Exhibit 10.1

 

OPEN MARKET SALE AGREEMENT

 

March 13, 2020

 

JEFFERIES LLC
520 Madison Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Aclaris Therapeutics, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell from time
to time through Jefferies LLC, as sales agent and/or principal (the “Agent”),
shares of the Company’s common stock, par value $0.00001 per share (the “Common
Shares”), having an aggregate offering price of up to $25,000,000 on the terms
set forth in this agreement (this “Agreement”).

 

Section 1. DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Selling Commission” means three percent (3%) of the gross proceeds of Shares
sold pursuant to this Agreement, or as otherwise agreed between the Company and
the Agent with respect to any Shares sold pursuant to this Agreement.

 

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

 

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

 

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

 

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Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

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

 

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

 

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

 

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

 

(b)            Compliance with Registration Requirements. The Original
Registration Statement has or will be declared effective by the Commission, and
any Rule 462(b) Registration Statement will be automatically effective under the
Securities Act. The Company has complied to the Commission’s satisfaction with
all requests of the Commission for additional or supplemental information. No
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of the Company,
contemplated or threatened by the Commission.

 

The Prospectus will comply or, when filed, complied, as applicable, in all
material respects with the Securities Act and, if filed with the Commission
through EDGAR (except as may be permitted by Regulation S-T under the Securities
Act), was identical to the copy thereof delivered to the Agent for use in
connection with the issuance and sale of the Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective and at all subsequent times,
complied and will comply in all material respects with the Securities Act and
did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. As of the date of this Agreement, the
Prospectus and any Free Writing Prospectus (as defined below) considered
together (collectively, the “Time of Sale Information”) did not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus, as amended or supplemented, as
of its date and at all subsequent times, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties set forth in
the three immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with
information relating to the Agent furnished to the Company in writing by the
Agent expressly for use therein, it being understood and agreed that the only
such information furnished by the Agent to the Company consists of the
information described in Section 6 below. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required. The Registration Statement and the offer and sale of the Shares as
contemplated hereby meet the requirements of Rule 415 under the Securities Act
and comply in all material respects with said rule.

 

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

 

(d)            Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the Prospectus,
at the time they were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act, as applicable, and, when
read together with the other information in the Prospectus, do not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

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

 

(f)             Statistical and Market-Related Data. The statistical,
demographic and market-related data included in the Registration Statement and
the Prospectus are based on or derived from sources that the Company believes to
be reliable and accurate or represent the Company’s good faith estimates that
are made on the basis of data derived from such sources.

 

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(g)            Disclosure Controls and Procedures; Deficiencies in or Changes to
Internal Control Over Financial Reporting. The Company has established and
maintains disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), which (i) are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) have been evaluated by management of the Company for
effectiveness as of the end of the Company’s most recent fiscal quarter; and
(iii) are effective in all material respects to perform the functions for which
they were established. Based on the most recent evaluation of its disclosure
controls and procedures, the Company is not aware of (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting. The Company is not aware of any
change in its internal control over financial reporting that has occurred during
its most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.

 

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

 

(i)             Authorization of the Shares. The Shares have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor pursuant to this Agreement,
will be validly issued, fully paid and nonassessable, and the issuance and sale
of the Shares is not subject to any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase the Shares.

 

(j)             No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.

 

(k)            No Material Adverse Change. Except as otherwise disclosed in the
Registration Statement and Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement and Prospectus:
(i) there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity (any such change is
called a “Material Adverse Change”); (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business: and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, by any of its subsidiaries
on any class of capital stock or repurchase or redemption by the Company or any
of its subsidiaries of any class of capital stock.

 

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(l)             Independent Accountants. The independent registered public
accounting firms which have expressed their opinions with respect to the
financial statements (which term as used in this Agreement includes the related
notes thereto) filed with the Commission or incorporated by reference as a part
of the Registration Statement and included in the Prospectus are (i) independent
public or certified public accountants as required by the Securities Act and the
Exchange Act, (ii) in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X; and
(iii) registered public accounting firms as defined by the Public Company
Accounting Oversight Board (the “PCAOB”) whose registration has not been
suspended or revoked and who has not requested such registration to be
withdrawn.

 

(m)           Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of or incorporated by reference in the
Registration Statement and included in the Prospectus present fairly, in all
material respects, the consolidated financial position of the Company and its
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. Such financial statements
have been prepared in conformity with generally accepted accounting principles
as applied in the United States applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes thereto
and except in the case of unaudited financial statements, which are subject to
normal and recurring year-end adjustments and do not contain certain footnotes
as permitted by the applicable rules of the Commission. No other financial
statements or supporting schedules are required to be included in or
incorporated in the Registration Statement or the Prospectus. The financial data
set forth or incorporated in the Prospectus under the caption “Selected
Consolidated Financial Data”, if applicable, fairly present, in all material
respects, the information set forth therein on a basis consistent with that of
the audited financial statements contained, incorporated or deemed to be
incorporated in the Registration Statement and the Prospectus. To the Company’s
knowledge, no person who has been suspended or barred from being associated with
a registered public accounting firm, or who has failed to comply with any
sanction pursuant to Rule 5300 promulgated by the PCAOB, has participated in or
otherwise aided the preparation of, or audited, the financial statements,
supporting schedules or other financial data filed with the Commission as a part
of the Registration Statement and included in the Prospectus.

