Exhibit 10.1

 

ELOXX PHARMACEUTICALS, INC.

 

$50,000,000

Shares of Common Stock

($0.01 par value)

 

Equity Distribution Agreement

 

November 16, 2018

 

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

 

Cantor Fitzgerald & Co.

499 Park Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Eloxx Pharmaceuticals, Inc., a corporation organized under the laws of the State
of Delaware (the “Company”), confirms its agreement (this “Agreement”) with each
of Citigroup Global Markets Inc. and Cantor Fitzgerald & Co. (each a “Manager”,
and together, the “Managers”) as follows:

 

1.           Description of Shares. The Company proposes to issue and sell
through or to the Managers, as sales agents and/or principals, shares of the
Company’s common stock, $0.01 par value per share (“Common Stock”), having an
aggregate gross sales price of up to $50,000,000 (the “Shares”), from time to
time during the term of this Agreement and on the terms set forth in Section 3
of this Agreement. For purposes of selling the Shares through the Managers, the
Company hereby appoints the Managers as exclusive agents of the Company for the
purpose of soliciting purchases of the Shares from the Company pursuant to this
Agreement and the Managers agree to use their reasonable efforts to solicit
purchases of the Shares on the terms and subject to the conditions stated
herein. The Company agrees that whenever it determines to sell the Shares
directly to either of the Managers as principal, it will enter into a separate
agreement (each, a “Terms Agreement”) with such Manager in substantially the
form of Annex I hereto, relating to such sale in accordance with Section 3 of
this Agreement. Certain terms used herein are defined in Section 18 hereof.

 

2.           Representations and Warranties. The Company represents and warrants
to, and agrees with, each Manager at the Execution Time and on each such time
the following representations and warranties are repeated or deemed to be made
pursuant to this Agreement, as set forth below.

 

   

 

 

(a)          The Company meets the requirements for use of Form S-3 under the
Securities Act and has prepared and filed with the Commission a registration
statement on Form S-3 (File Number 333-224207), including a related Base
Prospectus, for registration under the Securities Act of the offering and sale
of the Shares. Such Registration Statement, including any amendments thereto
filed prior to the Execution Time or prior to any such time this representation
is repeated or deemed to be made, has become effective. The Company has filed or
will file with the Commission the Prospectus Supplement relating to the Shares
in accordance with Rule 424(b). As filed, the Prospectus contains all
information required by the Securities Act and the rules thereunder, and, except
to the extent the Managers shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to the Managers prior to the
Execution Time or prior to any such time this representation is repeated or
deemed to be made. The Registration Statement, at the Execution Time, each such
time this representation is repeated or deemed to be made, and at all times
during which a prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 or any similar rule) in
connection with any offer or sale of Shares, meets the requirements set forth in
Rule 415(a)(1)(x). The initial Effective Date of the Registration Statement was
not earlier than the date three years before the Execution Time. Any reference
herein to the Registration Statement, the Base Prospectus, the Prospectus
Supplement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Base Prospectus, the Prospectus
Supplement or the Prospectus, as the case may be; and any reference herein to
the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus, the Prospectus Supplement or the Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement or the issue
date of the Base Prospectus, the Prospectus Supplement or the Prospectus, as the
case may be, deemed to be incorporated therein by reference.

 

(b)          To the extent that the Registration Statement is not available for
the sales of the Shares as contemplated by this Agreement or the Company is not
a “well known seasoned issuer” as defined in Rule 405 or otherwise is unable to
make the representations set forth in Section 2(e) at any time when such
representations are required, the Company shall, before requesting the sale of
Shares pursuant to this Agreement, file a new registration statement with
respect to any additional shares of Common Stock necessary to complete such
sales of the Shares and shall cause such registration statement to become
effective as promptly as practicable. After the effectiveness of any such
registration statement, all references to “Registration Statement” included in
this Agreement shall be deemed to include such new registration statement,
including all documents incorporated by reference therein pursuant to Item 12 of
Form S-3, and all references to “Base Prospectus” included in this Agreement
shall be deemed to include the final form of prospectus, including all documents
incorporated therein by reference, included in any such registration statement
at the time such registration statement became effective.

 

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(c)          On each Effective Date, at the Execution Time, at each Applicable
Time, at each Settlement Date and at all times during which a prospectus is
required by the Securities Act to be delivered (whether physically or through
compliance with Rule 172 or any similar rule) in connection with any offer or
sale of Shares, the Registration Statement complied and will comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the respective rules thereunder and did not and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and on the date of any filing pursuant to Rule 424(b),
at the Execution Time, at each Applicable Time, on each Settlement Date and at
all times during which a prospectus is required by the Securities Act to be
delivered (whether physically or through compliance with Rule 172 or any similar
rule) in connection with any offer or sale of Shares, the Prospectus (together
with any supplement thereto) complied and will comply in all material respects
with the applicable requirements of the Securities Act and the Exchange Act and
the respective rules thereunder and did not and will not include 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; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by the Managers specifically for inclusion in the Registration Statement
or the Prospectus (or any supplement thereto).

 

(d)          At the Execution Time, at each Applicable Time and at each
Settlement Date, the Disclosure Package does not, and will not, contain any
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, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by the Managers
specifically for use therein.

 

(e)          (i) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2)) of the Shares and (ii) as of the
Execution Time and on each such time this representation is repeated or deemed
to be made (with such date being used as the determination date for purposes of
this clause (ii)), the Company was not and is not an Ineligible Issuer (as
defined in Rule 405), without taking account of any determination by the
Commission pursuant to Rule 405 that it is not necessary that the Company be
considered an Ineligible Issuer.

 

(f)           Each Issuer Free Writing Prospectus, if any, does not include any
information that conflicts with the information contained in the Registration
Statement, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified. The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus based upon and in conformity with
written information furnished to the Company by the Managers specifically for
use therein.

 

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(g)          The Registration Statement is not the subject of a pending
proceeding or examination under Section 8(d) or 8(e) of the Securities Act, and
the Company is not the subject of a pending proceeding under Section 8A of the
Securities Act in connection with the offering of the Shares.

 

(h)          The Company has not entered into any other sales agency agreements
or other similar arrangements with any agent or any other representative in
respect of at the market offerings of the Shares in accordance with Rule
415(a)(4) of the Securities Act.

 

(i)           The Company has not taken and 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 any security of the
Company to facilitate the sale or resale of the Shares.

 

(j)           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.

 

(k)          The interactive data in the eXtensible Business Reporting Language
(“XBRL”) included or incorporated by reference in the Registration Statement
fairly presents the information called for in all material respects and has been
prepared in accordance with the Commission’s rules and guidelines applicable
thereto.

 

(l)           Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized with full
corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the Disclosure
Package and the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction which
requires such qualification, where such concepts exist, except where such
failure to so qualify would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined below).

 

(m)         All the outstanding shares of capital stock of each subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Disclosure Package and
the Prospectus, all outstanding shares of capital stock of the subsidiaries are
owned by the Company either directly or through wholly owned subsidiaries free
and clear of any perfected security interest or any other security interests,
claims, liens or encumbrances.

 

(n)          There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus, or to be
filed as an exhibit thereto, which is not described or filed as required; and
the statements in the Prospectus under the heading “Description of Capital
Stock”, insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings.

 

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(o)          This Agreement has been duly authorized, executed and delivered by
the Company.

 

(p)          The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Disclosure Package and the Prospectus, will not be an “investment company”
as defined in the Investment Company Act of 1940, as amended.

 

(q)          No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under the
Securities Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares by
the Managers in the manner contemplated herein and in the Disclosure Package and
the Prospectus or such consents, approvals, authorizations, filings or orders
the absence of which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

 

(r)          Neither the issue and sale of the Shares nor the consummation of
any other of the transactions herein contemplated nor the fulfillment of the
terms hereof will conflict with, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, (i) the charter or by-laws of
the Company or any of its subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its or their
property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of its subsidiaries
or any of its or their properties.

 

(s)          Except as set forth in the Disclosure Package and the Prospectus in
respect of securities that may be issued to Technion Research and Development
Foundation Limited, no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement and the holders
of outstanding shares of capital stock of the Company are not entitled to
statutory preemptive or other similar contractual rights to subscribe for the
Shares.

 

(t)          The consolidated historical financial statements and schedules of
the Company and its consolidated subsidiaries included in the Prospectus and the
Registration Statement present fairly in all material respects the financial
condition, results of operations and cash flows of the Company as of the dates
and for the periods indicated, comply as to form with the applicable accounting
requirements of the Securities Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).

