the Accelerated Purchase Share Amount, and (B) 0.3, and (iii) such time
that the Sale Price has fallen below any minimum price threshold set forth in
the applicable Purchase Notice by the Company.

 

(f)                 “Available Amount” means, initially, Fifteen Million Dollars
($15,000,000) in the aggregate, which amount shall be reduced by the Purchase
Amount each time the Investor purchases shares of Common Stock pursuant to
Section 2 hereof.

 

(g)                “Bankruptcy Law” means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

 

(h)                “Base Prospectus” means the Company’s final base prospectus,
dated April 29, 2020, a preliminary form of which is included in the Shelf
Registration Statement, including the documents incorporated by reference
therein.

 

(i)                 “Business Day” means any day on which the Principal Market
is open for trading, including any day on which the Principal Market is open for
trading for a period of time less than the customary time.

 

(j)                 “Closing Sale Price” means, for any security as of any date,
the last closing sale price for such security on the Principal Market as
reported by the Principal Market.

 

(k)                “Confidential Information” means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation,
documents, prototypes, samples, plant and equipment), which is designated as
“Confidential,” “Proprietary” or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) Business Days after the initial disclosure. Confidential Information may
also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party without confidential
restriction at the time of disclosure by the disclosing party as shown by the
receiving party’s files and records immediately prior to the time of disclosure;
(iv) is obtained by the receiving party from a third party without a breach of
such third party’s obligations of confidentiality; or (v) is independently
developed by the receiving party without use of or reference to the disclosing
party’s Confidential Information, as shown by documents and other competent
evidence in the receiving party’s possession.

 

(l)                 “DTC” means The Depository Trust Company, or any successor
performing substantially the same function for the Company.

 

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(m)              “DWAC Shares” means shares of Common Stock that are (i) issued
in electronic form, (ii) freely tradable and transferable and without
restriction on resale and (iii) timely credited by the Company to the Investor’s
or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with
DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar
program hereafter adopted by DTC performing substantially the same function.

 

(n)                “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

(o)                “Floor Price” means $0.25, which shall be adjusted for any
reorganization, recapitalization, non-cash dividend, share split or other
similar transaction and, effective upon the consummation of any of the
foregoing, the Floor Price shall mean the lower of (i) the adjusted price and
(ii) $0.25.

 

(p)                “Initial Prospectus Supplement” means the prospectus
supplement of the Company relating to the Securities, including the accompanying
Base Prospectus, to be prepared and filed by the Company with the SEC pursuant
to Rule 424(b)(5) under the Securities Act and in accordance with Section 5(a)
hereof, together with all documents and information incorporated therein by
reference.

 

(q)                “Material Adverse Effect” means any material adverse effect
on (i) the enforceability of any Transaction Document, (ii) the results of
operations, assets, business or financial condition of the Company and its
Subsidiaries, taken as a whole, other than any material adverse effect that
resulted exclusively from (A) any change in the United States or foreign
economies or securities or financial markets in general that does not have a
disproportionate effect on the Company and its Subsidiaries, taken as a whole,
(B) any change that generally affects the industry in which the Company and its
Subsidiaries operate that does not have a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, (C) any change arising in connection
with earthquakes, hostilities, acts of war, sabotage or terrorism or military
actions or any escalation or material worsening of any such hostilities, acts of
war, sabotage or terrorism or military actions existing as of the date hereof,
(D) any action taken by the Investor, its affiliates or its or their successors
and assigns with respect to the transactions contemplated by this Agreement, (E)
the effect of any change in applicable laws or accounting rules that does not
have a disproportionate effect on the Company and its Subsidiaries, taken as a
whole, or (F) any change resulting from compliance with terms of this Agreement
or the consummation of the transactions contemplated by this Agreement, or (iii)
the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document to be performed as of the date of
determination.

 

(r)                 “Maturity Date” means the first day of the month immediately
following the Thirty-Six (36) month anniversary of the Commencement Date.

 

(s)                 “Person” means an individual or entity including but not
limited to any limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

 

(t)                 “Principal Market” means The Nasdaq Global Select Market;
provided, however, that in the event the Company’s Common Stock is ever listed
or traded on The Nasdaq Global Market, The Nasdaq Capital Market, the New York
Stock Exchange, NYSE American, the NYSE Arca, the OTC Bulletin Board, or the
OTCQB or the OTCQX operated by the OTC Markets Group, Inc. (or any nationally
recognized successor to any of the foregoing), then the “Principal Market” shall
mean such other market or exchange on which the Company’s Common Stock is then
listed or traded.

 

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(u)                “Prospectus” means the Base Prospectus, as supplemented by
any Prospectus Supplement (including the Initial Prospectus Supplement),
including the documents and information incorporated by reference therein.

 

(v)                “Prospectus Supplement” means any prospectus supplement to
the Base Prospectus (including the Initial Prospectus Supplement) filed with the
SEC pursuant to Rule 424(b) under the Securities Act in connection with the
transactions contemplated by this Agreement, including the documents and
information incorporated by reference therein.

 

(w)              “Purchase” means any Regular Purchase, Accelerated Purchase or
Additional Accelerated Purchase, as applicable.

 

(x)                “Purchase Amount” means, with respect to any Regular
Purchase, any Accelerated Purchase or any Additional Accelerated Purchase made
hereunder, as applicable, the portion of the Available Amount to be purchased by
the Investor pursuant to Section 2 hereof.

 

(y)                “Purchase Date” means, with respect to a Regular Purchase
made pursuant to Section 2(a) hereof, the Business Day on which the Investor
receives, after 4:00 p.m. Eastern time on such Business Day, a Purchase Notice
for such Regular Purchase in accordance with this Agreement; provided that any
Business Day that is twenty (20) days or less before the filing of any
post-effective amendment to the Registration Statement or New Registration
Statement (as such term is defined in the Registration Rights Agreement), and
until the effective date of any such post-effective amendment to the
Registration Statement or New Registration Statement, shall not be a Purchase
Date.

 

(z)                “Purchase Notice” means a notice delivered to the Investor
pursuant to Section 2 with respect to any Regular Purchase, Accelerated Purchase
or Additional Accelerated Purchase, respectively.

 

(aa)             “Registration Rights Agreement” means that certain Registration
Rights Agreement, of even date herewith between the Company and the Investor.

 

(bb)            “Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

 

(cc)             “Regular Purchase Share Limit” means One Hundred Thousand
(100,000) Purchase Shares; provided, however, that (i) if the Closing Sale Price
of the Common Stock is not below $1.50 on the Purchase Date, the Regular
Purchase Share Limit may be increased to up to One Hundred Twenty-Five Thousand
(125,000) Purchase Shares, (ii) if the Closing Sale Price of the Common Stock is
not below $2.50 on the Purchase Date, the Regular Purchase Share Limit may be
increased to up to Two Hundred Thousand (200,000) Purchase Shares and (iii) if
the Closing Sale Price of the Common Stock is not below $3.00 on the Purchase
Date, the Regular Purchase Share Limit may be increased to up to Two Hundred
Fifty Thousand (250,000) Purchase Shares, in each case to be adjusted following
any reorganization, recapitalization, non-cash dividend, stock split, reverse
stock, split or other similar transaction effected with respect to the Common
Stock; provided, that if following such an adjustment the Regular Purchase Share
Limit as adjusted would preclude the Company from delivering to the Investor a
Purchase Notice hereunder for a Purchase Amount equal to or greater than One
Hundred Fifty Thousand Dollars ($150,000), the Regular Purchase Share Limit
shall equal the maximum number of Purchase Shares which would enable the Company
to deliver to the Investor a Purchase Notice for a Purchase Amount equal to, or
as closely approximating without exceeding, One Hundred Fifty Thousand Dollars
($150,000); provided, further, that the parties may mutually agree to increase
the Regular Purchase Share Limit for any Regular Purchase; and provided,
further, however, that the Investor’s committed obligation under any single
Regular Purchase shall not exceed Two Million Dollars ($2,000,000).

 

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(dd)            “Sale Price” means any trade price for the shares of Common
Stock on the Principal Market as reported by the Principal Market.

 

(ee)             “SEC” means the U.S. Securities and Exchange Commission.

 

(ff)               “Securities” means, collectively, the Purchase Shares and the
Commitment Shares.

 

(gg)            “Securities Act” means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

 

(hh)            “Shelf Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

 

(ii)               “Subsidiary” means any Person the Company wholly owns or
controls, or in which the Company, directly or indirectly, owns a majority of
the voting stock or similar voting interest, in each case that would be
disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the
Securities Act.

 

(jj)               “Transaction Documents” means, collectively, this Agreement
and the schedules and exhibits hereto, the Registration Rights Agreement and the
schedules and exhibits thereto, and each of the other agreements, documents,
certificates and instruments entered into or furnished by the parties hereto in
connection with the transactions contemplated hereby and thereby.

 

(kk)            “Transfer Agent” means Broadridge Financial Solutions, Inc., or
such other Person who is then serving as the transfer agent for the Company in
respect of the Common Stock.