 

(n)            Company’s Accounting System. The Company and each of its
subsidiaries make and keep accurate books and records and maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii)  transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

(o)            Incorporation and Good Standing of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the power and authority
(corporate or other) to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or to be in good standing, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Change.

 

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(p)            Incorporation and Good Standing of the Company’s Subsidiaries.
Each subsidiary of the Company has been duly incorporated or organized, as the
case may be, and is validly existing as a corporation, partnership or limited
liability company, as applicable, in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority (corporate or other) to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation, partnership or limited liability company, as applicable, to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Change. All of the issued and
outstanding capital stock or other equity or ownership interests of each
subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
adverse claim. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the subsidiaries listed
on Exhibit 21.1 to the Company’s most recent annual report on Form 10-K and
(ii) such other entities omitted from Exhibit 21.1 which, when such omitted
entities are considered in the aggregate as a single subsidiary, would not
constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of
Regulation S-X.

 

(q)            Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption “Description of Capital Stock” (other than for
subsequent issuances, if any, pursuant to employee benefit plans described in
the Prospectus or upon the exercise of outstanding options or warrants, in each
case as described in the Prospectus). The Common Shares (including the Shares)
conform in all material respects to the description thereof contained in the
Prospectus. All of the issued and outstanding Common Shares have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws. None of the
outstanding Common Shares were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company that have not been duly waived or satisfied. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in all
material respects in the Prospectus. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents in all material respects the information required to be shown
with respect to such plans, arrangements, options and rights.

 

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

 

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(s)            Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws, partnership agreement or
operating agreement or similar organizational document, as applicable, or is in
default (or, with the giving of notice or lapse of time, would be in default)
(“Default”) under any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound
(including, without limitation, any credit agreement, indenture, pledge
agreement, security agreement or other instrument or agreement evidencing,
guaranteeing, securing or relating to indebtedness of the Company or any of its
subsidiaries ), or to which any of the property or assets of the Company or any
of its subsidiaries is subject (each, an “Existing Instrument”), except for such
Defaults as would not, individually or in the aggregate, result in a Material
Adverse Change. The Company’s execution, delivery and performance of this
Agreement, consummation of the transactions contemplated hereby and by each
applicable Prospectus and the issuance and sale of the Shares (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws, partnership agreement or
operating agreement or similar organizational document of the Company or any
subsidiary, as applicable; (ii) will not conflict with or constitute a breach
of, or Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change; and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary, except as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company’s execution, delivery and performance of this Agreement
and consummation of the transactions contemplated hereby and by the Prospectus,
except (i) such as have been obtained or made by the Company and are in full
force and effect under the Securities Act, applicable state securities or blue
sky laws and from the Financial Industry Regulatory Authority (“FINRA”).

 

(t)             No Material Actions or Proceedings. Except as otherwise
disclosed in the Prospectus, there are no legal or governmental actions, suits
or proceedings pending or, to the Company’s knowledge, threatened (i) against or
affecting the Company or any of its subsidiaries; (ii) which have as the subject
thereof any officer or director of, or property owned or leased by, the Company
or any of its subsidiaries; or (iii) relating to environmental or discrimination
matters, where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company, such
subsidiary or such officer or director, (B) any such action, suit or proceeding,
if so determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement or (C) any such action, suit or proceeding is or
would be material in the context of the sale of Shares. Except as otherwise
disclosed in the Prospectus, no material labor dispute with the employees of the
Company or any of its subsidiaries, or with the employees of any principal
supplier, manufacturer, customer or contractor of the Company, exists or, to the
Company’s knowledge, is threatened or imminent.

 

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(u)            Intellectual Property Rights. The Company and its subsidiaries
own or possess the valid right to use all (i) patents, patent applications,
trademarks, trademark registrations, service marks, service mark
registrations, Internet domain name registrations, copyrights, copyright
registrations, licenses, trade secret rights (“Intellectual Property Rights”)
and (ii) inventions, software, works of authorships, trademarks, service marks,
trade names, databases, formulae, know how, Internet domain names and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary confidential information, systems, or procedures)
(collectively, “Intellectual Property Assets”) necessary to conduct their
respective businesses described in the Prospectus, except where the failure to
own or possess the valid right to use the Intellectual Property Assets would
not, individually or in the aggregate, result in a Material Adverse Change. The
Company and its subsidiaries have not received any opinion from their legal
counsel concluding that any activities of their respective businesses infringe,
misappropriate, or otherwise violate, valid and enforceable Intellectual
Property Rights of any other person. The Company and its subsidiaries have not
received written notice of any challenge, which is to their knowledge still
pending, by any other person to the rights of the Company and its subsidiaries
with respect to any Intellectual Property Rights or Intellectual Property Assets
owned or used by the Company or its subsidiaries that would reasonably be
expected to result in a Material Adverse Change. To the knowledge of the
Company, the Company and its subsidiaries’ respective businesses as now
conducted do not give rise to any infringement of, any misappropriation of, or
other violation of, any valid and enforceable Intellectual Property Rights of
any other person. All licenses for the use of the Intellectual Property Rights
described in the Prospectus are valid, binding upon, and enforceable by or
against the parties thereto in accordance to its terms. The Company has complied
in all material respects with, and is not in breach nor has received any
asserted or threatened claim of breach of any Intellectual Property Rights
license, and the Company has no knowledge of any breach or anticipated breach by
any other person to any Intellectual Property Rights license. Except as
described in the Prospectus, no claim has been made against the Company alleging
the infringement by the Company of any patent, trademark, service mark, trade
name, copyright, trade secret, license in or other intellectual property right
or franchise right of any person that would reasonably be expected to result in
a Material Adverse Change. The Company has taken all reasonable steps to
protect, maintain and safeguard its Intellectual Property Rights, including the
execution of appropriate nondisclosure and confidentiality agreements. The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of or payment of any additional amounts with respect
to, nor require the consent of any other person in respect of, the Company’s
right to own, use, or hold for use any of the Intellectual Property Rights as
owned, used or held for use in the conduct of the business as currently
conducted.

