Exhibit 10.1

 

OPEN MARKET SALE AGREEMENTSM

 

September 3, 2020

 

JEFFERIES LLC

520 Madison Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Cyclerion Therapeutics, Inc., a Massachusetts corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to issue and sell
from time to time through Jefferies LLC, as sales agent and/or principal (the
“Agent”), shares of the Company’s common stock, no par value per share (the
“Common Shares”), on the terms set forth in this agreement (this “Agreement”).

 

Section 1.         DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Selling Commission” means three percent (3.0%) of the gross proceeds of Shares
sold pursuant to this Agreement, or as otherwise agreed between the Company and
the Agent with respect to any Shares sold pursuant to this Agreement.

 

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

 

2

 

 

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

 

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

 

Section 2.         REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

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

 

(a)            Registration Statement. The Company has prepared and filed with
the Commission a shelf registration statement on Form S-3 (File No. 333-240095)
that contains a base prospectus (the “Base Prospectus”). Such registration
statement registers the issuance and sale by the Company of the Shares under the
Securities Act. The Company may file one or more additional registration
statements from time to time that will contain a base prospectus and related
prospectus or prospectus supplement, if applicable, with respect to the Shares.
Except where the context otherwise requires, such registration statement(s),
including any information deemed to be a part thereof pursuant to Rule 430B
under the Securities Act, including all financial statements, exhibits and
schedules thereto and all documents incorporated or deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Securities Act as
from time to time amended or supplemented, is herein referred to as the
“Registration Statement,” and the prospectus constituting a part of such
registration statement(s), together with any prospectus supplement filed with
the Commission pursuant to Rule 424(b) under the Securities Act relating to a
particular issuance of the Shares, including all documents incorporated or
deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3
under the Securities Act, in each case, as from time to time amended or
supplemented, is referred to herein as the “Prospectus,” except that if any
revised prospectus is provided to the Agent by the Company for use in connection
with the offering of the Shares that is not required to be filed by the Company
pursuant to Rule 424(b) under the Securities Act, the term “Prospectus” shall
refer to such revised prospectus from and after the time it is first provided to
the Agent for such use. The Registration Statement at the time it originally
became effective is herein called the “Original Registration Statement.” As used
in this Agreement, the terms “amendment” or “supplement” when applied to the
Registration Statement or the Prospectus shall be deemed to include the filing
by the Company with the Commission of any document under the Exchange Act after
the date hereof that is or is deemed to be incorporated therein by reference.

 

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

 

3

 

 

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

 

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

 

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

 

4

 

 

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

 

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

 

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

 

(f)            Statistical and Market-Related Data. All statistical, demographic
and market-related data included in the Registration Statement or the Prospectus
are based on or derived from sources that the Company believes, after reasonable
inquiry, to be reliable and accurate. To the extent required, the Company has
obtained the written consent for the use of such data from such sources.

 

5

 

 

(g)            Disclosure Controls and Procedures; Deficiencies in or Changes to
Internal Control Over Financial Reporting. The Company has established and
maintains disclosure controls and procedures (as defined in Rules 13a-15 and
15d-15 under the Exchange Act), which (i) are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared (it being understood that neither subsection (m) nor this subsection
requires the Company to comply with Section 404 of the Sarbanes-Oxley Act of
2002 as of an earlier date than it would otherwise be required to so comply
under applicable law); (ii) have been evaluated by management of the Company for
effectiveness as of the end of the Company’s most recent fiscal quarter; and
(iii) are effective in all material respects to perform the functions for which
they were established. Since the end of the Company’s most recent audited fiscal
year, there have been no significant deficiencies or material weaknesses in the
Company’s internal control over financial reporting (whether or not remediated)
and no change in the Company’s internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company is not aware of
any change in its internal control over financial reporting that has occurred
during its most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

 

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

 

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

 

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

 