 

(ll)               “VWAP” means in respect of an applicable Accelerated Purchase
Date, the volume weighted average price of the Common Stock on the Principal
Market, as reported on the Principal Market or by another reputable source such
as Bloomberg, L.P.

 

2.PURCHASE OF COMMON STOCK.

 

Subject to the terms and conditions set forth in this Agreement, the Company has
the right, but not the obligation, to sell to the Investor, in the Company’s
sole and absolute discretion, and the Investor has the obligation to purchase
from the Company, Purchase Shares as follows:

 

(a)                Commencement of Regular Purchases of Common Stock. Upon the
satisfaction of the conditions set forth in Sections 7 and 8 hereof (the
“Commencement” and the date of satisfaction of such conditions the “Commencement
Date”) and thereafter, the Company shall have the right, but not the obligation,
to direct the Investor, by its delivery to the Investor of a Purchase Notice
from time to time on any Purchase Date on which the Closing Sale Price is not
below the Floor Price, to purchase up to the Regular Purchase Share Limit (each
such purchase, a “Regular Purchase”) at the lower of: (i) the lowest Sale Price
of the Common Stock on the applicable Purchase Date and (ii) the arithmetic
average of the three (3) lowest Closing Sale Prices for the Common Stock during
the ten (10) consecutive Business Days ending on the Business Day immediately
preceding such Purchase Date (the “Purchase Price”) on each Purchase Date (each
such purchase, a “Regular Purchase”). The Company may deliver multiple Purchase
Notices to the Investor for multiple Regular Purchases on a Purchase Date
subject to the second sentence of Section 2(g).

 

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(b)                Accelerated Purchases. On any Purchase Date, provided that
the Company submitted a Purchase Notice for a Regular Purchase for a number of
Purchase Shares not less than the Regular Purchase Share Limit then in effect on
such Purchase Date, the Closing Sale Price is not below the Accelerated Purchase
Floor Price and otherwise subject to the terms and conditions of this Agreement,
the Company shall also have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of a Purchase Notice from time to time
in accordance with this Agreement, to purchase the applicable Accelerated
Purchase Share Amount (each such purchase, an “Accelerated Purchase”) at
ninety-seven percent (97%) of the lower of (i) the Closing Sale Price of the
Common Stock on such applicable Accelerated Purchase Date and (ii) of the VWAP
for the Accelerated Purchase Period (the “Accelerated Purchase Price”). Within
one (1) Business Day after completion of each Accelerated Purchase Date for an
Accelerated Purchase, the Investor will provide to the Company a written
confirmation of such Accelerated Purchase setting forth the applicable
Accelerated Purchase Share Amount and Accelerated Purchase Price for such
Accelerated Purchase.

 

(c)                Additional Accelerated Purchases.  On any Accelerated
Purchase Date, provided that the Company submitted a Purchase Notice for an
Accelerated Purchase and subject to the terms and conditions of this Agreement,
the Company shall also have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of a Purchase Notice from time to time
in accordance with this Agreement, to purchase the applicable Accelerated
Purchase Share Amount (each such purchase, an “Additional Accelerated Purchase”)
at the Accelerated Purchase Price. The Company may deliver Purchase Notices to
the Investor for multiple Additional Accelerated Purchases on an Accelerated
Purchase Date subject to the second sentence of Section 2(g).

 

(d)                Payment for Purchase Shares.    For each Regular Purchase,
the Investor shall pay to the Company an amount equal to the Purchase Amount
with respect to such Regular Purchase as full payment for such Purchase Shares
via wire transfer of immediately available funds on the same Business Day that
the Investor receives such Purchase Shares, if such Purchase Shares are received
by the Investor before 1:00 p.m., Eastern time, or, if such Purchase Shares are
received by the Investor after 1:00 p.m., Eastern time, the next Business Day.
Within one (1) Business Day after completion of each Accelerated Purchase Date
for an Accelerated Purchase or Additional Accelerated Purchase, respectively,
the Investor will provide to the Company a written confirmation of such
Accelerated Purchase setting forth the applicable Accelerated Purchase Share
Amount and Accelerated Purchase Price for such Purchase. For each Accelerated
Purchase and each Additional Accelerated Purchase, the Investor shall pay to the
Company an amount equal to the Purchase Amount with respect to such Purchase as
full payment for such Purchase Shares via wire transfer of immediately available
funds on the second Business Day following the date that the Investor receives
the Purchase Shares for such Purchase. If the Company or the Transfer Agent
shall fail for any reason or for no reason to electronically transfer any
Purchase Shares as DWAC Shares with respect to any Purchase within two (2)
Business Days following the receipt by the Company of the Purchase Price or
Accelerated Purchase Price, as applicable, for any Purchase therefor in
compliance with this Section 2(d), or if the Company or the Transfer Agent shall
fail for any reason or for no reason to electronically transfer the Commitment
Shares as DWAC Shares with respect within two (2) Business Days following the
filing of the Initial Prospectus Supplement, and in either case, if after such
second Business Day the Investor purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Investor of Purchase Shares or Commitment Shares in anticipation of receiving
such Purchase Shares or Commitment Shares from the Company, then the Company
shall, within two (2) Business Days after the Investor’s request, either (i) pay
cash to the Investor in an amount equal to the Investor’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Cover Price”), at which point the Company’s obligation to
deliver such Purchase Shares as DWAC Shares shall terminate, or (ii) promptly
honor its obligation to deliver to the Investor such Purchase Shares as DWAC
Shares and pay cash to the Investor in an amount equal to the excess (if any) of
the Cover Price over the total Purchase Amount paid by the Investor pursuant to
this Agreement for all of the Purchase Shares to be purchased by the Investor in
connection with such purchases. All payments made under this Agreement shall be
made in lawful money of the United States of America or wire transfer of
immediately available funds to such account as the Company may from time to time
designate by written notice in accordance with the provisions of this Agreement.
Whenever any amount expressed to be due by the terms of this Agreement is due on
any day that is not a Business Day, the same shall instead be due on the next
succeeding day that is a Business Day.

 

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(e)                Compliance with Rules of the Principal Market.
Notwithstanding anything in this Agreement to the contrary, and in addition to
the limitations set forth in Section 2(f), the Company shall not issue more than
8,544,555 shares (including the Commitment Shares) of Common Stock (the
“Exchange Cap”) under this Agreement, which equals 19.99% of the Company’s
outstanding shares of Common Stock as of the date hereof, unless stockholder
approval is obtained to issue in excess of the Exchange Cap; provided, however,
that the foregoing limitation shall not apply if at any time the Exchange Cap is
reached and at all times thereafter the average price paid for all shares of
Common Stock issued under this Agreement is equal to or greater than $2.1912
(the “Minimum Price”), which is the lower of (i) the Nasdaq Official Closing
Price immediately preceding the execution of this Agreement and (ii) the
arithmetic average of the Nasdaq Official Closing Prices for the Common Stock
for the five (5) Business Days immediately preceding the execution of this
Agreement, as adjusted in accordance with the rules of the Principal Market (in
such circumstance, for purposes of the Principal Market, the transaction
contemplated hereby would not be “below market” and the Exchange Cap would not
apply). Notwithstanding the foregoing, the Company shall not be required or
permitted to issue, and the Investor shall not be required to purchase, any
shares of Common Stock under this Agreement if such issuance would violate the
rules or regulations of the Principal Market. The Company may, in its sole
discretion, determine whether to obtain stockholder approval to issue more than
19.99% of its outstanding shares of Common Stock hereunder if such issuance
would require stockholder approval under the rules or regulations of the
Principal Market. The Exchange Cap shall be reduced, on a share-for-share basis,
by the number of shares of Common Stock issued or issuable that may be
aggregated with the transactions contemplated by this Agreement under applicable
rules of the Principal Market.

 

(f)                 Beneficial Ownership Limitation. Notwithstanding anything to
the contrary contained in this Agreement, the Company shall not issue or sell,
and the Investor shall not purchase or acquire, any shares of Common Stock under
this Agreement which, when aggregated with all other shares of Common Stock then
beneficially owned by the Investor and its affiliates (as calculated pursuant to
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) would
result in the beneficial ownership by the Investor and its affiliates of more
than 9.99% of the then issued and outstanding shares of Common Stock (the
“Beneficial Ownership Limitation”). Upon the written or oral request of the
Investor, the Company shall promptly (but not later than one (1) Business Day)
confirm orally or in writing to the Investor the amount of Common Stock then
outstanding. The Investor and the Company shall each cooperate in good faith in
the determinations required hereby and the application hereof. Upon the oral or
written request of the Company, the Investor shall promptly (but not later than
one (1) Business Day) confirm orally or in writing to the Company whether the
total number of shares beneficially held by it and its affiliates exceeds 9.0%
of the total outstanding amount of Common Stock then outstanding. The Investor’s
written certification to the Company of the applicability of the Beneficial
Ownership Limitation, and the resulting effect thereof hereunder at any time,
shall be conclusive with respect to the applicability thereof and such result
absent manifest error.