 

(v)            All Necessary Permits, etc. Except as otherwise disclosed in the
Prospectus, the Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary for the ownership or lease of
its properties or the conduct of its businesses (“Permits”) as described in the
Registration, Statement and the Prospectus, or to permit all clinical and
nonclinical studies and trials conducted by or on behalf of the Company and its
subsidiaries, except where failure to so possess would not reasonably be
expected to, individually or in the aggregate, result in a Material Adverse
Change; and neither the Company nor any subsidiary has received, or has any
reason to believe that it will receive, any notice of proceedings relating to
the revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.

 

 10 

 

 

(w)           Title to Properties. The Company and its subsidiaries have good
and marketable title to all of the real and personal property and other assets
reflected as owned in the financial statements referred to in Section 2(m) above
(or elsewhere in the Registration Statement or the Prospectus), in each case
free and clear of any security interests, mortgages, liens, encumbrances,
equities, adverse claims and other defects, except such as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Change. The real property, improvements, equipment and personal property held
under lease by the Company or any of its subsidiaries are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or such
subsidiary.

 

(x)            Tax Law Compliance. The Company and its consolidated subsidiaries
have filed all necessary federal, state and foreign income, property and
franchise tax returns (or have properly requested extensions thereof) and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them except
as may be being contested in good faith and by appropriate proceedings. The
Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 2(m) above in respect of all
federal, state and foreign income, property and franchise taxes for all periods
as to which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined.

 

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

 

(z)            Insurance. Except as otherwise disclosed in the Prospectus, each
of the Company and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes and
policies covering the Company and its subsidiaries for product liability claims
and clinical trial liability claims. The Company has no reason to believe that
it or any subsidiary will not be able (i) to renew its existing insurance
coverage as and when such policies expire; or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.

 

 11 

 

 

(aa)          No Price Stabilization or Manipulation; Compliance with Regulation
M. Neither the Company nor any of its subsidiaries has taken, directly or
indirectly, any action designed to or that would reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Shares or
any other “reference security” (as defined in Rule 100 of Regulation M under the
Exchange Act (“Regulation M”)), whether to facilitate the sale or resale of the
Shares or otherwise, and has taken no action which would directly or indirectly
violate Regulation M. The Company acknowledges that the Agent may engage in
passive market making transactions in the Shares on the Principal Market in
accordance with Regulation M. The Common Shares are “actively traded securities”
(as defined in Regulation M).

 

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

 

(cc)          FINRA Matters. All of the information provided to the Agent or to
counsel for the Agent by the Company, its officers and directors and the holders
of any securities (debt or equity) or options to acquire any securities of the
Company in connection with letters, filings or other supplemental information
provided to FINRA pursuant to FINRA Rules 5110, 5190 and 5121 is true, complete
and correct. The Company meets the requirements for use of Form S-3 under the
Securities Act specified in FINRA Rule 5110(b)(7)(C)(i). Neither the Company nor
any of its Affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or is a person associated with any member firm of FINRA.

 

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

 

(ee)          Compliance with Environmental Laws. Except as otherwise described
in the Prospectus, and except as would not, individually or in the aggregate,
result in a Material Adverse Change (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern (collectively,
“Environmental Laws”), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations required for
the operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or any of its subsidiaries received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company or any of its subsidiaries is in
violation of any Environmental Law; (ii) there is no claim, action or cause of
action filed with a court or governmental authority, no investigation with
respect to which the Company has received written notice, and no written notice
by any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys’ fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries or any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law; and (iii) to
the Company’s knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law.

 

 12 

 

 

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

 

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

 

(hh)          No Outstanding Loans or Other Extensions of Credit. Except as
described in the Prospectus, there are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees or indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the immediate family members of
any of them.

 

 13 

 

 

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

 

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

 

(kk)          Anti-Corruption and Anti-Bribery Laws. Neither the Company nor any
of its subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee, affiliate or other person acting on behalf of the Company or
any of its subsidiaries has, in the course of its actions for, or on behalf of,
the Company or any of its subsidiaries (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made or taken any act in furtherance of an offer,
promise, or authorization of any direct or indirect unlawful payment or benefit
to any foreign or domestic government official or employee, including of any
government-owned or controlled entity or public international organization, or
any political party, party official, or candidate for political office;
(iii) violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended (the “FCPA”), the UK Bribery Act 2010, or any
other applicable anti-bribery or anti-corruption law; or (iv) made, offered,
authorized, requested, or taken an act in furtherance of any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment or
benefit. The Company and its subsidiaries and, to the knowledge of the Company,
the Company’s affiliates have conducted their respective businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