 

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(u)          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 or its or their property is pending or, to the best
knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business (a “Material Adverse Effect”),
except as set forth in or contemplated in the Disclosure Package and the
Prospectus (exclusive of any amendment or supplement thereto).

 

(v)         Each of the Company and each of its subsidiaries owns or leases all
such properties as are reasonably necessary to the conduct of its operations as
presently conducted.

 

(w)         Neither the Company nor any subsidiary is in violation or default of
(i) any provision of its charter or bylaws, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject, or (iii) any statute, law,
rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable except, with respect to (ii) and (iii) above, such violations and
defaults that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(x)          Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, who
have certified certain financial statements of the Company and its consolidated
subsidiaries and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Disclosure Package and the
Prospectus, are independent public accountants with respect to the Company
within the meaning of the Securities Act and the applicable published rules and
regulations thereunder.

 

(y)          Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries included in the
Disclosure Package and the Prospectus, are independent public accountants with
respect to the Company within the meaning of the Securities Act and the
applicable published rules and regulations thereunder.

 

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

 

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(aa)        The Company has filed all tax returns that are required to be filed
or has requested extensions thereof (except in any case in which the failure so
to file would not have a Material Adverse Effect, except as set forth in or
contemplated in the Disclosure Package and the Prospectus (exclusive of any
amendment or supplement thereto)) and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as would not
have a Material Adverse Effect, except as set forth in or contemplated in the
Disclosure Package and the Prospectus (exclusive of any amendment or supplement
thereto).

 

(bb)        No labor problem or dispute with the employees of the Company or any
of its subsidiaries exists or is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its or its subsidiaries’ principal suppliers, contractors or customers, that
could have a Material Adverse Effect, except as set forth in or contemplated in
the Disclosure Package and the Prospectus (exclusive of any amendment or
supplement thereto).

 

(cc)        The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and there are no claims by the Company or any of its subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; neither the Company
nor any such subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect, except as set forth in or contemplated in the
Disclosure Package and the Prospectus (exclusive of any amendment or supplement
thereto).

 

(dd)        No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Disclosure Package and the Prospectus (exclusive of any amendment or supplement
thereto).

 

(ee)        The Company and its subsidiaries possess all licenses, certificates,
permits and other authorizations issued by all applicable authorities necessary
to conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect, except as set forth in or contemplated in
the Disclosure Package and the Prospectus (exclusive of any amendment or
supplement thereto).

 

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(ff)         The Company and each of its subsidiaries 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
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the interactive data in eXtensible Business
Reporting Language included or incorporated by reference in the Registration
Statement and the Prospectus is in compliance with the Commission’s published
rules, regulations and guidelines applicable thereto. The Company and its
subsidiaries’ internal controls over financial reporting are effective and the
Company and its subsidiaries are not aware of any material weakness in their
internal controls over financial reporting.

 

(gg)        The Company and its subsidiaries maintain “disclosure controls and
procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act);
such disclosure controls and procedures are effective.

 

(hh)        The Company and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual or
potential liability under any environmental law, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the Disclosure Package and the Prospectus (exclusive of any
amendment or supplement thereto). Except as set forth in the Disclosure Package
and the Prospectus, neither the Company nor any of the subsidiaries has been
named as a “potentially responsible party” under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.

 

(ii)          In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect, except as set forth
in or contemplated in the Disclosure Package and the Prospectus (exclusive of
any amendment or supplement thereto).

 

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

 

(kk)        There is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities as such, to comply
with any applicable provision of the Sarbanes-Oxley Act of 2002, as amended, and
the rules and regulations promulgated in connection thereunder (the
“Sarbanes-Oxley Act”), including Section 402 relating to loans and Sections 302
and 906 relating to certifications.

 

(ll)          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 is aware
of or has taken any action, directly or indirectly, that could result in a
violation or a sanction for violation by such persons of the Foreign Corrupt
Practices Act of 1977 or the U.K. Bribery Act 2010, each as may be amended, or
similar law of any other relevant jurisdiction, or the rules or regulations
thereunder; and the Company and its subsidiaries have instituted and maintain
policies and procedures to ensure compliance therewith. No part of the proceeds
of the offering will be used, directly or indirectly, in violation of the
Foreign Corrupt Practices Act of 1977 or the U.K. Bribery Act 2010, each as may
be amended, or similar law of any other relevant jurisdiction, or the rules or
regulations thereunder.

 

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(mm)      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 and the money laundering statutes and the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(nn)       Neither the Company nor any of its subsidiaries nor, to the knowledge
of the Company, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries (i) is, or is controlled or 50% or more owned
in the aggregate by or is acting on behalf of, one or more individuals or
entities that are currently the subject of any sanctions administered or
enforced by the United States (including any administered or enforced by the
Office of Foreign Assets Control of the U.S. Department of the Treasury, the
U.S. Department of State or the Bureau of Industry and Security of the U.S.
Department of Commerce), the United Nations Security Council, the European
Union, a member state of the European Union (including sanctions administered or
enforced by Her Majesty’s Treasury of the United Kingdom) or other relevant
sanctions authority (collectively, “Sanctions” and such persons, “Sanctioned
Persons” and each such person, a “Sanctioned Person”), (ii) is located,
organized or resident in a country or territory that is, or whose government is,
the subject of Sanctions that broadly prohibit dealings with that country or
territory (collectively, “Sanctioned Countries” and each, a “Sanctioned
Country”) or (iii) will, directly or indirectly, use the proceeds of this
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other individual or entity in any manner
that would result in a violation of any Sanctions by, or could result in the
imposition of Sanctions against, any individual or entity (including any
individual or entity participating in the offering, whether as underwriter,
advisor, investor or otherwise).

 

(oo)       Neither the Company nor any of its subsidiaries has engaged in any
dealings or transactions with or for the benefit of a Sanctioned Person, or with
or in a Sanctioned Country, in the preceding 3 years, nor does the Company or
any of its subsidiaries have any plans to engage in dealings or transactions
with or for the benefit of a Sanctioned Person, or with or in a Sanctioned
Country.

 

(pp)       The subsidiaries listed on Annex II attached hereto are the only
significant subsidiaries of the Company as defined by Rule 1-02 of Regulation
S-X.

 

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(qq)       To the Company’s best knowledge as of the date hereof, the Company
and its subsidiaries own, possess, license or have other rights to use, on
reasonable terms, all material patents, patent applications, trade and service
marks, trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, know-how and other intellectual property
(collectively, the “Intellectual Property”) necessary for the conduct of the
Company’s business as now conducted or as proposed in the Disclosure Package and
Prospectus to be conducted. Except as set forth in the Disclosure Package and
the Prospectus under the caption “Business—Intellectual Property,” (a) to the
Company’s best knowledge, there are no rights of third parties to any such
Intellectual Property; (b) to the Company’s best knowledge, there is no material
infringement by third parties of any such Intellectual Property; (c) there is no
pending or to the Company’s best knowledge, threatened action, suit, proceeding
or claim by others challenging the Company’s rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; (d) there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (e) there is no pending or, to
the Company’s best knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
is unaware of any other fact which would form a reasonable basis for any such
claim; (f) to the Company’s best knowledge, there is no U.S. patent or published
U.S. patent application which contains claims that dominate or may dominate any
Intellectual Property described in the Disclosure Package and the Prospectus as
being owned by or licensed to the Company or that interferes with the issued or
pending claims of any such Intellectual Property; and (g) there is no prior art
of which the Company is aware that may render any U.S. patent held by the
Company invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office.

 

(rr)         All amounts payable by the Company or its subsidiaries to all
persons involved in the research, development, conception or reduction to
practice of any of the Company’s or any subsidiary’s Intellectual Property have
been paid in full, and all current and former employees of the Company or its
subsidiaries have expressly and irrevocably waived the right to receive
compensation in connection with “Service Inventions” under Section 134 of the
Israeli Patent Law 1967 or any other similar provision under law of any
applicable jurisdiction. No government funding, facilities or resources of a
university, college, other educational institution or research center or funding
from third parties, including without limitation the Israeli Investment Center
and the Office of the Chief Scientist of the Ministry of Industry, Trade and
Labor of the State of Israel, was used in the development of any intellectual
property that is owned or purported to be owned by the Company or any of its
subsidiaries except as would not have a material adverse effect on the Company
and its subsidiaries, and no governmental agency or body, university, college,
other educational institution or research center has any claim or right in or to
any intellectual property that is owned or purported to be owned by the Company
or any of its subsidiaries.