 

(g)                Excess Share Limitations. If the Company delivers any
Purchase Notice for a Purchase Amount in excess of the limitations contained in
this Section 2, such Purchase Notice shall be void ab initio to the extent of
the amount by which the number of Purchase Shares set forth in such Purchase
Notice exceeds the number of Purchase Shares which the Company is permitted to
include in such Purchase Notice in accordance herewith, and the Investor shall
have no obligation to purchase such excess Purchase Shares in respect of such
Purchase Notice; provided, however, that the Investor shall remain obligated to
purchase the number of Purchase Shares which the Company is permitted to include
in such Purchase Notice. If the Company delivers a Purchase Notice, and all
Purchase Shares subject to all prior Purchases have not theretofore been
received by the Investor as DWAC Shares in accordance with this Agreement, such
Purchase Notice shall not be deemed to have been delivered and the Investor
shall not be required to purchase any Purchase Shares until all Purchase Shares
for such prior Purchases have been received by the Investor as DWAC Shares. If
any issuance of Purchase Shares would result in the issuance of a fraction of a
share of Common Stock, the Company shall round such fraction of a share of
Common Stock down to the nearest whole share.

 

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(h)                Adjustments for Shares and Prices. Except as specifically
stated otherwise, all share-related and dollar-related limitations contained in
this Section 2 shall be adjusted to take into account any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock, split or other
similar transaction effected with respect to the Common Stock.

 

3.INVESTOR’S REPRESENTATIONS AND WARRANTIES.

 

The Investor represents and warrants to the Company that as of the date hereof
and as of the Commencement Date:

 

(a)                Organization, Authority. Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with the requisite power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder and thereunder.

 

(b)                Accredited Investor Status. The Investor is an “accredited
investor” as that term is defined in Rule 501(a)(3) of Regulation D promulgated
under the Securities Act.

 

(c)                Investment Purpose. The Investor is acquiring the Securities
as principal for its own account for investment only and not with a view to or
for distributing or reselling such Securities or any part thereof in violation
of the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other Persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
the Investor’s right to sell the Securities at any time pursuant to the
Registration Statement described herein or otherwise in compliance with
applicable federal and state securities laws). The Investor is acquiring the
Securities hereunder in the ordinary course of its business.

 

(d)                Information. The Investor understands that its investment in
the Securities involves a high degree of risk. The Investor (i) is able to bear
the economic risk of an investment in the Securities including a total loss
thereof, (ii) has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment in the Securities and (iii) has had an opportunity to ask questions
of and receive answers from the officers of the Company concerning the financial
condition and business of the Company and other matters related to an investment
in the Securities. Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its representatives shall modify,
amend or affect the Investor’s right to rely on the Company’s representations
and warranties contained in Section 4 below. The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities
and is not relying on any accounting, legal, tax or other advice from the
Company or its officers, employees, representatives or advisors. The Investor
acknowledges and agrees that the Company neither makes nor has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 4 hereof.

 

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(e)                No Governmental Review. The Investor understands that no U.S.
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of an investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(f)                 Validity; Enforcement. This Agreement and the other
Transaction Documents have been duly and validly authorized, executed and
delivered on behalf of the Investor and is a valid and binding agreement of the
Investor enforceable against the Investor in accordance with its terms, subject
as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(g)                Residency. The Investor is a resident of the State of
Illinois.

 

(h)                No Short Selling. The Investor represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Investor, its agents, representatives or affiliates engaged in or effected, in
any manner whatsoever, directly or indirectly, any (i) “short sale” (as such
term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.

 

4.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to the Investor that as of the date hereof
and as of the Commencement Date:

 

(a)                Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
formation or incorporation, bylaws or other organizational or charter documents
except as would not be expected to result in a Material Adverse Effect.  Each of
the Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not reasonably be expected to result in a
Material Adverse Effect, and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification. The Company has no
Subsidiaries except as set forth in the SEC Documents (as defined below).

 

9

 

 

(b)                Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and each of the other Transaction Documents,
and to issue the Securities in accordance with the terms hereof and thereof,
(ii) the execution and delivery of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby,
including without limitation, the issuance of the Commitment Shares (as defined
below) and the reservation for issuance and the issuance of the Purchase Shares
issuable under this Agreement, have been duly authorized by the Company's Board
of Directors or a validly authorized committee thereof (collectively, the “Board
of Directors”) and no further consent or authorization is required by the
Company, its Board of Directors, or its stockholders (except as set forth in
Section 2(e) hereof), (iii) this Agreement has been, and each other Transaction
Document shall be on the Commencement Date, duly executed and delivered by the
Company and (iv) this Agreement constitutes, and each other Transaction Document
upon its execution on behalf of the Company, shall constitute, the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies. The Board of Directors of the
Company has passed all applicable resolutions (the “Resolutions”) to authorize
this Agreement and the transactions contemplated hereby. The Resolutions are
valid, in full force and effect and have not been modified or supplemented in
any respect. The Company has delivered to the Investor a true and correct copy
of the Resolutions duly adopted by the Board of Directors. Except as set forth
in this Agreement, no other approvals or consents of the Company’s Board of
Directors and/or stockholders is necessary under applicable laws and the
Company’s Certificate of Incorporation in effect on the date hereof (the
“Certificate of Incorporation”) and/or the Company’s Bylaws in effect on the
date hereof (the “Bylaws”) to authorize the execution and delivery of this
Agreement or any of the transactions contemplated hereby, including, but not
limited to, the issuance of the Commitment Shares and the issuance of the
Purchase Shares.

 

(c)                Capitalization. As of the date hereof, the authorized capital
stock of the Company is set forth in the SEC Documents (as defined below).
Except as disclosed in the Shelf Registration Statement or the SEC Documents,
(i) no shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. The Company has furnished to the Investor true and
correct copies of the Certificate of Incorporation and the Bylaws, and summaries
of the material terms of all securities convertible into or exercisable for
Common Stock, if any, and copies of any documents containing the material rights
of the holders thereof in respect thereto, which are not disclosed in any SEC
Document or filed as an exhibit thereto.

 

(d)                Issuance of Securities. Upon issuance and payment therefor in
accordance with the terms and conditions of this Agreement, the Securities shall
be validly issued, fully paid and nonassessable and free from all taxes, liens,
charges, restrictions, rights of first refusal and preemptive rights with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. 12,000,000 shares of Common Stock have
been duly authorized and reserved for issuance upon purchase under this
Agreement as Purchase Shares and Commitment Shares.

 

10

 

 

(e)                No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Securities) will not (i) result in
a violation of the Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of preferred
stock of the Company or the Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company) or by which any property or asset of
the Company or any of its Subsidiaries is bound or affected, except in the case
of conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations under clause (ii) which would not reasonably be expected to
result in a Material Adverse Effect. None of the Subsidiaries are in violation
of any term of or in default under its certificate or articles of incorporation,
any certificate of designation, preferences and rights of any outstanding series
of preferred stock, other organizational charter or bylaws. Neither the Company
nor any of its Subsidiaries is in violation of any term of or is in default
under any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except for possible conflicts,
defaults, terminations or amendments that would not reasonably be expected to
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is not being conducted, and shall not be conducted, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations, the sanctions for which either individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the Securities
Act or applicable state securities laws and the rules and regulations of the
Principal Market, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. Except
as set forth elsewhere in this Agreement, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence shall be obtained or effected on or prior to the
Commencement Date. Except as disclosed in the SEC documents, since one year
prior to the date hereof, the Company has not received nor delivered any notices
or correspondence from or to the Principal Market, other than notices with
respect to listing of additional shares of Common Stock and other routine
correspondence. Except as disclosed in the SEC Documents, the Principal Market
has not commenced any delisting proceedings against the Company.

 

11

 

 

(f)                 SEC Documents; Financial Statements. The Company is, and has
been during the 12-month period immediately preceding the date of this
Agreement, required to file reports, schedules, forms, statements and other
documents with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein, together with each Prospectus, as the “SEC Documents”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable.
None of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing.  Such
financial statements (i) have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and (ii) fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. Except
as publicly available through the SEC’s Electronic Data Gathering, Analysis, and
Retrieval system (EDGAR) or in connection with a confidential treatment request
submitted to the SEC, the Company has received no notices or correspondence from
the SEC for the one year preceding the date hereof other than SEC comment
letters relating to the Company’s filings under the Exchange Act and the
Securities Act. There are no “open” SEC comments. To the Company’s knowledge,
the SEC has not commenced any enforcement proceedings against the Company or any
of its Subsidiaries.

 

(g)                Absence of Certain Changes. Except as disclosed in the Shelf
Registration Statement or the SEC Documents, since December 31, 2019, there has
been no change that would constitute a Material Adverse Effect in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

 

(h)                Absence of Litigation. Except as disclosed in the Shelf
Registration Statement or the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, which would reasonably be expected to have a Material
Adverse Effect.

 

(i)                 Acknowledgment Regarding Investor’s Status. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to the Investor’s purchase of the Securities. The Company
further represents to the Investor that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives and advisors.

 

(j)                 No Aggregated Offering. Neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf has sold any security
under circumstances that would reasonably be expected to cause this offering of
the Securities to be aggregated with prior offerings by the Company in a manner
that would require stockholder approval pursuant to the rules of the Principal
Market on which any of the securities of the Company are listed or designated.
The issuance and sale of the Securities hereunder does not contravene the rules
and regulations of the Principal Market.