 

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

 

 14 

 

 

(mm)        Clinical Studies. The preclinical tests and clinical trials, and
other studies (collectively, “studies”) conducted by or on behalf of or
sponsored by the Company or any of its subsidiaries or in which the Company or
any of its subsidiaries or their products or product candidates have
participated were and, if still pending, are being conducted in all material
respects in accordance with the protocols, procedures and controls designed and
approved for such studies and all applicable laws and regulations, including,
without limitation, 21 C.F.R. Parts 50, 54, 56, 58, 312 and 812; each
description of the results of such studies is accurate and complete in all
material respects and fairly presents the data derived from such studies, and
the Company and its subsidiaries have no knowledge of any other studies the
results of which are inconsistent with, or otherwise call into question, the
results described or referred to in the Registration Statement or the
Prospectus; no investigational new drug application filed by or on behalf of the
Company or any of its subsidiaries with the U.S. Food and Drug Administration
(“FDA”) has been terminated or suspended by the FDA, and neither the FDA nor any
applicable foreign regulatory agency has commenced, or, to the knowledge of the
Company, threatened to initiate, any action to place a clinical hold order on,
or otherwise terminate, delay or suspend, any proposed or ongoing studies
conducted or proposed to be conducted by or on behalf of the Company or any of
its subsidiaries; the Company and its subsidiaries have made all such filings
and hold all such Permits for the operation of its business required by the FDA
or any committee thereof or from any other U.S. or foreign government or drug or
medical device regulatory agency, or health care facility Institutional Review
Board (collectively, the “Regulatory Agencies”); and the Company and its
subsidiaries have fulfilled and performed all of their material obligations with
respect to such Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit.

 

(nn)         Compliance with Health Care Laws. The Company and its subsidiaries
are, and at all times have been, in compliance in all respects with all
applicable Health Care Laws, and have not engaged in activities which are, as
applicable, cause for false claims liability, civil penalties, or mandatory or
permissive exclusion from Medicare, Medicaid, or any other state health care
program or federal health care program, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Change.
For purposes of this Agreement, “Health Care Laws” means: (i) the Federal Food,
Drug, and Cosmetic Act and the regulations promulgated thereunder; (ii) all
applicable federal, state, local and all applicable foreign health care related
fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback
Statute (42 U.S.C. Section 1320a-7b(b)), the U.S. Physician Payments Sunshine
Act (42 U.S.C. § 1320a-7h), the U.S. Civil False Claims Act (31 U.S.C.
Section 3729 et seq.), the criminal False Claims Law (42 U.S.C. § 1320a-7b(a)),
all criminal laws relating to health care fraud and abuse, including but not
limited to 18 U.S.C. Sections 286 and 287, and the health care fraud criminal
provisions under the U.S. Health Insurance Portability and Accountability Act of
1996 (42 U.S.C. Section 1320d et seq.), the exclusions law (42 U.S.C. §
1320a-7), the civil monetary penalties law (42 U.S.C. § 1320a-7a), HIPAA, as
amended by the Health Information Technology for Economic and Clinical Health
Act (42 U.S.C. Section 17921 et seq.) (“HIPAA”), and the regulations promulgated
pursuant to such statutes; (iii) Medicare (Title XVIII of the Social Security
Act); (iv) Medicaid (Title XIX of the Social Security Act); and (v) any and all
other applicable health care laws and regulations. Neither the Company nor any
of its subsidiaries have received notice of any claim, action, suit, proceeding,
hearing, enforcement, audit, investigation, arbitration or other action from any
court or arbitrator or governmental or regulatory authority or third party
alleging that any product operation or activity is in material violation of any
Health Care Laws, and, to the Company’s knowledge, no such claim, action, suit,
proceeding, hearing, enforcement, audit, investigation, arbitration or other
action is threatened. Neither the Company nor any of its subsidiaries are a
party to or have any ongoing reporting obligations pursuant to any corporate
integrity agreements, deferred prosecution agreements, monitoring agreements,
consent decrees, settlement orders, plans of correction or similar agreements
with or imposed by any Regulatory Agency or other governmental or regulatory
authority. Additionally, neither the Company nor any of its subsidiaries, nor
any of their respective employees, officers or directors has been excluded,
suspended or debarred from participation in any U.S. federal health care program
or human clinical research or, to the knowledge of the Company, is subject to a
governmental inquiry, investigation, proceeding, or other similar action that
could reasonably be expected to result in debarment, suspension, or exclusion.

 

 15 

 

 

(oo)         [Reserved.]

 

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

 

(qq)         Sarbanes-Oxley. The Company is in compliance, in all material
respects, with all applicable provisions of the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated thereunder.

 

(rr)           Duties, Transfer Taxes, Etc. No stamp or other issuance or
transfer taxes or duties and no capital gains, income, withholding or other
taxes are payable by the Agent in the United States or any political subdivision
or taxing authority thereof or therein in connection with the execution,
delivery or performance of this Agreement by the Company or the sale and
delivery by the Company of the Shares.