 

(ss)        The statements contained in the Prospectus under the captions “Risk
Factors—Risks Related to Intellectual Property” and “Business—Intellectual
Property,” insofar as such statements summarize legal matters, agreements,
documents, or proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings.

 

 11 

 

 

(tt)         Except as described in the Registration Statement, the Disclosure
Package and the Prospectus, as applicable, the Company (i) is and at all times
has been in compliance with all statutes, rules and regulations applicable to
the ownership, testing, development, manufacture, packaging, processing, use,
distribution, marketing, advertising, labeling, promotion, sale, offer for sale,
storage, import, export or disposal of any product manufactured or distributed
by the Company including, without limitation the Federal Food, Drug and Cosmetic
Act (21 U.S.C. §301 et seq.), the federal Anti-Kickback Statute (42 U.S.C.
§1320a-7b(b)), the Health Insurance Portability and Accountability Act of 1996,
as amended by the Health Information Technology for Economic and Clinical Health
Act of 2009, and the Patient Protection and Affordable Care Act of 2010, as
amended by the Health Care and Education Affordability Reconciliation Act of
2010, the regulations promulgated pursuant to such laws, and any successor
government programs and comparable state laws, regulations relating to Good
Clinical Practices and Good Laboratory Practices and all other local, state,
federal, national, supranational and foreign laws, manual provisions, policies
and administrative guidance relating to the regulation of the Company
(collectively, the “Applicable Laws”); (ii) has not received any notice from any
court or arbitrator or governmental or regulatory authority or third party
alleging or asserting noncompliance with any Applicable Laws or any licenses,
exemptions, certificates, approvals, clearances, authorizations, permits,
registrations and supplements or amendments thereto required by any such
Applicable Laws (“Authorizations”); (iii) possesses all Authorizations and such
Authorizations are valid and in full force and effect and are not in violation
of any term of any such Authorizations; (iv) has not received written notice of
any claim, action, suit, proceeding, hearing, enforcement, 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 violation of any Applicable Laws or Authorizations nor is any
such claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action threatened; (v) has received any written notice that
any court or arbitrator or governmental or regulatory authority has taken, is
taking or intends to take, action to limit, suspend, materially modify or revoke
any Authorizations nor is any such limitation, suspension, modification or
revocation threatened; (vi) has filed, obtained, maintained or submitted all
material reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and accurate on the date filed (or were corrected or supplemented by a
subsequent submission); and (vii) is not a party to any corporate integrity
agreements, monitoring agreements, consent decrees, settlement orders, or
similar agreements with or imposed by any governmental or regulatory authority.

 

 12 

 

 

(uu)       The clinical and pre-clinical trials conducted by or on behalf of or
sponsored by the Company or its subsidiaries, or in which the Company or its
subsidiaries have participated, that are described in the Registration
Statement, the Disclosure Package and the Prospectus or the results of which are
referred to in the Registration Statement, the Disclosure Package and the
Prospectus, as applicable, and are intended to be submitted to Regulatory
Authorities as a basis for product approval, were and, if still pending, are
being conducted in accordance with standard medical and scientific research
procedures and all applicable statutes, rules and regulations of the FDA and
comparable drug regulatory agencies outside of the United States to which it is
subject (collectively, the “Regulatory Authorities”), including, without
limitation, 21 C.F.R. Parts 50, 54, 56, 58, and 312, and current Good Clinical
Practices and Good Laboratory Practices; the descriptions in the Registration
Statement, the Disclosure Package or the Prospectus of the results of such
studies and trials are accurate and complete and fairly present the data derived
from such trials; the Company has no knowledge of any other trials conducted by
or on behalf of or sponsored by the Company or its subsidiaries, or in which the
Company or its subsidiaries have participated the results of which are
inconsistent with or otherwise call into question the results described or
referred to in the Registration Statement, Disclosure Package and the
Prospectus; the Company and its subsidiaries have operated and are currently in
compliance with all applicable statutes, rules and regulations of the Regulatory
Authorities; neither the Company nor any of its subsidiaries has not received
any written notices, correspondence or other communication from the Regulatory
Authorities or any governmental authority which could lead to the termination or
suspension of any clinical or pre-clinical trials that are described in the
Registration Statement, the Disclosure Package and the Prospectus or the results
of which are referred to in the Registration Statement, Disclosure Package or
the Prospectus, and there are no reasonable grounds for same.

 

(vv)       The Company and its subsidiaries possess all licenses, certificates,
permits and other authorizations (collectively, “Permits”) issued by, and has
made all declarations and filings with, the applicable federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
businesses as described in the Registration Statement, the Disclosure Package
and the Prospectus, or to permit all clinical and nonclinical studies and trials
conducted by or on behalf of the Company and its subsidiaries, including,
without limitation, all necessary FDA and applicable foreign regulatory agency
approvals; neither the Company nor any of its subsidiaries is in violation of,
or in default under, any such Permit; and the Company and its subsidiaries have
not received notice of any revocation or modification of any such Permit and
does not have any reason to believe that any such Permit will not be renewed in
the ordinary course. The Company and its subsidiaries (i) have, and at all times
have been, in compliance with all Applicable Laws; and (ii) have not received
any FDA Form 483, written notice of adverse finding, warning letter, untitled
letter or other correspondence or written notice from any court or arbitrator or
governmental or regulatory authority alleging or asserting non-compliance with
(A) any Applicable Laws or (B) any Permits required by any such Applicable Laws.

 

(ww)      To the Company’s knowledge, the manufacturing facilities and
operations of its suppliers are operated in compliance with all applicable
statutes, rules, regulations and policies of the Regulatory Authorities.

 

(xx)        None of the Company’s product candidates have received marketing
approval from any Regulatory Authority.

 

 13 

 

 

Any certificate signed by any officer of the Company and delivered to the
Managers or counsel for the Managers in connection with this Agreement or any
Terms Agreement shall be deemed a representation and warranty by the Company, as
to matters covered thereby, to each Manager.

 

3.           Sale and Delivery of Shares.

 

(a)          Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to issue and
sell Shares from time to time through the Managers, acting as sales agents, and
the Managers agree to use their reasonable efforts to sell, as sales agents for
the Company, the Shares on the following terms.

 

(i)          The Shares are to be sold by one of the Managers on a daily basis
or otherwise as shall be agreed to by the Company and such Manager on any day
that (A) is a trading day for the Nasdaq Global Market (“Nasdaq”), (B) the
Company has instructed such Manager by telephone (confirmed promptly by
electronic mail) to make such sales and (C) the Company has satisfied its
obligations under Section 6 of this Agreement. The Company will designate the
maximum amount of the Shares to be sold by such Manager daily as agreed to by
such Manager (in any event not in excess of the amount available for issuance
under the Prospectus and the currently effective Registration Statement) and the
minimum price per Share at which such Shares may be sold. Subject to the terms
and conditions hereof, such Manager shall use its reasonable efforts to sell on
a particular day all of the Shares designated for the sale by the Company on
such day. The gross sales price of the Shares sold under this Section 3(a) shall
be the market price for shares of the Company’s Common Stock sold by such
Manager under this Section 3(a) on Nasdaq at the time of sale of such Shares.
For the avoidance of doubt, in no event shall the Company submit instructions to
sell Shares to (x) more than one Manager under this Agreement or (y) to any
Manager under this Agreement and any sales agent or other representative under
any other effective sales agency agreement in respect of at the market offerings
of Common Stock in accordance with Rule 415(a)(4), in each case, on any single
trading day.

 

(ii)         The Company acknowledges and agrees that (A) there can be no
assurance that the Managers will be successful in selling the Shares, (B) no
Manager will incur liability or obligation to the Company or any other person or
entity if such Manager does not sell Shares for any reason other than a failure
by such Manager to use its reasonable efforts consistent with its normal trading
and sales practices and applicable law and regulations to sell such Shares as
required under this Agreement, and (C) no Manager shall be under any obligation
to purchase Shares on a principal basis pursuant to this Agreement, except as
otherwise specifically agreed by such Manager and the Company.