 

12

 

 

(k)                Intellectual Property Rights. Except as disclosed in the
Shelf Registration Statement or the SEC Documents, the Company and its
Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted, except as such failure to own, possess
or acquire such rights would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect. Except as set forth in the
SEC Documents, the Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of any material trademark, trade
name rights, patents, patent rights, copyrights, inventions, licenses, service
names, service marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others, and there is no claim, action or
proceeding brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other infringement, which
would reasonably be expected to have a Material Adverse Effect.

 

(l)                 Environmental Laws. Except as set forth in the SEC
Documents, the Company and its Subsidiaries (i) are 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) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where, in each of the three foregoing clauses, the
failure to so comply would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

(m)              Title. The Company does not own any real property. Except as
set forth in the SEC Documents, the Company and the Subsidiaries have good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
liens, encumbrances and defects (“Liens”), except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries, Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties, and Liens that
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect.  Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries or would not reasonably be expected, individually in or the
aggregate, to result in a Material Adverse Effect.

 

(n)                Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such Subsidiary has any 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 materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.

 

(o)                Regulatory Permits. Except as set forth in the SEC Documents,
the Company and its Subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as currently conducted, except where the failure to possess such certificates,
authorizations, or permits would not reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
written notice of proceedings relating to the revocation or modification of any
such material certificate, authorization or permit.

 

13

 

 

(p)                Tax Status. Except as set forth in the SEC Documents, the
Company and each of its Subsidiaries has made or filed all federal and state and
foreign income and all other material tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply, and except as would not reasonably be expected to have a
Material Adverse Effect. To the Company’s knowledge, there are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction.

 

(q)                Transactions With Affiliates. Except as set forth in the SEC
Documents, to the Company’s knowledge, none of the Company’s stockholders,
officers or directors or any family member or affiliate of any of the foregoing,
has either directly or indirectly an interest in, or is a party to, any
transaction that would be required to be disclosed as a related party
transaction pursuant to Item 404 of Regulation S-K promulgated under the
Securities Act.

 

(r)                 Application of Takeover Protections. The Company and its
Board of Directors have taken or will take prior to the Commencement Date all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation or
otherwise which is or could become applicable to the Investor as a result of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Securities and the Investor’s ownership of the
Securities.

 

(s)                 Disclosure. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents that
will be timely publicly disclosed by the Company, the Company confirms that
neither it nor any other Person acting on its behalf has provided the Investor
or its agents or counsel with any information that it believes constitutes or
might constitute material, non-public information which is not otherwise
disclosed in the Shelf Registration Statement or the SEC Documents.   The
Company understands and confirms that the Investor will rely on the foregoing
representation in effecting purchases and sales of securities of the
Company.  All of the disclosure furnished by or on behalf of the Company to the
Investor regarding the Company, its business and the transactions contemplated
hereby, including the disclosure schedules to this Agreement, taken as a whole,
is true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Company acknowledges and agrees that
the Investor neither makes nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3 hereof.

 

(t)                 Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other Person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any Person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 

14

 

 

(u)                Registration Statement. The Company has prepared and filed
the Shelf Registration Statement with the SEC in accordance with the Securities
Act. The Shelf Registration Statement was declared effective by order of the SEC
on April 29, 2020. The Shelf Registration Statement is effective pursuant to the
Securities Act and available for the issuance of the Securities thereunder, and
the Company has not received any written notice that the SEC has issued or
intends to issue a stop order or other similar order with respect to the Shelf
Registration Statement or the Prospectus or that the SEC otherwise has (i)
suspended or withdrawn the effectiveness of the Shelf Registration Statement or
(ii) issued any order preventing or suspending the use of the Prospectus or any
Prospectus Supplement, in either case, either temporarily or permanently or
intends or, to the knowledge of the Company, has threatened in writing to do so.
The “Plan of Distribution” section of the Prospectus permits the issuance of the
Securities under the terms of this Agreement. At the time the Shelf Registration
Statement and any amendments thereto became effective, at the date hereof and at
each deemed effective date thereof pursuant to Rule 430B(f)(2) of the Securities
Act, the Shelf Registration Statement and any amendments thereto complied and
will comply in all material respects with the requirements of the Securities Act
and did not and 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 not misleading; and the Base Prospectus and any
Prospectus Supplement thereto, at the time such Base Prospectus or such
Prospectus Supplement thereto was issued and on the Commencement Date, complied
and will comply in all material respects with the requirements of the Securities
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from any Prospectus Supplement made in reliance upon and in
conformity with information relating to the Investor furnished to the Company in
writing by or on behalf of the Investor expressly for use therein. The Company
meets all of the requirements for the use of a registration statement on
Form S-3 pursuant to the Securities Act in reliance on General Instruction I.B.1
of Form S-3 for the offering and issuance of the Securities contemplated by this
Agreement, and the SEC has not notified the Company of any objection to the use
of the form of the Shelf Registration Statement pursuant to Rule 401(g)(1) of
the Securities Act. The Company hereby confirms that the issuance of the
Securities to the Investor pursuant to this Agreement would not result in
non-compliance with the Securities Act or any of the General Instructions to
Form S-3. The Shelf Registration Statement, as of its effective date, meets the
requirements set forth in Rule 415(a)(1)(x) pursuant to the Securities Act. At
the earliest time after the filing of the Shelf Registration Statement that the
Company or another participant in the transactions contemplated hereby made a
bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act)
relating to any of the Securities, the Company was not, and as of the date
hereof the Company is not, an “Ineligible Issuer” (as defined in Rule 405 of the
Securities Act). The Company has not distributed any offering material in
connection with the offering and issuance of any of the Securities, and until
the Investor does not hold any of the Securities, shall not distribute any
offering material in connection with the offering and sale of any of the
Securities, to or by the Investor, in each case, other than the Registration
Statement or any amendment thereto, the Prospectus or any Prospectus Supplement
required pursuant to applicable law or the Transaction Documents. The Company
has not made and shall not make an offer relating to the Securities that would
constitute a “free writing prospectus” as defined in Rule 405 under the
Securities Act without the consent of the Investor.

 

(v)                DTC Eligibility. The Company, through the Transfer Agent,
currently participates in the DTC Fast Automated Securities Transfer (FAST)
Program and the Common Stock can be transferred electronically to third parties
via the DTC Fast Automated Securities Transfer (FAST) Program.

 

15

 

 

(w)              Sarbanes-Oxley. The Company is in compliance with all
provisions of the Sarbanes-Oxley Act of 2002, as amended, which are applicable
to it as of the date hereof.

 

(x)                Certain Fees. No brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents. The
Investor shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section 4(x) that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(y)                Investment Company. The Company is not required to be
registered as, and immediately after receipt of payment for the Securities will
not be required to be registered as, an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

 

(z)                Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock pursuant to the
Exchange Act nor has the Company received any written notification that the SEC
is currently contemplating terminating such registration.

 

(aa)             Accountants. The Company’s accountants are set forth in the SEC
Documents and, to the knowledge of the Company, such accountants are an
independent registered public accounting firm as required by the Securities Act.

 

(bb)            No Market Manipulation. The Company has not, and to its
knowledge no Person acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.

 

(cc)             Benefit Plans; Labor Matters. Each benefit and compensation
plan, agreement, policy and arrangement that is maintained, administered or
contributed to by the Company for current or former employees or directors of,
or independent contractors with respect to, the Company has been maintained in
material compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, and the Company has complied in all
material respects with all applicable statutes, orders, rules and regulations in
regard to such plans, agreements, policies and arrangements. Each stock option
granted under any equity incentive plan of the Company (each, a “Stock Plan”)
was granted with a per share exercise price no less than the market price per
common share on the grant date of such option in accordance with the rules of
the Principal Market, and no such grant involved any “back-dating,”
“forward-dating” or similar practice with respect to the effective date of such
grant; each such option (i) was granted in compliance in all material respects
with Applicable Laws (as defined below) and with the applicable Stock Plan(s),
(ii) was duly approved by the Board of Directors, and (iii) has been properly
accounted for in the Company’s financial statements and disclosed, to the extent
required, in the Company’s filings or submissions with the SEC, and the
Principal Market. No labor problem or dispute with the employees of the Company
exists or has been threatened in writing, and the Company is not aware of any
existing or threatened labor disturbance by the employees of any of its
principal suppliers or contractors, that would reasonably be expected to have a
Material Adverse Effect.