 

 16 

 

 

(ss)          Cybersecurity. To the Company’s knowledge, the Company and its
subsidiaries’ information technology assets and equipment, computers, systems,
networks, hardware, software, websites, applications, and databases
(collectively, “IT Systems”) are adequate for, and operate and perform in all
material respects as required in connection with the operation of the business
of the Company and its subsidiaries as currently conducted, free and clear of
all material bugs, errors, defects, Trojan horses, time bombs, malware and other
corruptants. The Company and its subsidiaries have implemented and maintained
commercially reasonable physical, technical and administrative controls,
policies, procedures, and safeguards to maintain and protect their material
confidential information and the integrity, continuous operation, redundancy and
security of all IT Systems and data, including “Personal Data,” used in
connection with their businesses. “Personal Data” means (i) a natural person’s
name, street address, telephone number, e-mail address, photograph, social
security number or tax identification number, driver’s license number, passport
number, credit card number, bank information, or customer or account number;
(ii) any information which would qualify as “personally identifying information”
under the Federal Trade Commission Act, as amended; (iii) if applicable to the
Company, “personal data” as defined by GDPR (as defined below); (iv) if
applicable to the Company, any information which would qualify as “protected
health information” under HIPAA; and (v) any other piece of information that
allows the identification of such natural person, or his or her family, or
permits the collection or analysis of any data related to an identified person’s
health or sexual orientation. To the Company’s knowledge, there have been no
breaches, violations, outages or unauthorized uses of or accesses to same,
except for those that have been remedied without material cost or liability or
the duty to notify any other person, and there are no incidents under internal
review or investigations relating to the same. The Company and its subsidiaries
are presently in material compliance with all applicable laws or statutes and
all judgments, orders, rules and regulations of any court or arbitrator or
governmental or regulatory authority, internal policies and contractual
obligations relating to the privacy and security of IT Systems and Personal Data
and to the protection of such IT Systems and Personal Data from unauthorized
use, access, misappropriation or modification.

 

(tt)           Compliance with Data Privacy Laws. The Company and its
subsidiaries are, and at all prior times were, in material compliance with all
applicable state and federal data privacy and security laws and regulations,
including without limitation HIPAA, and the Company and its subsidiaries have
taken commercially reasonable actions to prepare to comply with, and since
May 25, 2018, have been and currently are in compliance with, the European Union
General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, the
“Privacy Laws”) in all material respects. To ensure compliance with the Privacy
Laws, the Company and its subsidiaries have in place, comply with, and take
appropriate steps reasonably designed to ensure compliance in all material
respects with their policies and procedures relating to data privacy and
security and the collection, storage, use, disclosure, handling, and analysis of
Personal Data (the “Policies”). The Company and its subsidiaries have at all
times made all disclosures to users or customers required by applicable laws and
regulatory rules or requirements, and none of such disclosures made or contained
in any Policy have, to the knowledge of the Company, been inaccurate or in
violation of any applicable laws and regulatory rules or requirements in any
material respect. The Company further certifies that neither it nor any
subsidiary: (i) has received notice of any actual or potential liability under
or relating to, or actual or potential violation of, any of the Privacy Laws,
and has no knowledge of any event or condition that would reasonably be expected
to result in any such notice; (ii) is currently conducting or paying for, in
whole or in part, any investigation, remediation, or other corrective action
pursuant to any Privacy Law; or (iii) is a party to any order, decree, or
agreement that imposes any obligation or liability under any Privacy Law.

 

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

 

 17 

 

 

(vv)         Other Underwriting Agreements. The Company is not a party to any
agreement with an agent or underwriter for any other “at the market” or
continuous equity transaction.

 

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

 

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

 

Section 3. ISSUANCE AND SALE OF COMMON SHARES

 

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

 

(b)            Mechanics of Issuances.

 

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

 

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

 

 18 

 

 

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

 

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

 

(v)            Settlement. Each issuance of Shares will be settled on the
applicable Settlement Date for such issuance of Shares and, subject to the
provisions of Section 5, on or before each Settlement Date, the Company will, or
will cause its transfer agent to, electronically transfer the Shares being sold
by crediting the Agent or its designee’s account at The Depository Trust Company
through its Deposit/Withdrawal At Custodian (DWAC) System, or by such other
means of delivery as may be mutually agreed upon by the parties hereto and, upon
receipt of such Shares, which in all cases shall be freely tradable,
transferable, registered shares in good deliverable form, the Agent will
deliver, by wire transfer of immediately available funds, the related Issuance
Price in same day funds delivered to an account designated by the Company prior
to the Settlement Date. The Company may sell Shares to the Agent as principal at
a price agreed upon at each relevant time Shares are sold pursuant to this
Agreement (each, a “Time of Sale”).

 

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

 

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

 

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

 

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

 

(d)            Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Shares
(including all printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Shares; (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Prospectus, any
Free Writing Prospectus (as defined below) prepared by or on behalf of, used by,
or referred to by the Company, and all amendments and supplements thereto, and
this Agreement; (vi) all filing fees, attorneys’ fees and expenses incurred by
the Company or the Agent in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada, and, if requested by the Agent,
preparing and printing a “Blue Sky Survey” or memorandum and a “Canadian
wrapper”, and any supplements thereto, advising the Agent of such
qualifications, registrations, determinations and exemptions; (vii) the
reasonable fees and disbursements of the Agent’s counsel, including the
reasonable fees and expenses of counsel for the Agent in connection with, FINRA
review, if any, and approval of the Agent’s participation in the offering and
distribution of the Shares; (viii) the filing fees incident to FINRA review, if
any; and (ix) the fees and expenses associated with listing the Shares on the
Principal Market. The fees and disbursements of Agent’s counsel pursuant to
subsections (vi) and (vii) above shall not exceed $60,000.