(k)            No Material Adverse Change. Except as otherwise disclosed in the
Registration Statement and the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus:
(i) there has been no material adverse change, or any development that would
reasonably be expected to result in a material adverse change, in (A) the
condition, financial or otherwise, or in the earnings, business, properties,
operations, operating results, assets, liabilities or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity, or (B) the ability of the Company to
consummate the transactions contemplated by this Agreement or perform its
obligations hereunder (any such change being referred to herein as a “Material
Adverse Change”); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, including without limitation any losses or interference with
their business from fire, explosion, flood, earthquakes, accident or other
calamity, whether or not covered by insurance, or from any strike, labor dispute
or court or governmental action, order or decree, that are material,
individually or in the aggregate, to the Company and its subsidiaries,
considered as one entity, and have not entered into any transactions not in the
ordinary course of business; and (iii) there has not been any material decrease
in the capital stock or any material increase in any short-term or long-term
indebtedness of the Company or its subsidiaries and there has been no dividend
or distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, by any of the Company’s
subsidiaries on any class of capital stock, or any repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.

 

6

 

 

(l)             Independent Accountants. Ernst & Young LLP, which has expressed
its opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) filed with the Commission as a
part of the Registration Statement and the Prospectus, is (i) an independent
registered public accounting firm as required by the Securities Act , the
Exchange Act, and the rules of the Public Company Accounting Oversight Board
(“PCAOB”), (ii) in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X under the
Securities Act and (iii) a registered public accounting firm as defined by the
PCAOB whose registration has not been suspended or revoked and who has not
requested such registration to be withdrawn.

 

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

 

(n)            Company’s Accounting System. The Company and each of its
subsidiaries make and keep books and records that are accurate in all material
respects and maintain a system of internal accounting controls designed to
provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with U.S. GAAP and to maintain accountability for assets;
(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 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 fairly presents the information
called for in all material respects and is prepared in accordance with the
Commission's rules and guidelines applicable thereto.

 

7

 

 

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

 

(p)            Subsidiaries. Each of the Company’s “subsidiaries” (for purposes
of this Agreement, as defined in Rule 405 under the Securities Act) has been
duly incorporated or organized, as the case may be, and is validly existing as a
corporation, partnership or limited liability company, as applicable, in good
standing under the laws of the jurisdiction of its incorporation or organization
and has the power and authority (corporate or other) to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus. Each of the Company’s subsidiaries is duly
qualified as a foreign corporation, partnership or limited liability company, as
applicable, to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to be
so qualified or in good standing, as the case may be, or to have such power or
authority would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Change.. All of the issued and outstanding capital
stock or other equity or ownership interests of each of the Company’s
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
adverse claim. None of the outstanding capital stock or equity interest in any
subsidiary was issued in violation of preemptive or similar rights of any
security holder of such subsidiary. The constitutive or organizational documents
of each of the subsidiaries comply in all material respects with the
requirements of applicable laws of its jurisdiction of incorporation or
organization and are in full force and effect. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 21 to the Company’s most recent
Annual Report on Form 10-K.

 

(q)            Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Registration Statement and the Prospectus under the caption “Capitalization”
(other than for subsequent issuances, if any, pursuant to employee benefit plans
or upon the exercise of outstanding options or warrants, in each case described
in the Registration Statement and the Prospectus). The Common Shares (including
the Shares) conform in all material respects to the description thereof
contained in the Prospectus. All of the issued and outstanding Common Shares
have been duly authorized and validly issued, are fully paid and nonassessable
and have been issued in compliance with all applicable federal and state
securities laws. None of the outstanding Common Shares was issued in violation
of any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those described in the Registration Statement and the
Prospectus. The descriptions of the Company’s stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Registration Statement and the Prospectus
accurately and fairly presents in all material respects the information required
to be shown with respect to such plans, arrangements, options and rights.

 

8

 

 

(r)             Stock Exchange Listing. The Common Shares are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and are listed on the
Principal Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Shares under the
Exchange Act or delisting the Common Shares from the Principal Market, nor has
the Company received any notification that the Commission or the Principal
Market is contemplating terminating such registration or listing. To the
Company’s knowledge, it is in compliance with all applicable listing
requirements of the Principal Market.