 

16

 

 

(dd)            Regulatory. During the 12-month period immediately preceding the
date hereof, except as described in the SEC Documents, the Company and each of
its Subsidiaries: (A) is and at all times has been in material compliance with
all applicable U.S. and foreign statutes, rules, or regulations applicable to
Company and its Subsidiaries (“Applicable Laws”), except as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; (B) have not received any material written notice of adverse
finding, warning letter, untitled letter or other correspondence or notice from
the U.S. Food and Drug Administration or any other federal, state, or foreign
governmental authority having authority over the Company (“Governmental
Authority”) alleging or asserting material noncompliance with any Applicable
Laws or any licenses, certificates, approvals, clearances, authorizations,
permits and supplements or amendments thereto required by any such Applicable
Laws (“Authorizations”); (C) possess all material Authorizations and such
material Authorizations are valid and in full force and effect and, to the
Company’s knowledge, are not in violation of any term of any such material
Authorizations; (D) have not received written notice of any claim, action, suit,
proceeding, hearing, enforcement, investigation, arbitration or other action
from any Governmental Authority or third party alleging that any product,
operation or activity is in violation of any Applicable Laws or Authorizations
and have no knowledge that any such Governmental Authority or third party is
considering any such claim, litigation, arbitration, action, suit, investigation
or proceeding; (E) have not received written notice that any Governmental
Authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any Authorizations and the Company has no knowledge that any
such Governmental Authority is considering such action; and (F) have filed,
obtained, maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments as required by any Applicable Laws or material Authorizations and
that all such reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct in all
material respects on the date filed (or were corrected or supplemented by a
subsequent submission). During the 12-month period immediately preceding the
date hereof, to the Company’s knowledge, the studies, tests and preclinical
studies and clinical trials conducted by or on behalf of the Company were and,
if still pending, are, in all material respects, being conducted in accordance
with experimental protocols, procedures and controls pursuant to accepted
professional scientific standards and all Applicable Laws, including, without
limitation, the United States Federal Food, Drug, and Cosmetic Act or any other
applicable regulation of a federal, provincial, state, local or foreign
governmental or quasi-governmental body exercising comparable authority; the
descriptions of the results of such studies, tests and trials contained in the
SEC Documents are accurate and complete in all material respects and fairly
present the data derived from such studies, tests and trials; the descriptions
in the SEC Documents of the results of such clinical trials are consistent in
all material respects with such results and to the Company’s knowledge there are
no other studies or other clinical trials whose results are materially
inconsistent with or otherwise materially call into question the results
described or referred to in the SEC Documents; and the Company has not received
any written notices or correspondence from any Governmental Authority requiring
the termination, suspension or material modification of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the Company or its
Subsidiaries. The Company has concluded that it uses commercially reasonable
efforts to review, from time to time, the progress and results of the studies,
tests and preclinical studies and clinical trials and, based upon (i) the
information provided to the Company by the third parties conducting such
studies, tests, preclinical studies and clinical trials that are described in
the SEC Documents and the Company’s review of such information, and (ii) the
Company’s knowledge, the Company reasonably believes that the descriptions of
the results of such studies, tests, preclinical studies and clinical trials are
accurate and complete in all material respects.

 

(ee)             Shell Company Status. The Company is not, and has never been,
an issuer identified in Rule 144(i)(1) under the Securities Act.

 

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5.COVENANTS.

 

(a)                Filing of Current Report and Initial Prospectus Supplement.
The Company agrees that it shall, on the date hereof, file with the SEC a
current report on Form 8-K relating to the transactions contemplated by, and
describing the material terms and conditions of, the Transaction Documents in
the form agreed upon by the Investor prior to the date hereof (the “Current
Report”). The Company further agrees that it shall, on the date hereof, file
with the SEC the Initial Prospectus Supplement pursuant to Rule 424(b) under the
Securities Act, in the form agreed upon by the Investor prior to the date
hereof, specifically relating to the transactions contemplated by, and
describing the material terms and conditions of, the Transaction Documents,
containing information previously omitted at the time of effectiveness of the
Shelf Registration Statement in reliance on Rule 430B under the Securities Act,
and disclosing all information relating to the transactions contemplated hereby
required to be disclosed in the Shelf Registration Statement and the Prospectus
as of the date of the Initial Prospectus Supplement, including, without
limitation, information required to be disclosed in the section captioned “Plan
of Distribution” in the Prospectus. The Investor acknowledges that it will be
identified in the Initial Prospectus Supplement as an underwriter within the
meaning of Section 2(a)(11) of the Securities Act. The Investor shall furnish to
the Company such information regarding itself, the Securities held by it and the
intended method of distribution thereof, including any arrangement between the
Investor and any other Person relating to the sale or distribution of the
Securities, as shall be reasonably requested by the Company in connection with
the preparation and filing of the Current Report and the Initial Prospectus
Supplement, and shall otherwise cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Current Report and the Initial Prospectus Supplement with the SEC.

 

(b)                Blue Sky. The Company shall take all such action, if any, as
is necessary in order to obtain an exemption for or to register or qualify (i)
the issuance of the Commitment Shares and the sale of the Purchase Shares to the
Investor under this Agreement and (ii) any subsequent resale of all Commitment
Shares and all Purchase Shares by the Investor, in each case, under applicable
securities or “Blue Sky” laws of the states of the United States in such states
as is reasonably requested by the Investor from time to time, and shall provide
evidence of any such action so taken to the Investor.

 

(c)                Listing/DTC. The Company shall promptly secure the listing of
all of the Purchase Shares and Commitment Shares to be issued to the Investor
hereunder on the Principal Market (subject to official notice of issuance) and
upon each other national securities exchange or automated quotation system, if
any, upon which the Common Stock is then listed, and shall use commercially
reasonable efforts to maintain, so long as any shares of Common Stock shall be
so listed, such listing of all such Securities from time to time issuable
hereunder. The Company shall use commercially reasonable efforts to maintain the
listing of the Common Stock on the Principal Market and shall comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules and regulations of the Principal Market. Neither the Company nor
any of its Subsidiaries shall take any action that would reasonably be expected
to result in the delisting or suspension of the Common Stock on the Principal
Market. The Company shall promptly, and in no event later than the following
Business Day, provide to the Investor copies of any notices it receives from the
Principal Market regarding the continued eligibility of the Common Stock for
listing on the Principal Market; provided, however, that the Company shall not
be required to provide the Investor copies of any such notice that the Company
reasonably believes constitutes material non-public information and the Company
would not be required to publicly disclose such notice in any report or
statement filed with the SEC under the Exchange Act (including on Form 8-K) or
the Securities Act. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 5(c). The Company shall take
all action necessary to ensure that its Common Stock can be transferred
electronically as DWAC Shares.

 

18

 

 

(d)                Prohibition of Short Sales and Hedging Transactions. The
Investor agrees that beginning on the date of this Agreement and ending on the
date of termination of this Agreement as provided in Section 11, the Investor
and its agents, representatives and affiliates shall not in any manner
whatsoever enter into or effect, directly or indirectly, any (i) “short sale”
(as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of
the Common Stock or (ii) hedging transaction, which establishes a net short
position with respect to the Common Stock.

 

(e)                Issuance of Commitment Shares. In consideration for the
Investor’s execution and delivery of this Agreement, the Company shall cause to
be issued to the Investor a total of 121,584 shares of Common Stock (the
“Commitment Shares”). For the avoidance of doubt, all of the Commitment Shares
shall be fully earned as of the date of this Agreement, whether or not the
Commencement shall occur or any Purchase Shares are purchased by the Investor
under this Agreement and irrespective of any subsequent termination of this
Agreement.

 

(f)                 Due Diligence; Non-Public Information. During the term of
this Agreement, the Investor shall have the right, from time to time as the
Investor may reasonably deem appropriate, and upon reasonable advance notice to
the Company, to perform reasonable due diligence on the Company during normal
business hours. The Company and its officers and employees shall provide
information and reasonably cooperate with the Investor in connection with any
reasonable request by the Investor related to the Investor's due diligence of
the Company. Each party hereto agrees not to disclose any Confidential
Information of the other party to any third party and shall not use the
Confidential Information for any purpose other than in connection with, or in
furtherance of, the transactions contemplated hereby. Each party hereto
acknowledges that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party. The receiving party may disclose Confidential Information to the extent
such information is required to be disclosed by law, regulation or order of a
court of competent jurisdiction or regulatory authority, provided that the
receiving party shall promptly notify the disclosing party when such requirement
to disclose arises, and shall cooperate with the disclosing party so as to
enable the disclosing party to: (i) seek an appropriate protective order; and
(ii) make any applicable claim of confidentiality in respect of such
Confidential Information; and provided, further, that the receiving party shall
disclose Confidential Information only to the extent required by the protective
order or other similar order, if such an order is obtained, and, if no such
order is obtained, the receiving party shall disclose only the minimum amount of
such Confidential Information required to be disclosed in order to comply with
the applicable law, regulation or order. In addition, any such Confidential
Information disclosed pursuant to this Section 5(g) shall continue to be deemed
Confidential Information. Notwithstanding anything in this Agreement to the
contrary, the Company and the Investor agree that neither the Company nor any
other Person acting on its behalf shall provide the Investor or its agents or
counsel with any information that constitutes or may reasonably be considered to
constitute material, non-public information, unless a simultaneous public
announcement thereof is made by the Company in the manner contemplated by
Regulation FD. In the event of a breach of the foregoing covenant by the Company
or any Person acting on its behalf (as determined in the reasonable good faith
judgment of the Investor), in addition to any other remedy provided herein or in
the other Transaction Documents, if the Investor is holding any Securities at
the time of the disclosure of such material non-public information, the Investor
shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material, non-public
information without the prior approval by the Company; provided the Investor
shall have first provided notice to the Company that it believes it has received
information that constitutes material, non-public information, the Company shall
have at least twenty-four (24) hours (or, if later, until the end of the next
succeeding Business Day) to either publicly disclose such material, non-public
information or to demonstrate to the Investor that such information does not
constitute material, non-public information. The Investor shall not have any
liability to the Company, any of its Subsidiaries, or any of their respective
directors, officers, employees, stockholders or agents, for any such disclosure.
The Company understands and confirms that the Investor shall be relying on the
foregoing covenants in effecting transactions in Securities of the Company.