 

Section 4. ADDITIONAL COVENANTS

 

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

 

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

 

 20 

 

 

(b)            Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Agent in writing (i) of the receipt of any
comments of, or requests for additional or supplemental information from, the
Commission; (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement, any Rule 462(b) Registration Statement
or any amendment or supplement to the Prospectus, any Free Writing Prospectus;
(iii) of the time and date that any post-effective amendment to the Registration
Statement or any Rule 462(b) Registration Statement becomes effective; and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto, any Rule 462(b) Registration Statement or any amendment or supplement
to the Prospectus or of any order preventing or suspending the use of any Free
Writing Prospectus or the Prospectus, or of any proceedings to remove, suspend
or terminate from listing or quotation the Common Shares from any securities
exchange upon which they are listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its reasonable efforts to obtain the lifting of such order
as soon as practicable. Additionally, the Company agrees that it shall comply
with the provisions of Rule 424(b) and Rule 433, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under such Rule 424(b) or Rule 433 were received in a timely
manner by the Commission.

 

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

 

(d)            Agent’s Review of Proposed Amendments and Supplements. Prior to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus
(excluding any amendment or supplement through incorporation of any report filed
under the Exchange Act), the Company shall furnish to the Agent for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a
copy of each such proposed amendment or supplement, and, if such proposed
amendment or supplement relates to the matters contemplated by this Agreement,
the Company shall not file or use any such proposed amendment or supplement
without the Agent’s prior consent, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.

 

 21 

 

 

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

 

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

 

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

 

 22 

 

 

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

 

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

 

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

 

 23 

 

 

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

 

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

 

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

 

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

 

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

 

(A)            the filing of the Prospectus or the amendment or supplement of
any Registration Statement or Prospectus (other than a prospectus supplement
relating solely to an offering of securities other than the Shares or a
prospectus filed pursuant to Section 4(a)(ii)(B)), by means of a post-effective
amendment, sticker or supplement, but not by means of incorporation of documents
by reference into the Registration Statement or Prospectus;

 

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

 

(C)            the filing with the Commission of a current report on Form 8-K of
the Company containing amended financial information (other than information
“furnished” pursuant to Item 2.02 or 7.01 of Form 8-K or to provide disclosure
pursuant to Item 8.01 of Form 8-K relating to reclassification of certain
properties as discontinued operations in accordance with Statement of Financial
Accounting Standards No. 144) that is material to the offering of securities of
the Company in the Agent’s reasonable discretion;

 

 24 

 

 

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

 

(p)            Legal Opinions. On or prior to the date of the first Issuance
Notice and on or prior to each Triggering Event Date with respect to which the
Company is obligated to deliver a certificate pursuant to Section 4(o) for which
no waiver is applicable and excluding the date of this Agreement, a negative
assurance letter and the written legal opinion of Cooley LLP (the “Corporate
Opinion”), counsel to the Company, and Pepper Hamilton LLP, intellectual
property counsel to the Company (the “IP Opinion”), each dated the date of
delivery, in form and substance reasonably satisfactory to Agent and its
counsel, substantially similar to the form previously provided to the Agent and
its counsel, modified, as necessary, to relate to the Registration Statement and
the Prospectus as then amended or supplemented shall be furnished to the Agent;
provided, however, the Company shall be required to furnish no more than one
Corporate Opinion hereunder per calendar year and shall otherwise be required to
only furnish a negative assurance letter and one IP Opinion hereunder per
calendar year. In lieu of such opinions for subsequent periodic filings, in the
discretion of the Agent, the Company may furnish a reliance letter from such
counsel to the Agent, permitting the Agent to rely on a previously delivered
opinion letter, modified as appropriate for any passage of time or Triggering
Event Date (except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and the Prospectus as amended or
supplemented as of such Triggering Event Date).

 

(q)            Comfort Letter. On or prior to the date of the first Issuance
Notice and on or prior to each Triggering Event Date with respect to which the
Company is obligated to deliver a certificate pursuant to Section 4(o) for which
no waiver is applicable and excluding the date of this Agreement, the Company
shall cause PricewaterhouseCoopers LLP, the independent registered public
accounting firm who has audited the financial statements included or
incorporated by reference in the Registration Statement, to furnish the Agent a
comfort letter, dated the date of delivery, in form and substance reasonably
satisfactory to the Agent and its counsel, substantially similar to the form
previously provided to the Agent and its counsel; provided, however, that any
such comfort letter will only be required on the Triggering Event Date specified
to the extent that it contains financial statements filed with the Commission
under the Exchange Act and incorporated or deemed to be incorporated by
reference into a Prospectus. If requested by the Agent, the Company shall also
cause a comfort letter to be furnished to the Agent within ten (10) Trading Days
of the date of occurrence of any material transaction or event requiring the
filing of a current report on Form 8-K containing material amended financial
information of the Company, including the restatement of the Company’s financial
statements. The Company shall be required to furnish no more than one comfort
letter hereunder per calendar quarter.