 

 14 

 

 

(iii)        The Company shall not authorize the issuance and sale of, and the
relevant Manager shall not be obligated to use its reasonable efforts to sell,
any Share at a price lower than the minimum price therefor designated from time
to time by the Company’s Board of Directors (the “Board”), or a duly authorized
committee thereof, and notified to such Manager in writing. The Company or any
Manager may, upon notice to the other party hereto by telephone (confirmed
promptly by electronic mail), suspend the offering of the Shares for any reason
and at any time; provided, however, that such suspension or termination shall
not affect or impair the parties’ respective obligations with respect to the
Shares sold hereunder prior to the giving of such notice.

 

(iv)        Each Manager hereby covenants and agrees not to make any sales of
the Shares on behalf of the Company, pursuant to this Section 3(a), other than
(A) by means of ordinary brokers’ transactions between members of Nasdaq that
qualify for delivery of a Prospectus to Nasdaq in accordance with Rule 153 of
the Securities Act (such transactions are hereinafter referred to as “Continuous
Offerings”) and (B) such other sales of the Shares on behalf of the Company in
its capacity as agent of the Company as shall be agreed by the Company and such
Manager pursuant to a Terms Agreement.

 

(v)         The compensation to each Manager for sales of the Shares with
respect to which such Manager acts as sales agent under this Agreement shall be
3.0% of the gross sales price of the Shares sold pursuant to this Section 3(a)
and payable as described in the succeeding subsection (vi) below. The foregoing
rate of compensation shall not apply when such Manager acts as principal, in
which case the Company may sell Shares to such Manager as principal at a price
agreed upon at the relevant Applicable Time pursuant to a Terms Agreement. The
remaining proceeds, after further deduction for any transaction fees imposed by
any governmental or self-regulatory organization in respect of such sales (the
“Transaction Fees”), shall constitute the net proceeds to the Company for such
Shares (the “Net Proceeds”).

 

(vi)       The Manager acting as sales agent hereunder shall provide written
confirmation (which may be by facsimile or electronic mail) to the Company
following the close of trading on Nasdaq each day in which the Shares are sold
under this Section 3(a) setting forth the number of the Shares sold on such day,
the aggregate gross sales proceeds and the Net Proceeds to the Company, and the
compensation payable by the Company to such Manager with respect to such sales.
Such compensation shall be set forth and invoiced in periodic statements from
such Manager to the Company, with payment to be made by the Company promptly
after its receipt thereof.

 

 15 

 

 

(vii)       Settlement for sales of the Shares pursuant to this Section 3(a)
will occur on the second business day following the date on which such sales are
made (each such day, a “Settlement Date”). On each Settlement Date, the Shares
sold through a Manager for settlement on such date shall be issued and delivered
by the Company to such Manager against payment of the aggregate gross sales
proceeds less any Transaction Fees for the sale of such Shares. Settlement for
all such Shares shall be effected by free delivery of the Shares to such
Manager’s account at The Depository Trust Company (“DTC”) in return for payments
in same day funds delivered to the account designated by the Company. If the
Company or its transfer agent (if applicable) shall default on its obligation to
deliver the Shares on any Settlement Date, the Company shall (A) indemnify and
hold such Manager harmless against any loss, claim or damage arising from or as
a result of such default by the Company and (B) pay such Manager any commission
to which it would otherwise be entitled absent such default. If any Manager
breaches this Agreement by failing to deliver the aggregate gross sales proceeds
less any Transaction Fees to the Company on any Settlement Date for the Shares
delivered by the Company, such Manager will pay the Company interest based on
the effective overnight federal funds rate on such unpaid amount less any
compensation due to such Manager.

 

(viii)      At each Applicable Time, Settlement Date and Representation Date (as
defined in Section 4(k)), the Company shall be deemed to have affirmed each
representation and warranty contained in this Agreement as if such
representation and warranty were made as of such date, modified as necessary to
relate to the Registration Statement and the Prospectus as amended as of such
date. Any obligation of a Manager to use its reasonable efforts to sell the
Shares on behalf of the Company shall be subject to the continuing accuracy of
the representations and warranties of the Company herein, to the performance by
the Company of its obligations hereunder and to the continuing satisfaction of
the additional conditions specified in Section 6 of this Agreement.

 

(b)          If the Company wishes to issue and sell the Shares pursuant to this
Agreement but other than as set forth in Section 3(a) of this Agreement (each, a
“Placement”), it will notify a Manager of the proposed terms of such Placement.
If such Manager, acting as principal, wishes to accept such proposed terms
(which it may decline to do for any reason in its sole discretion) or, following
discussions with the Company wishes to accept amended terms, such Manager and
the Company will enter into a Terms Agreement setting forth the terms of such
Placement. The terms set forth in a Terms Agreement will not be binding on the
Company or such Manager unless and until the Company and such Manager have each
executed such Terms Agreement accepting all of the terms of such Terms
Agreement. In the event of a conflict between the terms of this Agreement and
the terms of a Terms Agreement, the terms of such Terms Agreement will control.

 

(c)          Each sale of the Shares to a Manager shall be made in accordance
with the terms of this Agreement and, if applicable, a Terms Agreement, which
will provide for the sale of such Shares to, and the purchase thereof by, such
Manager. A Terms Agreement may also specify certain provisions relating to the
reoffering of such Shares by such Manager. The commitment of such Manager to
purchase the Shares pursuant to any Terms Agreement shall be deemed to have been
made on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall specify the number of the Shares to be purchased by
such Manager pursuant thereto, the price to be paid to the Company for such
Shares, any provisions relating to rights of, and default by, underwriters
acting together with such Manager in the reoffering of the Shares, and the time
and date (each such time and date being referred to herein as a “Time of
Delivery”) and place of delivery of and payment for such Shares. Such Terms
Agreement shall also specify any requirements for opinions of counsel,
accountants’ letters and officers’ certificates pursuant to Section 6 of this
Agreement and any other information or documents required by such Manager.

 

 16 

 

 

(d)          Under no circumstances shall the number and aggregate amount of the
Shares sold pursuant to this Agreement and any Terms Agreement exceed (i) the
aggregate amount set forth in Section 1, (ii) the number of shares of the Common
Stock available for issuance under the currently effective Registration
Statement or (iii) the number and aggregate amount of the Shares authorized from
time to time to be issued and sold under this Agreement by the Board, or a duly
authorized committee thereof, and notified to the Manager acting as sales agent
in writing.

 

(e)          If any party has reason to believe that the exemptive provisions
set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not
satisfied with respect to the Shares, it shall promptly notify the other parties
and sales of the Shares under this Agreement and any Terms Agreement shall be
suspended until that or other exemptive provisions have been satisfied in the
judgment of each party.

 

(f)          Notwithstanding any other provision of this Agreement the Company
shall not request the sale of any Shares that would be sold, and no Manager
shall be obligated to sell, during any period in which the Company is, or would
reasonably be deemed to be, in possession of material non-public information.

 

4.           Agreements. The Company agrees with the Managers that:

 

(a)          During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Securities Act, the
Company will not file any amendment of the Registration Statement or supplement
(including the Prospectus Supplement) to the Base Prospectus unless the Company
has furnished to the Managers a copy for their review prior to filing and will
not file any such proposed amendment or supplement to which any Manager
reasonably objects. The Company has properly completed the Prospectus, in a form
approved by the Managers, and filed such Prospectus, as amended at the Execution
Time, with the Commission pursuant to the applicable paragraph of Rule 424(b) by
the Execution Time and will cause any supplement to the Prospectus to be
properly completed, in a form approved by the Managers, and will file such
supplement with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed thereby and will provide evidence
satisfactory to the Managers of such timely filing. The Company will promptly
advise each Manager (i) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule 424(b) or
when any Rule 462(b) Registration Statement shall have been filed with the
Commission, (ii) when, during any period when the delivery of a prospectus
(whether physically or through compliance with Rule 172 or any similar rule) is
required under the Securities Act in connection with the offering or sale of the
Shares, any amendment to the Registration Statement shall have been filed or
become effective, (iii) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any notice objecting to
its use or the institution or threatening of any proceeding for that purpose and
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the institution or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order or the
occurrence of any such suspension or objection to the use of the Registration
Statement and, upon such issuance, occurrence or notice of objection, to obtain
as soon as possible the withdrawal of such stop order or relief from such
occurrence or objection, including, if necessary, by filing an amendment to the
Registration Statement or a new registration statement and using its best
efforts to have such amendment or new registration statement declared effective
as soon as practicable.