 

19

 

 

(g)                Purchase Records. The Investor and the Company shall each
maintain records showing the remaining Available Amount at any given time and
the dates and Purchase Amounts for each Regular Purchase, Accelerated Purchase
and Additional Accelerated Purchase or shall use such other method, reasonably
satisfactory to the Investor and the Company.

 

(h)                Taxes. The Company shall pay any and all transfer, stamp or
similar taxes that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Investor made under this Agreement.

 

(i)                 No Aggregation. From and after the date of this Agreement,
neither the Company, nor or any of its affiliates will, and the Company shall
use its commercially reasonable efforts to ensure that no Person acting on their
behalf will, directly or indirectly, make any offers or sales of any security or
solicit any offers to buy any security, under circumstances that would
reasonably be expected to cause this offering of the Securities by the Company
to the Investor to be aggregated with other offerings by the Company in a manner
that would require stockholder approval pursuant to the rules of the Principal
Market on which any of the securities of the Company are listed or designated
unless stockholder approval is obtained before the closing of such subsequent
transaction in accordance with the rules of such Principal Market.

 

(j)                 Use of Proceeds. The Company will use the net proceeds from
the offering as described in the Prospectus.

 

(k)                Other Transactions. During the term of this Agreement, the
Company shall not enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction in or of which the terms thereof
would restrict, materially delay, conflict with or impair the ability or right
of the Company to perform its obligations under the Transaction Documents,
including, without limitation, the obligation of the Company to deliver the
Purchase Shares and the Commitment Shares to the Investor in accordance with the
terms of the Transaction Documents.

 

(l)                 Limitation on Financings. From and after the date of this
Agreement until the earlier of (X) the Maturity Date and (Y) twelve (12) months
after the date of termination of this Agreement as provided in Section 11,the
Company shall be prohibited from entering into any “equity line” or similar
transaction whereby an investor is irrevocably bound to purchase securities over
a period of time from the Company at a price based on the market price of the
Common Stock at the time of such purchase; provided, however, that this Section
5(l) shall not be deemed to prohibit the issuance of Common Stock pursuant to an
“at-the-market offering” by the Company exclusively through a registered
broker-dealer acting as agent of the Company pursuant to a written agreement
between the Company and such registered broker-dealer. The Investor shall be
entitled to seek injunctive relief against the Company to preclude any such
issuance, which remedy shall be in addition to any right to collect damages,
without the necessity of showing economic loss and without any bond or other
security being required.

 

(m)              Publicity. The Company shall afford the Investor and its
counsel with the opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Investor or its counsel on, any
press release, SEC filing or other public disclosure by or on behalf of the
Company that, in each case, identifies the Investor, describes its purchases
hereunder or summarizes the Transaction Documents or the transactions
contemplated thereby, not less than twenty-four (24) hours prior to the
issuance, filing or public disclosure thereof; provided that the Company shall
not be required to provide to the Investor any disclosures that are materially
similar to those previously reviewed by the Investor. The Investor must be
provided with a substantially final version of any such press release, SEC
filing or other public disclosure at least twenty-four (24) hours prior to any
release, filing or use by the Company thereof. The Company agrees and
acknowledges that its failure to fully comply with this provision constitutes a
Material Adverse Effect.

 

20

 

 

6.TRANSFER AGENT INSTRUCTIONS.

 

On the Commencement Date, the Company shall issue to the Transfer Agent (and any
subsequent transfer agent) irrevocable instructions, in the form substantially
similar to those used by the Investor in substantially similar transactions, to
issue the Commitment Shares, reserve the Purchase Shares and issue the Purchase
Shares from time to time in accordance with the terms of this Agreement (the
“Irrevocable Transfer Agent Instructions”). All Securities to be issued to or
for the benefit of the Investor pursuant to this Agreement shall be issued as
DWAC Shares. The Company warrants to the Investor that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 6 will
be given by the Company to the Transfer Agent with respect to the Securities,
and the Securities shall otherwise be freely transferable on the books and
records of the Company; provided that if for any reason the Initial Prospectus
Supplement has not been filed before February 12, 2021, the Company shall issue
instructions to the Transfer Agent to issue the Commitment Shares to the
Investor.

 

7.CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK.

 

The right of the Company hereunder to commence sales of the Purchase Shares on
the Commencement Date is subject to the satisfaction or, where legally
permissible, the waiver of each of the following conditions:

 

(a)                The Investor shall have executed each of the Transaction
Documents and delivered the same to the Company;

 

(b)                No stop order with respect to the Registration Statement
shall be pending or threatened by the SEC;

 

(c)                The Common Stock shall be listed on the Principal Market, and
all Securities to be issued by the Company to the Investor under the Transaction
Documents shall have been approved for listing on the Principal Market in
accordance with the applicable rules and regulations of the Principal Market,
subject only to official notice of issuance; and

 

(d)                The representations and warranties of the Investor shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date hereof and as of the
Commencement Date as though made at that time.

 

8.CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE SHARES OF COMMON STOCK.

 

The obligation of the Investor to buy Purchase Shares under this Agreement is
subject to the satisfaction or, where legally permissible, the waiver of each of
the following conditions on or prior to the Commencement Date and, once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has occurred:

 

(a)                The Company shall have executed each of the Transaction
Documents and delivered the same to the Investor;

 

21

 

 

(b)                The Investor shall have received the opinions and the
negative assurances letter of the Company’s legal counsel dated as of the
Commencement Date substantially in the form agreed to prior to the date of this
Agreement by the Company’s legal counsel and the Investor’s legal counsel;

 

(c)                The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
4 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Commencement Date. The
Investor shall have received a certificate, executed by the Chief Financial
Officer of the Company, dated as of the Commencement Date, to the foregoing
effect in the form attached hereto as Exhibit A;

 

(d)                The Board of Directors of the Company shall have adopted the
Resolutions, which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;

 

(e)                As of the Commencement Date, the Company shall have reserved
out of its authorized and unissued Common Stock solely for the purpose of
effecting purchases of Purchase Shares hereunder, 12,000,000 shares of Common
Stock;

 

(f)                 The Irrevocable Transfer Agent Instructions shall have been
delivered to and acknowledged in writing by the Company and the Company’s
Transfer Agent (or any successor transfer agent), and the Commitment Shares
required to be issued in accordance with Section 5(e) hereof shall have been
issued directly to the Investor electronically as DWAC Shares;

 

(g)                The Company shall have delivered to the Investor a certified
copy of the Certificate of Incorporation and a certificate evidencing the
incorporation and good standing of the Company in the State of Delaware, each
issued by the Secretary of State of the State of Delaware, as well as a
certificate evidencing the authorization to do business in Pennsylvania in each
case as of a date within ten (10) Business Days of the Commencement Date;

 

(h)                The Company shall have delivered to the Investor a
secretary’s certificate executed by the Secretary of the Company, dated as of
the Commencement Date, in the form attached hereto as Exhibit B;

 

(i)                 The Shelf Registration Statement shall continue to be
effective and no stop order with respect to the Shelf Registration Statement
shall be pending or threatened by the SEC. The Company shall have a maximum
dollar amount of Common Stock registered under the Shelf Registration Statement
which is sufficient to issue to the Investor not less than (i) the full
Available Amount worth of Purchase Shares plus (ii) all of the Commitment
Shares. The Current Report and the Initial Prospectus Supplement each shall have
been filed with the SEC, as required pursuant to Section 5(b), and in compliance
with the Registration Rights Agreement. The Prospectus shall be current and
available for issuances and sales of all of the Securities by the Company to the
Investor and for the resale of all of the Securities by the Investor. Any other
Prospectus Supplements required to have been filed by the Company with the SEC
under the Securities Act at or prior to the Commencement Date shall have been
filed with the SEC within the applicable time periods prescribed for such
filings under the Securities Act. All reports, schedules, registrations, forms,
statements, information and other documents required to have been filed by the
Company with the SEC at or prior to the Commencement Date pursuant to the
reporting requirements of the Exchange Act shall have been filed with the SEC
within the applicable time periods prescribed for such filings under the
Exchange Act;

 

22

 

 

(j)                 No Event of Default (as defined below) has occurred, and no
event which, after notice and/or lapse of time, would reasonably be expected to
become an Event of Default has occurred;

 

(k)                All federal, state and local governmental laws, rules and
regulations applicable to the transactions contemplated by the Transaction
Documents and necessary for the execution, delivery and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby in accordance with the terms thereof shall have been complied with, and
all consents, authorizations and orders of, and all filings and registrations
with, all federal, state and local courts or governmental agencies and all
federal, state and local regulatory or self-regulatory agencies necessary for
the execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby in accordance with the
terms thereof shall have been obtained or made, including, without limitation,
in each case those required under the Securities Act, the Exchange Act,
applicable state securities or “Blue Sky” laws or applicable rules and
regulations of the Principal Market, or otherwise required by the SEC, the
Principal Market or any state securities regulators;

 

(l)                 No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any federal, state, local or foreign court or governmental authority of
competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by the
Transaction Documents; and

 

(m)              No action, suit or proceeding before any federal, state, local
or foreign arbitrator or any court or governmental authority of competent
jurisdiction shall have been commenced or threatened, and no inquiry or
investigation by any federal, state, local or foreign governmental authority of
competent jurisdiction shall have been commenced or threatened against the
Company, or any of the officers, directors or affiliates of the Company, seeking
to restrain, prevent or change the transactions contemplated by the Transaction
Documents, or seeking material damages in connection with such transactions.