 

 25 

 

 

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

 

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

 

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

 

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

 

 26 

 

 

(v)            Notice of Other Sale. Without the written consent of the Agent,
the Company will not, directly or indirectly, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any Common Shares or
securities convertible into or exchangeable for Common Shares (other than Shares
hereunder), warrants or any rights to purchase or acquire Common Shares, during
the period beginning on the third Trading Day immediately prior to the date on
which any Issuance Notice is delivered to the Agent hereunder and ending on the
third Trading Day immediately following the Settlement Date with respect to
Shares sold pursuant to such Issuance Notice; and will not directly or
indirectly enter into any other “at the market” or continuous equity transaction
to offer to sell, sell, contract to sell, grant any option to sell or otherwise
dispose of any Common Shares (other than the Shares offered pursuant to this
Agreement) or securities convertible into or exchangeable for Common Shares,
warrants or any rights to purchase or acquire Common Shares prior to the
termination of this Agreement; provided, however, that such restrictions will
not be required in connection with the Company’s (i) issuance or sale of Common
Shares, options to purchase Common Shares or Common Shares issuable upon the
exercise of options or other equity awards pursuant to any employee or director
share option, incentive or benefit plan, share purchase or ownership plan,
long-term incentive plan, dividend reinvestment plan, inducement award under
Nasdaq rules or other compensation plan of the Company or its subsidiaries, as
in effect on the date of this Agreement, (ii) issuance or sale of Common Shares
issuable upon exchange, conversion or redemption of securities or the exercise
or vesting of warrants, options or other equity awards outstanding at the date
of this Agreement, (iii) issuance or sale of Common Shares or securities
convertible into or exchangeable for Common Shares as consideration for mergers,
acquisitions, other business combinations, joint ventures or strategic alliances
(each a “Business Transaction”) occurring after the date of this Agreement which
are not used for capital raising purposes; provided, that the aggregate number
of Common Shares issued, or issuable pursuant to the conversion or exchange of
securities convertible into or exchangeable for Common Shares, in connection
with such Business Transaction does not exceed 5% of the aggregate number of
Common Shares outstanding immediately prior to such Business Transaction and
(iv) modification of any outstanding options, warrants of any rights to purchase
or acquire Common Shares.

 

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

 

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

 

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

 

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

 

 27 

 

 

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

 

(iv)No Suspension of Trading in or Delisting of Common Shares; Other Events. The
trading of the Common Shares (including without limitation the Shares) shall not
have been suspended by the Commission, the Principal Market or FINRA and the
Common Shares (including without limitation the Shares) shall have been approved
for listing or quotation on and shall not have been delisted from the Nasdaq
Stock Market, the New York Stock Exchange or any of their constituent markets.
There shall not have occurred (and be continuing in the case of occurrences
under clauses (i) and (ii) below) any of the following: (i) trading or quotation
in any of the Company’s securities shall have been suspended or limited by the
Commission or by the Principal Market or trading in securities generally on
either the Principal Market shall have been suspended or limited, or minimum or
maximum prices shall have been generally established on any of such stock
exchanges by the Commission or FINRA; (ii) a general banking moratorium shall
have been declared by any of federal or New York, authorities; or (iii) there
shall have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in United States’ or international
political, financial or economic conditions, as in the judgment of the Agent is
material and adverse and makes it impracticable to market the Shares in the
manner and on the terms described in the Prospectus or to enforce contracts for
the sale of securities.

 

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

 

 28 

 

 

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

 

Section 6. INDEMNIFICATION AND CONTRIBUTION

 

(a)            Indemnification of the Agent. The Company agrees to indemnify and
hold harmless the Agent, its officers and employees, and each person, if any,
who controls the Agent within the meaning of the Securities Act or the Exchange
Act against any loss, claim, damage, liability or expense, as incurred, to which
the Agent or such officer, employee or controlling person may become subject,
under the Securities Act, the Exchange Act, other federal or state statutory law
or regulation, or the laws or regulations of foreign jurisdictions where Shares
have been offered or sold or at common law or otherwise (including in settlement
of any litigation), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430B under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any Free Writing Prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or (iii) any act or failure to act or any
alleged act or failure to act by the Agent in connection with, or relating in
any manner to, the Common Shares or the offering contemplated hereby, and which
is included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon any matter covered by clause (i) or
(ii) above, provided that the Company shall not be liable under this clause
(iii) to the extent that a court of competent jurisdiction shall have determined
by a final judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by the Agent through its bad faith or willful misconduct, and to reimburse the
Agent and each such officer, employee and controlling person for any and all
documented expenses (including the fees and disbursements of counsel chosen by
the Agent) as such expenses are reasonably incurred by the Agent or such
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use in the Registration Statement, any such
Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), it being understood and agreed that the only such information
furnished by the Agent to the Company consists solely of the name of the Agent
and the first sentence of the ninth paragraph under the caption “Plan of
Distribution” in the Prospectus (collectively, the “Agent Information”). The
indemnity agreement set forth in this Section 6(a)  shall be in addition to any
liabilities that the Company may otherwise have.