 

 17 

 

 

(b)          If, at any time on or after an Applicable Time but prior to the
related Settlement Date or Time of Delivery, any event occurs as a result of
which the Disclosure Package would include any 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
or the circumstances then prevailing not misleading, the Company will (i) notify
promptly each Manager so that any use of the Disclosure Package may cease until
it is amended or supplemented; (ii) amend or supplement the Disclosure Package
to correct such statement or omission; and (iii) supply any amendment or
supplement to each Manager in such quantities as such Manager may reasonably
request.

 

(c)          During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Securities Act, any
event occurs as a result of which the Prospectus as then supplemented would
include any 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 at such time not misleading, or if it
shall be necessary to amend the Registration Statement, file a new registration
statement or supplement the Prospectus to comply with the Securities Act or the
Exchange Act or the respective rules thereunder, including in connection with
use or delivery of the Prospectus, the Company promptly will (i) notify each
Manager of any such event, (ii) prepare and file with the Commission, subject to
the second sentence of paragraph (a) of this Section 4, an amendment or
supplement or new registration statement which will correct such statement or
omission or effect such compliance, (iii) use its best efforts to have any
amendment to the Registration Statement or new registration statement declared
effective as soon as practicable in order to avoid any disruption in use of the
Prospectus and (iv) supply any supplemented Prospectus to each Manager in such
quantities as such Manager may reasonably request.

 

(d)          As soon as practicable, the Company will make generally available
to its security holders and to the Managers an earnings statement or statements
of the Company and its subsidiaries which will satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158.

 

 18 

 

 

(e)          The Company will furnish to each Manager and counsel for the
Managers, without charge, signed copies of the Registration Statement (including
exhibits thereto) and, so long as delivery of a prospectus by each Manager or
dealer may be required by the Securities Act (including in circumstances where
such requirement may be satisfied pursuant to Rule 172), as many copies of the
Prospectus and any Issuer Free Writing Prospectus and any supplement thereto as
such Manager may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.

 

(f)           The Company will arrange, if necessary, for the qualification of
the Shares for sale under the laws of such jurisdictions as the Managers may
designate and will maintain such qualifications in effect so long as required
for the distribution of the Shares; provided that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action that would subject it to service of process
in suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.

 

(g)          The Company agrees that, unless it has or shall have obtained the
prior written consent of the Managers, and the Managers agree with the Company
that, unless it has or shall have obtained, as the case may be, the prior
written consent of the Company, it has not made and will not make any offer
relating to the Shares that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a “free writing prospectus” (as defined in
Rule 405) required to be filed by the Company with the Commission or retained by
the Company under Rule 433; provided that the prior written consent of the
parties hereto shall be deemed to have been given in respect of the Free Writing
Prospectuses included in Schedule I hereto. Any such free writing prospectus
consented to by the Managers or the Company is hereinafter referred to as a
“Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated
and will treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus and (ii) it has complied and will comply, as the
case may be, with the requirements of Rules 164 and 433 applicable to any
Permitted Free Writing Prospectus, including in respect of timely filing with
the Commission, legending and record keeping.

 

(h)          Without giving the Managers at least five Business Days’ prior
written notice specifying the nature of the proposed transaction and the date of
such proposed transaction and while a Placement is in effect, the Company will
not offer, sell, contract to sell, pledge, or otherwise dispose of, (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition of (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement (other than a
registration statement on Form S-8, Form S-4 or, in either case, a successor
form thereto) with the Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, any other shares of Common Stock
or any securities convertible into, or exercisable, or exchangeable for, shares
of Common Stock, or publicly announce an intention to effect any such
transaction; provided, however, that the Company may issue and sell Common Stock
pursuant to this Agreement or any Terms Agreement, any equity incentive plan,
employee stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time or approved by the Board and the
Company may issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.

 

 19 

 

 

(i)           The Company will not (i) take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or (ii) sell, bid for, purchase Common Stock in
violation of Regulation M under the Exchange Act or pay any person (other than
as contemplated by this Agreement or any Terms Agreement) any compensation for
soliciting purchases of the Shares.

 

(j)           The Company will, at any time during the term of this Agreement,
as supplemented from time to time, advise the Managers immediately after it
shall have received notice or obtain knowledge thereof, of any information or
fact that would alter or affect any opinion, certificate, letter and other
document provided to the Managers pursuant to Section 6 herein.

 

(k)          On the date the Company first requests a Placement (and upon the
recommencement of the offering of the Shares under this Agreement following the
termination of a suspension of sales hereunder), and each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than a prospectus supplement relating solely to the offering of securities other
than the Shares), (ii) there is filed with the Commission any document
incorporated by reference into the Prospectus, (iii) the Shares are delivered to
any Manager as principal at the Time of Delivery pursuant to a Terms Agreement,
or (iv) otherwise as any Manager may reasonably request (such commencement or
recommencement date and each such date referred to in (i), (ii), (iii) and (iv)
above, a “Representation Date”), the Company shall furnish or cause to be
furnished to the Managers (or, in the case of subclause (iii) above, the
relevant Manager party to such Terms Agreement) forthwith a certificate dated
and delivered the date of such commencement or recommencement, effectiveness of
such amendment, the date of filing with the Commission of such supplement or
other document, the Time of Delivery, or promptly upon request, as the case may
be, in form satisfactory to the Managers (or, in the case of subclause (iii)
above, the relevant Manager party to such Terms Agreement) to the effect that
the statements contained in the certificate referred to in Section 6(e) of this
Agreement which were last furnished to the Managers (or, in the case of
subclause (iii) above, the relevant Manager party to such Terms Agreement) are
true and correct at the time of such commencement or recommencement, amendment,
supplement, filing, or delivery, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 6(e), modified as necessary to relate to
the Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate; provided, however, the request to deliver
a certificate under this Section 4(k) shall be waived for any Representation
Date occurring at a time at which no Placement is pending or no Terms Agreement
is in effect (each, a “Waiver”), which Waiver, in each case, shall continue
until such time as the Company requests its next Placement or enters into a
Terms Agreement.

 

 20 

 

 

(l)           At each Representation Date, the Company shall furnish or cause to
be furnished forthwith to the Managers (or, in the case of a Representation Date
of the type described in Section 4(k)(iii), the relevant Manager party to such
Terms Agreement) and to counsel to the Managers a written opinion of Proskauer
Rose LLP, counsel to the Company (“Company Counsel”), or other counsel
satisfactory to the Manager(s), dated and delivered the date of commencement or
recommencement, effectiveness of such amendment, the date of filing with the
Commission of such supplement or other document, the Time of Delivery, or
promptly upon such request, as the case may be, in form and substance reasonably
satisfactory to the Manager(s), of the same tenor as the opinions referred to in
Section 6(b) of this Agreement, but modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion; provided, however, the Company shall not be
required to furnish such letter at any time a Waiver is in effect until such
time as the Company requests its next Placement or enters into a Terms
Agreement.

 

(m)         At each Representation Date, the Company shall furnish or cause to
be furnished forthwith to the Managers (or, in the case of a Representation Date
of the type described in Section 4(k)(iii), the relevant Manager party to such
Terms Agreement) and to counsel to the Managers a written opinion of Perkins
Coie LLP, intellectual property counsel to the Company (“Company IP Counsel”),
or other counsel satisfactory to the Manager(s), dated and delivered the date of
commencement or recommencement, effectiveness of such amendment, the date of
filing with the Commission of such supplement or other document, the Time of
Delivery, or promptly upon such request, as the case may be, in form and
substance reasonably satisfactory to the Manager(s), of the same tenor as the
opinions referred to in Section 6(c) of this Agreement, but modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion; provided, however, the
Company shall not be required to furnish such letter at any time a Waiver is in
effect until such time as the Company requests its next Placement or enters into
a Terms Agreement.

 

(n)          At each Representation Date, Goodwin Procter LLP, counsel to the
Managers, shall deliver a written opinion, dated and delivered the date of
commencement or recommencement, effectiveness of such amendment, the date of
filing with the Commission of such supplement or other document, the Time of
Delivery, or promptly upon such request, as the case may be, in form and
substance satisfactory to the Managers (or, in the case of a Representation Date
of the type described in Section 4(k)(iii), the relevant Manager party to such
Terms Agreement), of the same tenor as the opinions referred to in Section 6(d)
of this Agreement but modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such opinion; provided, however, Goodwin Procter LLP shall not be required to
furnish such letter at any time a Waiver is in effect until such time as the
Company requests its next Placement or enters into a Terms Agreement.