 

(s)            Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by laws, partnership agreement or
operating agreement or similar organizational documents, as applicable, or is in
default (or, with the giving of notice or lapse of time, would be in default)
(“Default”) under any indenture, loan, credit agreement, note, lease, license
agreement, contract, franchise or other instrument (including, without
limitation, any pledge agreement, security agreement, mortgage or other
instrument or agreement evidencing, guaranteeing, securing or relating to
indebtedness) to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of their respective
properties or assets are subject (each, an “Existing Instrument”), except for
such Defaults as would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Change. The Company’s execution,
delivery and performance of this Agreement, consummation of the transactions
contemplated hereby and by the Registration Statement and the Prospectus and the
issuance and sale of the Shares (including the use of proceeds from the sale of
the Shares as described in the Registration Statement and the Prospectus under
the caption “Use of Proceeds”) (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions of the
charter or by laws, partnership agreement or operating agreement or similar
organizational documents, as applicable, of the Company or any subsidiary
(ii) will not conflict with or constitute a breach of, or Default or a Debt
Repayment Triggering Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, or require the consent of
any other party to, any Existing Instrument, and (iii) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company or any of its subsidiaries, except in the case
of clauses (ii) or (iii) above, as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company’s execution, delivery and performance of this Agreement
and consummation of the transactions contemplated hereby and by the Registration
Statement and the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act and such as
may be required under applicable state securities or blue sky laws or FINRA (as
defined below). As used herein, a “Debt Repayment Triggering Event” means any
event or condition which gives, or with the giving of notice or lapse of time
would give, the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.

 

9

 

 

(t)             No Material Actions or Proceedings. Except as otherwise
disclosed in the Prospectus, there is no action, suit, proceeding, inquiry or
investigation brought by or before any legal or governmental entity now pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or any of its subsidiaries, which would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change; and
the aggregate of all pending legal or governmental proceedings to which the
Company or any such subsidiary is a party or of which any of their respective
properties or assets is the subject, including ordinary routine litigation
incidental to the business, if determined adversely to the Company, would not
reasonably be expected to result in a Material Adverse Change. No material labor
dispute with the employees of the Company or any of its subsidiaries exist or,
to the knowledge of the Company, is threatened or imminent. To the knowledge of
the Company, no material labor disputes with the employees of any principal
supplier, manufacturer, customer or contractor of the Company exists or is
threatened.

 

(u)            Intellectual Property Rights. Except as otherwise disclosed in
the Registration Statement or the Prospectus, the Company and its subsidiaries
own, or have obtained valid and enforceable licenses for, the inventions, patent
applications, patents, trademarks, trade names, service names, copyrights, trade
secrets and other intellectual property described in the Registration Statement
and the Prospectus as being owned or licensed by them or which are material to
and necessary for the conduct of their respective businesses as currently
conducted or as currently proposed to be conducted (collectively, “Intellectual
Property”) and, to the Company’s knowledge, the conduct of their respective
businesses currently does not and will not, upon the commercialization of any
product or service currently proposed, infringe in any material respect any
intellectual property rights of others. The Intellectual Property of the Company
has not been adjudged by a court of competent jurisdiction to be invalid or
unenforceable, in whole or in part, and the Company is unaware of any facts
which would form a reasonable basis for any such adjudication. To the Company’s
knowledge: (i) there are no third parties who have rights to any Intellectual
Property, except for customary reversionary rights of third-party licensors with
respect to Intellectual Property that is disclosed in the Registration Statement
and the Prospectus as licensed to the Company or one or more of its
subsidiaries; and (ii) there is no infringement by third parties of any
Intellectual Property. There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others: (A) challenging the
Company’s rights in or to any Intellectual Property, and the Company is unaware
of any facts which would form a reasonable basis for any such action, suit,
proceeding or claim; (B) challenging the validity, enforceability or scope of
any Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such action, suit, proceeding or claim; or
(C) asserting that the Company or any of its subsidiaries infringes or otherwise
violates, or would, upon the commercialization of any product or service
described in the Registration Statement or the Prospectus as under development,
infringe or violate, any patent, trademark, trade name, service name, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any facts which would form a reasonable basis for any such action, suit,
proceeding or claim. The Company and its subsidiaries have complied in all
material respects with the terms of each agreement pursuant to which
Intellectual Property has been licensed to the Company or any subsidiary, and
all such agreements are in full force and effect. To the Company’s knowledge,
there are no material defects of form or procedural defects in any of the
patents or patent applications included in the Intellectual Property. The
Company and its subsidiaries have taken all reasonable steps to protect,
maintain and safeguard their Intellectual Property, including the execution of
appropriate nondisclosure, confidentiality agreements and invention assignment
agreements and invention assignments with their employees, and, to the knowledge
of the Company, no employee of the Company is in or has been in violation in any
material respect of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement, or any restrictive covenant
to or with a former employer where the basis of such violation relates to such
employee’s employment with the Company. The duty of candor and good faith as
required by the United States Patent and Trademark Office during the prosecution
of the United States patents and patent applications included in the
Intellectual Property have been complied with; and in all foreign offices having
similar requirements, all such requirements have been complied with. None of the
Company owned Intellectual Property or technology (including information
technology and outsourced arrangements) employed by the Company or its
subsidiaries has been obtained or is being used by the Company or its subsidiary
in violation of any contractual obligation binding on the Company or its
subsidiaries or any of their respective officers, directors or employees or
otherwise in violation of the rights of any persons in any material respect. The
product candidates described in the Registration Statement and the Prospectus as
under development by the Company or any subsidiary fall within the scope of the
claims of one or more patents or patent applications owned by, or exclusively
licensed to, the Company or any subsidiary.