 

9.INDEMNIFICATION.

 

In consideration of the Investor’s execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, stockholders, officers, directors, members, managers, employees and
direct or indirect investors and any of the foregoing Person’s agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of or relating to: (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby other than, in the case of clause (c),
with respect to Indemnified Liabilities which directly and primarily result from
the fraud, gross negligence or willful misconduct of an Indemnitee. The
indemnity in this Section 9 shall not apply to amounts paid in settlement of any
claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Payment under this indemnification shall be
made within thirty (30) days from the date the Indemnitee makes written request
for it. A certificate containing reasonable detail as to the amount of such
indemnification submitted to the Company by the Indemnitee shall be conclusive
evidence, absent manifest error, of the amount due from the Company to the
Indemnitee, provided that the Indemnitee shall undertake to repay any amounts
paid to it hereunder if it is ultimately determined, by a final and
non-appealable order of a court of competent jurisdiction, that the Indemnitee
is not entitled to be indemnified against such Indemnified Liabilities by the
Company pursuant to this Agreement. If any action shall be brought against any
Indemnitee in respect of which indemnity may be sought pursuant to this
Agreement, such Indemnitee shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Indemnitee. Any Indemnitee shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnitee, except to the extent that (i) the employment thereof
has been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Indemnitee, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel.

 

23

 

 

10.EVENTS OF DEFAULT.

 

An “Event of Default” shall be deemed to have occurred at any time as any of the
following events occurs:

 

(a)                the effectiveness of the Registration Statement registering
the Securities lapses for any reason (including, without limitation, the
issuance of a stop order or similar order), the Registration Statement or any
Prospectus is unavailable for the sale by the Company to the Investor (or the
resale by the Investor) of any or all of the Securities to be issued to the
Investor under the Transaction Documents (including, without limitation, as a
result of any failure of the Company to satisfy all of the requirements for the
use of a registration statement on Form S-3 pursuant to the Securities Act for
the offering and sale of the Securities contemplated by this Agreement), and any
such lapse or unavailability continues for a period of ten (10) consecutive
Business Days or for more than an aggregate of thirty (30) Business Days in any
365-day period, but excluding a lapse or unavailability where (i) the Company
terminates the Registration Statement after the Investor has confirmed in
writing that all of the Securities covered thereby have been resold or (ii) the
Company supersedes the Shelf Registration Statement with a New Registration
Statement (as defined in the Registration Rights Agreement), including (without
limitation) when the Registration Statement is effectively replaced with a New
Registration Statement covering Securities (provided in the case of this clause
(ii) that all of the Securities covered by the superseded (or terminated)
registration statement that have not theretofore been sold to the Investor are
included in the superseding (or new) registration statement);

 

(b)                the suspension of the Common Stock from trading on the
Principal Market for a period of one (1) Business Day, provided that the Company
may not direct the Investor to purchase any shares of Common Stock during any
such suspension;

 

24

 

 

(c)                the delisting of the Common Stock from The Nasdaq Global
Select Market, unless the Common Stock is immediately thereafter trading on The
Nasdaq Global Market, The Nasdaq Capital Market, the New York Stock Exchange,
the NYSE Arca, the NYSE American, the OTC Bulletin Board, or the OTCQB or the
OTCQX operated by the OTC Markets Group, Inc. (or any nationally recognized
successor to any of the foregoing);

 

(d)                the failure for any reason by the Transfer Agent to issue
Purchase Shares to the Investor within one (1) Business Day after the applicable
Purchase Date or Accelerated Purchase Date (as applicable) on which the Investor
is entitled to receive such Purchase Shares;

 

(e)                the Company breaches any representation, warranty, covenant
or other term or condition under any Transaction Document if such breach could
have a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of at
least five (5) Business Days;

 

(f)                 if any Person commences a proceeding against the Company
pursuant to or within the meaning of any Bankruptcy Law;

 

(g)                if the Company is at any time insolvent, or, pursuant to or
within the meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law (a “Custodian”) of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors or is generally unable to pay its debts as the same
become due;

 

(h)                a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against the Company in an
involuntary case, (ii) appoints a Custodian of the Company or for all or
substantially all of its property, or (iii) orders the liquidation of the
Company or any Subsidiary;

 

(i)                 if at any time the Company is not eligible to transfer its
Common Stock electronically as DWAC Shares; or

 

(j)                 if at any time after the Commencement Date, the Exchange Cap
is reached (to the extent the Exchange Cap is applicable pursuant to Section
2(e) hereof) and the Company’s stockholders have not approved the transactions
contemplated by this Agreement in accordance with the applicable rules and
regulations of the Principal Market.

 

In addition to any other rights and remedies under applicable law and this
Agreement, so long as an Event of Default has occurred and is continuing, or if
any event that, after notice and/or lapse of time, would reasonably be expected
to become an Event of Default, has occurred and is continuing, the Company shall
not deliver to the Investor any Purchase Notice, and the Investor shall not
purchase any shares of Common Stock under this Agreement.

 

25

 

 

11.TERMINATION

 

This Agreement may be terminated only as follows:

 

(a)                If pursuant to or within the meaning of any Bankruptcy Law,
the Company commences a voluntary case or any Person commences a proceeding
against the Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general assignment for
the benefit of its creditors (any of which would be an Event of Default as
described in Sections 10(f), 10(g) and 10(h) hereof), this Agreement shall
automatically terminate without any liability or payment to the Company (except
as set forth below) without further action or notice by any Person.

 

(b)                In the event that the Commencement shall not have occurred on
or before September 30, 2020, due to the failure to satisfy the conditions set
forth in Sections 7 and 8 above with respect to the Commencement, either the
Company or the Investor shall have the option to terminate this Agreement at the
close of business on such date or thereafter without liability of any party to
any other party (except as set forth below); provided, however, that the right
to terminate this Agreement under this Section 11(b) shall not be available to
any party if such party is then in breach of any covenant or agreement contained
in this Agreement or any representation or warranty of such party contained in
this Agreement fails to be true and correct such that the conditions set forth
in Section 7(d) or Section 8(c), as applicable, could not then be satisfied.

 

(c)                At any time after the Commencement Date, the Company shall
have the option to terminate this Agreement for any reason or for no reason by
delivering notice (a “Company Termination Notice”) to the Investor electing to
terminate this Agreement without any liability whatsoever of any party to any
other party under this Agreement (except as set forth below). The Company
Termination Notice shall not be effective until one (1) Business Day after it
has been received by the Investor.

 

(d)                This Agreement shall automatically terminate on the date that
the Company sells and the Investor purchases the full Available Amount as
provided herein, without any action or notice on the part of any party and
without any liability whatsoever of any party to any other party under this
Agreement (except as set forth below).

 

(e)                If, for any reason or for no reason, the full Available
Amount has not been purchased in accordance with Section 2 of this Agreement by
the Maturity Date, this Agreement shall automatically terminate on the Maturity
Date, without any action or notice on the part of any party and without any
liability whatsoever of any party to any other party under this Agreement
(except as set forth below).

 

Except as set forth in Sections 11(a) (in respect of an Event of Default under
Sections 10(f), 10(g) and 10(h)), 11(d) and 11(e), any termination of this
Agreement pursuant to this Section 11 shall be effected by written notice from
the Company to the Investor, or the Investor to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Investor contained in Sections 3 and 4 hereof,
the indemnification provisions set forth in Section 9 hereof and the agreements
and covenants set forth in Sections 5, 6, 10, 11 and 12 shall survive the
Commencement and any termination of this Agreement. No termination of this
Agreement shall (i) affect the Company’s or the Investor’s rights or obligations
under (A) this Agreement with respect to pending Regular Purchases, Accelerated
Purchases and Additional Accelerated Purchases and the Company and the Investor
shall complete their respective obligations with respect to any pending Regular
Purchases, Accelerated Purchases and Additional Accelerated Purchases under this
Agreement and (B) the Registration Rights Agreement, which shall survive any
such termination in accordance with its terms, or (ii) be deemed to release the
Company or the Investor from any liability for intentional misrepresentation or
willful breach of any of the Transaction Documents.