 

 21 

 

 

(o)          On the date the Company first requests a Placement (and upon the
recommencement of the offering of the Shares under this Agreement following the
termination of a suspension of sales hereunder), and each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional amended financial information, (ii) the Shares are delivered
to a Manager as principal at a Time of Delivery pursuant to a Terms Agreement,
(iii) the Company files a Quarterly Report on Form 10-Q or an Annual Report on
Form 10-K, or (iv) at the Manager’s request and upon reasonable advance notice
to the Company, there is filed with the Commission any document which contains
financial information (other than an Annual Report on Form 10-K) incorporated by
reference into the Prospectus, the Company shall cause each of (A) Kost Forer
Gabbay & Kasierer, a member of Ernst & Young Global, and (B) Deloitte & Touche
LLP (together, the “Accountants”), or other independent accountants satisfactory
to the Managers forthwith, to furnish the Managers (or, in the case of subclause
(ii) above, the relevant Manager party to such Terms Agreement) a letter, dated
the date of commencement or recommencement, effectiveness of such amendment, the
date of filing of such supplement or other document with the Commission, or the
Time of Delivery, as the case may be, in form reasonably satisfactory to the
Manager(s), of the same tenor as the letter referred to in Section 6(f) of this
Agreement but modified to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.

 

(p)          On or prior to the date the Company first requests a Placement (and
upon the recommencement of the offering of the Shares under this Agreement
following the termination of a suspension of sales hereunder), and at each
Representation Date, the Company will conduct a due diligence session, in form
and substance reasonably satisfactory to the Managers, which shall include
representatives of the management and the independent accountants of the
Company. The Company shall cooperate timely with any reasonable due diligence
request from or review conducted by the Managers or their agents from time to
time in connection with the transactions contemplated by this Agreement,
including, without limitation, providing information and available documents and
access to appropriate corporate officers and the Company’s agents during regular
business hours and at the Company’s principal offices, and timely furnishing or
causing to be furnished such certificates, letters and opinions from the
Company, its officers and its agents, as the Managers may reasonably request.

 

(q)          The Company consents to the Managers trading in the Common Stock
for the Managers’ own accounts and for the account of their clients at the same
time as sales of the Shares occur pursuant to this Agreement or pursuant to a
Terms Agreement.

 

(r)          The Company will disclose in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, as applicable, the number of Shares sold through
the Managers under this Agreement, the Net Proceeds to the Company and the
compensation paid by the Company with respect to sales of Shares pursuant to
this Agreement during the relevant quarter.

 

 22 

 

 

(s)          If to the knowledge of the Company, the conditions set forth in
Section 6(a), 6(g) or 6(h) shall not be true and correct on the applicable
Settlement Date, the Company will promptly notify the applicable Managers of any
such condition that is not true or correct.

 

(t)          Each acceptance by the Company of an offer to purchase the Shares
hereunder, and each execution and delivery by the Company of a Terms Agreement,
shall be deemed to be an affirmation to each Manager 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 acceptance or of such Terms
Agreement as though made at and as of such date, and an undertaking that such
representations and warranties will be true and correct as of the Settlement
Date for the Shares relating to such acceptance or as of the Time of Delivery
relating to such sale, as the case may be, as though made at and as of 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).

 

(u)          The Company shall ensure that there are at all times sufficient
shares of Common Stock to provide for the issuance, free of any preemptive
rights, out of its authorized but unissued shares of Common Stock or shares of
Common Stock held in treasury, of the maximum aggregate number of Shares
authorized for issuance by the Board pursuant to the terms of this Agreement.
The Company will use its commercially reasonable efforts to cause the Shares to
be listed for trading on Nasdaq and to maintain such listing.

 

(v)         During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Securities Act, the
Company will file all documents required to be filed with the Commission
pursuant to the Exchange Act within the time periods required by the Exchange
Act and the regulations thereunder.

 

(w)         The Company shall cooperate with the Managers and use its reasonable
efforts to permit the Shares to be eligible for clearance and settlement through
the facilities of DTC.

 

(x)          The Company will apply the Net Proceeds from the sale of the Shares
in the manner set forth in the Prospectus.

 

 23 

 

 

5.           Payment of Expenses.

 

(a)          The Company agrees to pay the costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated, including without limitation:
(i) the preparation, printing or reproduction and filing with the Commission of
the Registration Statement (including financial statements and exhibits
thereto), the Prospectus and each Issuer Free Writing Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, the Prospectus, and
each Issuer Free Writing Prospectus, and all amendments or supplements to any of
them, as may, in each case, be reasonably requested for use in connection with
the offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp or transfer taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Shares; (v) the
registration of the Shares under the Exchange Act and the listing of the Shares
on Nasdaq; (vi) any registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the Managers
relating to such registration and qualification); (vii) any filings required to
be made with the Financial Industry Regulatory Authority, Inc. (“FINRA”)
(including filing fees and the reasonable fees and expenses of counsel for the
Managers relating to such filings); (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; (ix) the fees and
expenses of the Company’s accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (x) the reasonable
documented out-of-pocket expenses of the Managers, including the reasonable
fees, disbursements and expenses of counsel for the Managers in connection with
this Agreement and the Registration Statement and ongoing services in connection
with the transactions contemplated hereunder, in an amount not to exceed
$50,000; and (xi) all other costs and expenses incident to the performance by
the Company of its obligations hereunder.

 

6.           Conditions to the Obligations of the Managers. The obligations of
the Managers under this Agreement and any Terms Agreement shall be subject to
(i) the accuracy of the representations and warranties on the part of the
Company contained herein as of the Execution Time, each Representation Date, and
as of each Applicable Time, Settlement Date and Time of Delivery, (ii) to the
performance by the Company of its obligations hereunder and (iii) the following
additional conditions:

 

(a)          The Prospectus, and any supplement thereto, required by Rule 424 to
be filed with the Commission have been filed in the manner and within the time
period required by Rule 424(b) with respect to any sale of Shares; any material
required to be filed by the Company pursuant to Rule 433(d) under the Securities
Act, shall have been filed with the Commission within the applicable time
periods prescribed for such filings by Rule 433; and no stop order suspending
the effectiveness of the Registration Statement or any notice objecting to its
use shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.

 

(b)          The Company shall have requested and caused the Company Counsel to
furnish to the Managers (or, in the case of a Representation Date of the type
described in Section 4(k)(iii), the relevant Manager party to such Terms
Agreement), on every date specified in Section 4(l) of this Agreement, its
opinion, dated as of such date and addressed to such Manager(s), in form and
substance reasonably satisfactory to such Manager(s).

 

 24 

 

 

(c)          The Company shall have requested and caused the Company IP Counsel
to furnish to the Managers (or, in the case of a Representation Date of the type
described in Section 4(k)(iii), the relevant Manager party to such Terms
Agreement), on every date specified in Section 4(m) of this Agreement, its
opinion, dated as of such date and addressed to such Manager(s), in form and
substance reasonably satisfactory to such Manager(s).

 

(d)          The Managers (or, in the case of a Representation Date of the type
described in Section 4(k)(iii), the relevant Manager party to such Terms
Agreement) shall have received from Goodwin Procter LLP, counsel for the
Managers, on every date specified in Section 4(n) of this Agreement, such
opinion or opinions, dated as of such date and addressed to such Manager(s),
with respect to the issuance and sale of the Shares, the Registration Statement,
the Disclosure Package, the Prospectus (together with any supplement thereto)
and other related matters as such Manager(s) may reasonably require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.

 

(e)          The Company shall have furnished or caused to be furnished to the
Managers (or, in the case of a Representation Date of the type described in
Section 4(k)(iii), the relevant Manager party to such Terms Agreement), on every
date specified in Section 4(k) of this Agreement, a certificate of the Company,
signed by the Chairman of the Board or the President or Chief Executive Officer
and the principal financial or accounting officer of the Company, dated as of
such date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Disclosure Package and the Prospectus
and any supplements or amendments thereto and this Agreement and that:

 

(i)          the representations and warranties of the Company in this Agreement
are true and correct on and as of such date with the same effect as if made on
such date and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to such
date;

 

(ii)         no stop order suspending the effectiveness of the Registration
Statement or any notice objecting to its use has been issued and no proceedings
for that purpose have been instituted or, to the Company’s knowledge,
threatened; and

 

(iii)        since the date of the most recent financial statements included in
the Disclosure Package, there has been no Material Adverse Effect, except as set
forth in or contemplated in the Disclosure Package and the Prospectus.