 

 29 

 

 

(b)            Indemnification of the Company, its Directors and Officers. The
Agent agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who signed the Registration Statement and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which the Company or any such director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Shares have been offered or sold or at common law or
otherwise (including in settlement of any litigation), insofar as such loss,
claim, damage, liability or expense arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430B under the Securities Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Free Writing Prospectus that the Company has used, referred to
or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act
or the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but only to the extent arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Agent expressly for use in the Registration Statement, any
such Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), it being understood and agreed that the only such information
furnished by the Agent to the Company consists solely of the Agent Information,
and to reimburse the Company and each such director, officer and controlling
person for any and all documented expenses (including the fees and disbursements
of counsel chosen by the Company) as such expenses are reasonably incurred by
the Company or such officer, director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The indemnity agreement set forth in this
Section 6(b) shall be in addition to any liabilities that the Agent or the
Company may otherwise have.

 

(c)            Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 6 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 6, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 6 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the
indemnified party of counsel (not to be unreasonably withheld, delayed or
conditioned), the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than
one separate counsel (together with local counsel), representing the indemnified
parties who are parties to such action), which counsel (together with any local
counsel) for the indemnified parties shall be selected by the Agent (in the case
of counsel for the indemnified parties referred to in Section 6(a) above) or the
Company (in the case of counsel for the indemnified parties referred to in
Section 6(b) above), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party and shall be paid as they are incurred.

 

 30 

 

 

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

 

(e)            Contribution. If the indemnification provided for in this
Section 6 is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Agent, on
the other hand, from the offering of the Shares pursuant to this Agreement; or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Agent, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Agent,
on the other hand, in connection with the offering of the Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total gross proceeds from the offering of the Shares (before deducting expenses)
received by the Company bear to the total commissions received by the Agent. The
relative fault of the Company, on the one hand, and the Agent, on the other
hand, shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Agent, on the other hand, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

 31 

 

 

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

 

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

 

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

 

 32 

 

 

Section 7. TERMINATION & SURVIVAL

 

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

 

(b)            Termination; Survival Following Termination.

 

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

 

(ii)In addition to the survival provision of Section 7(b)(i), the respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers and of the Agent set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Agent or the Company or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and, anything herein to the contrary notwithstanding, will survive delivery of
and payment for the Shares sold hereunder and any termination of this Agreement.

 

Section 8. MISCELLANEOUS

 

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

 

 33 

 

 

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

 

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

 

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

 

If to the Agent:

 

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

 

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

 

Latham & Watkins LLP
200 Clarendon Street
27th Floor
Boston, Massachusetts 02116
Facsimile: (617) 948-6001
Attention: Peter Handrinos, Esq.

Email: peter.handrinos@lw.com

 

 34 

 

 

If to the Company:

 

Aclaris Therapeutics, Inc.
640 Lee Road

Suite 200

Wayne, Pennsylvania 19087

Attention: Kamil Ali-Jackson

Email: kalijackson@aclaristx.com

 

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

 

Cooley LLP

11951 Freedom Drive

14th Floor

Reston, Virginia 20190-5640

Facsimile: (703) 456-8100

Attention: Brian F. Leaf, Esq.

Email: bleaf@cooley.com

 

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

 

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

 

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

 

(g)            Governing Law Provisions. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby (“Related Proceedings”) may be instituted in
the federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in each
case located in the Borough of Manhattan in the City of New York (collectively,
the “Specified Courts”), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a “Related Judgment”), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party’s address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.

 

 35 

 

 

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

 

[Signature Page Immediately Follows]

 

 36 

 

 

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

 

 

  Very truly yours,         ACLARIS THERAPEUTICS, INC.         By: /s/ Neal
Walker     Name: Neal Walker     Title: President & CEO

 

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

 

 

JEFFERIES LLC         By: /s/ Donald Lynaugh     Name: Donald Lynaugh     Title:
Managing Director  

 

 

 

 

EXHIBIT A

 

ISSUANCE NOTICE

 

[Date]

 

Jefferies LLC

520 Madison Avenue

New York, New York 10022

 

Attn: [__________]

 

Reference is made to the Open Market Sale Agreement between Aclaris
Therapeutics, Inc. (the “Company”) and Jefferies LLC (the “Agent”) dated as of
March [13], 2020. The Company confirms that all conditions to the delivery of
this Issuance Notice are satisfied as of the date hereof.

 

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

 

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

 

$______________________

 

Number of days in selling period: _______________________

 

First date of selling period: _______________________

 

Last date of selling period: _______________________

 

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

 

_______________________

 

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

 

Comments:
____________________________________________________________________________________________

 

 

  _______________________         By:
                                                  Name:     Title:

 

 A-1 

 

 

Schedule A

 

Notice Parties

 

The Company

 

Aclaris Therapeutics, Inc.
640 Lee Road

Suite 200

Wayne, Pennsylvania 19087

Telephone: (484) 324-7933

Attention: Kamil Ali-Jackson

Email: kalijackson@aclaristx.com

 

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

 

Cooley LLP

11951 Freedom Drive

14th Floor

Reston, Virginia 20190-5640
Facsimile: (703) 456-8100
Attention: Brian F. Leaf, Esq.

Email: bleaf@cooley.com

 

The Agent

 

Jefferies LLC
520 Madison Avenue
New York, NY 10022
Attention: Donald Lynaugh, Michael Magarro, and Jack Fabbri

Email: dlynaugh@jefferies.com, mmagarro@jefferies.com, and JFABBRI@Jefferies.com

 

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

 

Latham & Watkins LLP
200 Clarendon Street
27th Floor
Boston, Massachusetts 02116
Facsimile: (617) 948-6001
Attention: Peter Handrinos, Esq.

Email: peter.handrinos@lw.com