 

26

 

 

12.MISCELLANEOUS.

 

(a)                Governing Law; Jurisdiction; Jury Trial. The corporate laws
of the State of Delaware shall govern all issues concerning the relative rights
of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
other Transaction Documents shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of and venue in the U.S.
District Court for the Southern District of New York or, if that court does not
have subject matter jurisdiction, in any state court located in the City and
County of New York, for the adjudication of any dispute hereunder or under the
other Transaction Documents or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)                Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature or
signature delivered by e-mail in a “.pdf” format data file shall be considered
due execution and shall be binding upon the signatory thereto with the same
force and effect as if the signature were an original signature.

 

(c)                Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

(d)                Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)                Entire Agreement. The Transaction Documents supersede all
other prior oral or written agreements between the Investor, the Company, their
affiliates and Persons acting on their behalf with respect to the subject matter
thereof, and this Agreement, the other Transaction Documents and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
The Company acknowledges and agrees that it has not relied on, in any manner
whatsoever, any representations or statements, written or oral, other than as
expressly set forth in the Transaction Documents. The Investor acknowledges and
agrees that it has not relied on, in any manner whatsoever, any representations
or statements, written or oral, other than as expressly set forth in the
Transaction Documents. No provision of this Agreement may be amended other than
by a written instrument signed by both parties hereto.

 

(f)                 Notices. Any notices, consents or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt when
delivered personally; (ii) upon receipt when sent by facsimile or email
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses for such
communications shall be:

 

27

 

 

If to the Company:

 

Aclaris Therapeutics, Inc.

640 Lee Road, Suite 200

Wayne, PA 19087

Telephone: (484) 324-7933

E-mail: kalijackson@aclaristx.com

Attention: Kamil Ali-Jackson

 

With a copy to (which shall not constitute notice or service of process):

 

Cooley LLP

One Freedom Square, Reston Town Center

11951 Freedom Drive

Reston, Virginia 20190-5640

Telephone: (703) 456-8000

Facsimile: (703) 456-8100

Attention: Brian F. Leaf, Esq.

Email: bleaf@cooley.com

 

If to the Investor:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Telephone:     (312) 822-9300

Facsimile:        (312) 822-9301

E-mail:               jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention:        Josh Scheinfeld/Jonathan Cope

 

With a copy to (which shall not constitute notice or service of process):

 

K&L Gates, LLP

200 S. Biscayne Blvd., Ste. 3900

Miami, Florida 33131

Telephone:     (305) 539-3306

Facsimile:        (305) 358-7095

E-mail:              clayton.parker@klgates.com

Attention:        Clayton E. Parker, Esq.

 

 

or at such other address, email and/or facsimile number and/or to the attention
of such other Person as the recipient party has specified by written notice
given to each other party one (1) Business Day prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or email account containing the
time, date, and recipient facsimile number or email address, as applicable, and
an image of the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of personal
service, receipt by facsimile, email or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

28

 

 

(g)                Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its rights or
obligations under this Agreement.

 

(h)                No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and, except as set forth in Section 9, is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

(i)                 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to consummate and
make effective, as soon as reasonably possible, the Commencement, and to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

(j)                 No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

 

(k)                Remedies, Other Obligations, Breaches and Injunctive Relief.
The Investor’s remedies provided in this Agreement, including, without
limitation, the Investor’s remedies provided in Section 9, shall be cumulative
and in addition to all other remedies available to the Investor under this
Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy of the Investor contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit the Investor’s right to pursue actual
damages for any failure by the Company to comply with the terms of this
Agreement. The parties acknowledge that a breach by any party of its obligations
hereunder will cause irreparable harm to the non-breaching party and that the
remedy at law for any such breach may be inadequate. The parties therefore agree
that, in the event of any such breach or threatened breach, the non-breaching
party shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

 

(l)                 Enforcement Costs. If: (i) this Agreement is placed by the
Investor or the Company in the hands of an attorney for enforcement or is
enforced by the Investor or the Company through any legal proceeding; (ii) an
attorney is retained to represent the Investor or the Company in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Agreement; or (iii) an attorney is retained to
represent the Investor or the Company in any other proceedings whatsoever in
connection with this Agreement, then the party against which redress is sought
under this section shall pay all reasonable costs and expenses including
attorneys' fees incurred in connection therewith to the party incurring such
costs and expenses, as incurred, in addition to all other amounts due hereunder.

 

(m)              Waiver; Failure or Indulgence Not Waiver. No provision of this
Agreement may be waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

 

** Signature Page Follows **

 

29

 

 

IN WITNESS WHEREOF, the Investor and the Company have caused this Purchase
Agreement to be duly executed as of the date first written above.

 

  THE COMPANY:       ACLARIS THERAPEUTICS, INC.       By: /s/ Neal Walker  
Name:  Neal Walker   Title: President and Chief Executive Officer      
INVESTOR:       LINCOLN PARK CAPITAL FUND, LLC   BY: LINCOLN PARK CAPITAL, LLC  
BY: Rockledge Capital Corporation       By: /s/ Joshua Scheinfeld   Name: Joshua
Scheinfeld   Title: President

 

30

 

 

EXHIBITS

 

Exhibit A    Form of Officer’s Certificate

Exhibit B     Form of Secretary’s Certificate

 

31

 

 

EXHIBIT A

 

FORM OF OFFICER’S CERTIFICATE

 

 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(c) of that certain Purchase Agreement dated as of August 13, 2020,
(“Purchase Agreement”), by and between ACLARIS THERAPEUTICS, INC., a Delaware
corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the
“Investor”). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Purchase Agreement.

 

The undersigned, Frank Ruffo, Chief Financial Officer of the Company, hereby
certifies, on behalf of the Company and not in his individual capacity, as
follows:

 

1.       I am the Chief Financial Officer of the Company and make the statements
contained in this Certificate;

 

2.       The representations and warranties of the Company are true and correct
in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 4 of the
Purchase Agreement, in which case, such representations and warranties are true
and correct without further qualification) as of the date when made and as of
the Commencement Date as though made at that time (except for representations
and warranties that speak as of a specific date);

 

3.       The Company has performed, satisfied and complied in all material
respects with covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior
to the Commencement Date, to the extent not otherwise waived.

 

4.      The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any Bankruptcy Law nor does the
Company or any of its Subsidiaries currently have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy or
insolvency proceedings. The Company is currently financially solvent and is
generally able to pay its debts as they become due.

 

IN WITNESS WHEREOF, I have hereunder signed my name as of the date first written
above.

 

      Name: Frank Ruffo   Title: Chief Financial Officer

 

32

 

 

EXHIBIT B

 

FORM OF SECRETARY’S CERTIFICATE

 

This Secretary’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(h) of that certain Purchase Agreement dated as of August 13, 2020,
(“Purchase Agreement”), by and between ACLARIS THERAPEUTICS, INC., a Delaware
corporation (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”),
pursuant to which the Company may sell to the Investor up to Fifteen Million
Dollars ($15,000,000) of the Company's Common Stock, $0.00001 par value (the
“Common Stock”). Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Purchase Agreement.

 

The undersigned, Kamil Ali-Jackson, Secretary of the Company, hereby certifies,
on behalf of the Company and not in her individual capacity, as follows:

 

1.       I am the Secretary of the Company and make the statements contained in
this Secretary’s Certificate.

 

2.       Attached hereto as Exhibit A and Exhibit B are true, correct and
complete copies of the Company’s Bylaws (“Bylaws”) and Certificate of
Incorporation (“Charter”), in each case, as amended through the date hereof, and
no action has been taken by the Company, its directors, officers or
stockholders, in contemplation of the filing of any further amendment relating
to or affecting the Bylaws or Charter.

 

3.       Attached hereto as Exhibit C are true, correct and complete copies of
the resolutions duly adopted by the Pricing Committee of the Board of Directors
of the Company by at a meeting held on August 13, 2020 in accordance with the
Delaware General Corporation Law. Such resolutions have not been amended,
modified or rescinded and remain in full force and effect and such resolutions
are the only resolutions adopted by the Company’s Board of Directors, or any
committee thereof, or the stockholders of the Company relating to or affecting
(i) the entering into and performance of the Purchase Agreement, or the
issuance, offering and sale of the Purchase Shares and the Commitment Shares and
(ii) and the performance of the Company of its obligation under the Transaction
Documents as contemplated therein.

 

4.       As of the date hereof, the authorized, issued and reserved capital
stock of the Company is as set forth on Exhibit D hereto.

 

IN WITNESS WHEREOF, I have hereunder signed my name as of the date first written
above.

 

      Name: Kamil Ali-Jackson   Title: Secretary

 

The undersigned as Chief Financial Officer of ACLARIS THERAPEUTICS, INC., a
Delaware corporation, hereby certifies that Kamil Ali-Jackson is the duly
elected, appointed, qualified and acting Secretary of ACLARIS THERAPEUTICS,
INC., and that the signature appearing above is her genuine signature.

 

      Name: Frank Ruffo   Title: Chief Financial Officer

 

33