 

(f)           The Company shall have requested and caused the Accountants to
have furnished to the Managers (or, in the case of a Representation Date of the
type described in Section 4(k)(iii), the relevant Manager party to such Terms
Agreement), on every date specified in Section 4(o) hereof and to the extent
requested by the Manager(s) in connection with any offering of the Shares,
letters (which may refer to letters previously delivered to such Manager(s)),
dated as of such date, in form and substance reasonably satisfactory to such
Manager(s).

 

 25 

 

 

(g)          Since the respective dates as of which information is disclosed in
the Registration Statement, the Disclosure Package and the Prospectus, except as
otherwise stated therein, there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (e) of this
Section 6 or (ii) any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Disclosure Package (exclusive of any amendment
or supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Managers, so material
and adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Shares as contemplated by the Registration Statement
(exclusive of any amendment thereof), the Disclosure Package and the Prospectus
(exclusive of any amendment or supplement thereto).

 

(h)          Between the Execution Time and the time of any sale of Shares
through a Manager, there shall not have been any decrease in the rating of any
of the Company’s debt securities by any “nationally recognized statistical
rating organization” (as defined for purposes of Rule 436(g) under the
Securities Act) or any notice given of any intended or potential decrease in any
such rating or of a possible change in any such rating that does not indicate
the direction of the possible change.

 

(i)           FINRA shall not have raised any objection with respect to the
fairness and reasonableness of the terms and arrangements under this Agreement.

 

(j)           The Shares shall have been listed and admitted and authorized for
trading on Nasdaq, and satisfactory evidence of such actions shall have been
provided to the Managers.

 

(k)          Prior to each Settlement Date and Time of Delivery, as applicable,
the Company shall have furnished to the Managers such further information,
certificates and documents as the Managers may reasonably request.

 

If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to any Managers and counsel for
the Managers, this Agreement, as it relates to such Manager, and all obligations
of such Manager hereunder may be canceled at, or at any time prior to, any
Settlement Date or Time of Delivery, as applicable, by such Manager. Notice of
such cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.

 

 26 

 

 

The documents required to be delivered by this Section 6 shall be delivered at
the office of Goodwin Procter LLP, counsel for the Managers, at 620 Eighth
Avenue, New York, New York 10018, on each such date as provided in this
Agreement.

 

7.           Indemnification and Contribution.

 

(a)          The Company agrees to indemnify and hold harmless the Managers, the
directors, officers, employees, affiliates and agents of the Managers and each
person who controls any Manager within the meaning of either the Securities Act
or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Shares as originally
filed or in any amendment thereof, or in the Base Prospectus, the Prospectus
Supplement, the Prospectus or any Issuer Free Writing Prospectus, or in any
amendment thereof or supplement thereto or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as incurred,
for any documented legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by the Managers
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability that the Company may otherwise have. The Company acknowledges
that the last two sentences of the first paragraph under the heading “Plan of
Distribution” in the Prospectus Supplement and the name and contact information
of the Managers in the Prospectus Supplement and the Prospectus constitute the
only information furnished in writing by or on behalf of the Managers for
inclusion in the Prospectus Supplement, the Prospectus or any Issuer Free
Writing Prospectus.

 

(b)          The Managers, severally and not jointly, agree to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Manager, but only with
reference to written information relating to a Manager furnished to the Company
by or on behalf of such Manager specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which any Manager may otherwise have.

 

 27 

 

 

(c)          Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded, based on advice of counsel, 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, (iii) 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 the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties (such consent not to be
unreasonably withheld, conditioned or delayed), settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent: (i) includes an unconditional release of each indemnified party from
all liability arising out of such claim, action, suit or proceeding and (ii)
does not include an admission of fault.

 

 28 

 

 

(d)          In the event that the indemnity provided in paragraph (a), (b) or
(c) of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Manager agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending the same) (collectively “Losses”) to which the Company and the
Managers may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and by any Managers on
the other from the offering of the Shares. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Managers severally shall contribute in such relative proportions as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and of the Managers on the other in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by it, and benefits received by the
Managers shall be deemed to be equal to the gross compensation received by such
Managers with respect to the Shares purchased under this Agreement, in each case
as determined by this Agreement or any applicable Terms Agreement. Relative
fault shall be determined by reference to, among other things, whether any
untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Managers on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and each Manager agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), in no event shall any Manager be required to contribute
any amount in excess of the amount by which the gross compensation applicable to
the Shares purchased by such Managers hereunder exceeds the amount of any
damages that such Manager has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person who controls a Manager within the meaning of either the Securities
Act or the Exchange Act and each director, officer, employee, affiliate and
agent of a Manager shall have the same rights to contribution as any Manager,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).

 

8.           Termination.

 

(a)          The Company shall have the right, by giving written notice as
hereinafter specified, to terminate the provisions of this Agreement relating to
the solicitation of offers to purchase the Shares in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that (i) if Shares have been sold through any Manager for the
Company, then Section 4(t) shall remain in full force and effect, (ii) with
respect to any pending sale, through such Manager for the Company, the
obligations of the Company, including in respect of compensation of the
Managers, shall remain in full force and effect notwithstanding the termination
and (iii) the provisions of Sections 2, 5, 7, 9, 10, 12 and 14 of this Agreement
shall remain in full force and effect notwithstanding such termination.

 

(b)          Each Manager shall have the right, by giving written notice as
hereinafter specified, to terminate its own obligations under the provisions of
this Agreement relating to the solicitation of offers to purchase the Shares in
its sole discretion at any time. Any such termination shall have no effect on
the obligations of any other Manager under this Agreement and shall be without
liability of any party to any other party except that the provisions of Sections
2, 5, 7, 9, 10, 12 and 14 of this Agreement shall remain in full force and
effect with respect to such Managers notwithstanding such termination.

 

 29 

 

 

(c)          This Agreement shall remain in full force and effect until the
earlier of (i) its termination pursuant to Section 8(a) above or otherwise by
mutual agreement of all of the parties and (ii) the termination of the
obligations of each Manager pursuant to Section 8(b) above; provided that any
such termination by mutual agreement shall in all cases be deemed to provide
that Sections 2, 5, 7 and 9 shall remain in full force and effect.

 

(d)          Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by any Manager or the Company, as the case may be. If such termination
shall occur prior to the Settlement Date or Time of Delivery for any sale of the
Shares, such sale shall settle in accordance with the provisions of Section
3(a)(vii) of this Agreement.

 

(e)          In the case of any purchase of Shares by any Manager pursuant to a
Terms Agreement, the obligations of such Manager pursuant to such Terms
Agreement shall be subject to termination, in the absolute discretion of such
Manager, by notice given to the Company prior to the Time of Delivery relating
to such Shares, if at any time prior to such delivery and payment (i) trading in
the Company’s Common Stock shall have been suspended by the Commission or Nasdaq
or trading in securities generally on the NYSE or Nasdaq shall have been
suspended or limited or minimum prices shall have been established on either of
such exchanges, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war, or other calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of such Manager,
impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).

 

9.           Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Managers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by the Managers or the Company or any of the officers,
directors, employees, affiliates, agents or controlling persons referred to in
Section 7 hereof, and will survive delivery of and payment for the Shares.

 

10.         Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Managers, will be mailed,
delivered or telefaxed to the (i) Citigroup Global Markets Inc. General Counsel
(fax no.: (646) 291-1469) and confirmed to the General Counsel, Citigroup Global
Markets Inc., at 388 Greenwich Street, New York, New York, 10013, Attention:
General Counsel and (ii) Cantor Fitzgerald & Co. General Counsel (fax no.:
(212) 829-4708) and confirmed to the General Counsel, Cantor Fitzgerald & Co.,
at 499 Park Avenue, New York, New York, 10022, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to (781) 577-5300
and confirmed to it at 950 Winter Street, Waltham Massachusetts 02451,
Attention: Chief Executive Officer.

 

11.         Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 7 hereof, and no other person will have any right or obligation
hereunder.

 

 30 

 

 

12.         No Fiduciary Duty. The Company hereby acknowledges that (a) the
purchase and sale of the Shares pursuant to this Agreement is an arm’s-length
commercial transaction between the Company, on the one hand, and the Managers
and any affiliate through which any of them may be acting, on the other, (b) the
Managers are acting solely as sales agents and/or principals in connection with
the purchase and sale of the Company’s securities and not as a fiduciary of the
Company and (c) the Company’s engagement of the Managers in connection with the
offering and the process leading up to the offering is as independent
contractors and not in any other capacity. Furthermore, the Company agrees that
it is solely responsible for making its own judgments in connection with the
offering (irrespective of whether the Managers have advised or is currently
advising the Company on related or other matters). The Company agrees that it
will not claim that the Managers have rendered advisory services of any nature
or respect, or owe an agency, fiduciary or similar duty to the Company, in
connection with such transaction or the process leading thereto.

 

13.         Integration. This Agreement and any Terms Agreement supersede all
prior agreements and understandings (whether written or oral) between the
Company and the Managers with respect to the subject matter hereof.

 

14.         Applicable Law. This Agreement and any Terms Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.

 

15.         Waiver of Jury Trial. The Company hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement, any Terms
Agreement or the transactions contemplated hereby or thereby.

 

16.         Counterparts. This Agreement and any Terms Agreement may be signed
in one or more counterparts, each of which shall constitute an original and all
of which together shall constitute one and the same agreement.

 

17.         Headings. The section headings used in this Agreement and any Terms
Agreement are for convenience only and shall not affect the construction hereof.

 

18.         Definitions. The terms that follow, when used in this Agreement and
any Terms Agreement, shall have the meanings indicated.

 

“Applicable Time” shall mean, with respect to any Shares, the time of sale of
such Shares pursuant to this Agreement or any relevant Terms Agreement.

 

“Base Prospectus” shall mean the base prospectus referred to in Section 2(a)
above contained in the Registration Statement at the Execution Time.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.

 

“Commission” shall mean the Securities and Exchange Commission.

 

 31 

 

 

“Disclosure Package” shall mean (i) the Base Prospectus, (ii) the Prospectus
Supplement, (iii) the Issuer Free Writing Prospectuses, if any, identified in
Schedule I hereto, (iv) the public offering price of Shares sold at the relevant
Applicable Time and (v) any other Free Writing Prospectus that the parties
hereto shall hereafter expressly agree in writing to treat as part of the
Disclosure Package.

 

“Effective Date” shall mean each date and time that the Registration Statement,
any post-effective amendment or amendments thereto and any Rule 462(b)
Registration Statement became or becomes effective.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

“Execution Time” shall mean the date and time that this Agreement is executed
and delivered by the parties hereto.

 

“Free Writing Prospectus” shall mean a free writing prospectus, as defined in
Rule 405.

 

“Issuer Free Writing Prospectus” shall mean an issuer free writing prospectus,
as defined in Rule 433.

 

“Prospectus” shall mean the Base Prospectus, as supplemented by the Prospectus
Supplement.

 

“Prospectus Supplement” shall mean the most recent prospectus supplement
relating to the Shares that was first filed pursuant to Rule 424(b) at or prior
to the Execution Time.

 

“Registration Statement” shall mean the registration statement referred to in
Section 2(a) above, including exhibits and financial statements and any
prospectus supplement relating to the Shares that is filed with the Commission
pursuant to Rule 424(b) and deemed part of such registration statement pursuant
to Rule 430B, as amended on each Effective Date and, in the event any
post-effective amendment thereto becomes effective, shall also mean such
registration statement as so amended or such Rule 462(b) Registration Statement,
as the case may be.

 

“Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 405”, “Rule 415”,
“Rule 424”, “Rule 430B” and “Rule 433” refer to such rules under the Securities
Act.

 

“Rule 462(b) Registration Statement” shall mean a registration statement and any
amendments thereto filed pursuant to Rule 462(b) relating to the offering
covered by the registration statement referred to in Section 2(a) hereof.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

 

[Remainder of Page Intentionally Left Blank]

 

 32 

 

 

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the Managers.

 

  Very truly yours,       ELOXX PHARMACEUTICALS, INC.

 

  By: /s/ Robert E. Ward     Name: Robert E. Ward     Title: Chief Executive
Officer

 

The foregoing Agreement is
hereby confirmed and accepted
as of the date first written above.

 

CITIGROUP GLOBAL MARKETS INC.

 

By: /s/ Bradley Wolff     Name: Bradley Wolff     Title: Managing Director, Head
of West Coast Life Sciences  

 

CANTOR FITZGERALD & CO.

 

By: /s/ Mark Kaplan     Name: Mark Kaplan     Title: Global COO  

 

   

 

 

SCHEDULE I

 

Schedule of Free Writing Prospectuses included in the Disclosure Package

 

None.

 

   

 

 

ANNEX I

 

ELOXX Pharmaceuticals, inc.

 

Common Stock

 

Terms Agreement

 

______, 20__

 

[Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York, 10013]

[Cantor Fitzgerald & Co.

499 Park Avenue

New York, New York 10022]

 

Ladies and Gentleman:

 

Eloxx Pharmaceuticals, Inc. (the “Company”) proposes, subject to the terms and
conditions stated herein and in the Equity Distribution Agreement, dated
November [●], 2018 (the “Equity Distribution Agreement”), between the Company,
on the one hand, and Citigroup Global Markets Inc. and Cantor Fitzgerald & Co.
(together, the “Managers”), on the other, to issue and sell to [Citigroup Global
Markets Inc.][Cantor Fitzgerald & Co.] the securities specified in Schedule I
hereto (the “Purchased Shares”).

 

Each of the provisions of the Equity Distribution Agreement not specifically
related to the solicitation by the Managers, as agents of the Company, of offers
to purchase securities is incorporated herein by reference in its entirety, and
shall be deemed to be part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Terms Agreement and the Time of Delivery, except that each
representation and warranty in Section 2 of the Equity Distribution Agreement
which makes reference to the Prospectus (as therein defined) shall be deemed to
be a representation and warranty as of the date of the Equity Distribution
Agreement in relation to the Prospectus, and also a representation and warranty
as of the date of this Terms Agreement and the Time of Delivery in relation to
the Prospectus as amended and supplemented to relate to the Purchased Shares.

 

An amendment to the Registration Statement (as defined in the Equity
Distribution Agreement), or a supplement to the Prospectus, as the case may be,
relating to the Purchased Shares, in the form heretofore delivered to each
Manager is now proposed to be filed with the Securities and Exchange Commission.

 

Subject to the terms and conditions set forth herein and in the Equity
Distribution Agreement which are incorporated herein by reference, the Company
agrees to issue and sell to [Citigroup Global Markets Inc.][Cantor Fitzgerald &
Co.] and the latter agrees to purchase from the Company the number of shares of
the Purchased Shares at the time and place and at the purchase price set forth
in the Schedule I hereto.

 

   

 

 

If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this Terms Agreement, including
those provisions of the Equity Distribution Agreement incorporated herein by
reference, shall constitute a binding agreement between [Citigroup Global
Markets Inc.][Cantor Fitzgerald & Co.] and the Company.

 

  ELOXX PHARMACEUTICALS, INC.       By:       Name:     Title:

 

ACCEPTED as of the date
first written above.

 

[CITIGROUP GLOBAL MARKETS INC.]

[CANTOR FITZGERALD & CO.]

 

By:       Name:     Title:  

 

   

 

 

Schedule I to the Terms Agreement

 

Title of Purchased Shares:

Common Stock, par value $0.01 per share

 

Number of Shares of Purchased Shares:

 

Price to Public:

 

Purchase Price by [Citigroup Global Markets Inc.][Cantor Fitzgerald & Co.]:

 

Method of and Specified Funds for Payment of Purchase Price:

By wire transfer to a bank account specified by the Company in same day funds.

 

Method of Delivery:

Free delivery of the Shares to the Manager’s account at The Depository Trust
Company in return for payment of the purchase price.

 

Time of Delivery:

 

Closing Location:

 

Documents to be Delivered:

 

The following documents referred to in the Equity Distribution Agreement shall
be delivered as a condition to the closing at the Time of Delivery:

(1)The opinion referred to in Section 4(l).

(2)The opinion referred to in Section 4(m).

(3)The opinion referred to in Section 4(n)

(4)The accountants’ letters referred to in Section 4(o).

(5)The officers’ certificate referred to in Section 4(k).

(6)Such other documents as the Manager shall reasonably request.

 

   

 

 

ANNEX II

 

Subsidiaries

 

1)Eloxx Pharmaceuticals Ltd., a private limited company organized under the laws
of Israel