 

10

 

 

(v)            All Necessary Permits, etc. Except as otherwise disclosed in the
Prospectus, the Company and each subsidiary possess such valid and current
certificates, authorizations or permits required by state, federal or foreign
regulatory agencies or bodies to conduct their respective businesses as
currently conducted and as described in the Registration Statement or the
Prospectus (“Permits”), except where the failure to possess the same or so
qualify would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Change. Neither the Company nor any of its
subsidiaries is in violation of, or in default under, any of the Permits or has
received any notice of proceedings relating to the revocation or modification
of, or non compliance with, the Permits, except for such violations, defaults or
proceedings which, if resolved unfavorably, would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change.

 

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

 

11

 

 

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

 

(y)            Company Not an “Investment Company.” The Company is not, and will
not be, either after receipt of payment for the Shares or after the application
of the proceeds therefrom as described under “Use of Proceeds” in the
Registration Statement or the Prospectus, required to register as an “investment
company” under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

 

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

 

(aa)          No Price Stabilization or Manipulation; Compliance with Regulation
M. Neither the Company nor any of its subsidiaries has taken, directly or
indirectly (without giving effect to the activities of the Agent other than
sales of Shares pursuant to and in accordance with this Agreement), any action
designed to or that would reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Shares or of any
“reference security” (as defined in Rule 100 of Regulation M under the Exchange
Act (“Regulation M”)) with respect to the Common Shares, whether to facilitate
the sale or resale of the Shares or otherwise, and has taken no action which
would directly or indirectly violate Regulation M.

 

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

 

12

 

 

(cc)          FINRA Matters. All of the information provided to the Agent or to
counsel for the Agent by the Company, and to the knowledge of the Company, its
counsel, its officers and directors and the holders of any securities (debt or
equity) or options to acquire any securities of the Company in connection with
the offering of the Shares is true, complete, correct and compliant with
Financial Industry Regulatory Authority, Inc.’s (“FINRA”) rules and any letters,
filings or other supplemental information provided to FINRA pursuant to FINRA
Rules or NASD Conduct Rules is true, complete and correct.

 

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

 

(ee)          Compliance with Environmental Laws. Except as described in the
Prospectus and except as would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Change; (i) neither the Company
nor any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (ii) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements, (iii) there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) there are no orders for clean-up or
remediation, or any actions, suits or proceedings by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

 

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

 

13

 

 

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

 

(hh)         No Outstanding Loans or Other Extensions of Credit. The Company
does not have any outstanding extension of credit, in the form of a personal
loan, to or for any director or executive officer (or equivalent thereof) of the
Company except for such extensions of credit as are expressly permitted by
Section 13(k) of the Exchange Act.

 

(ii)            Compliance with Laws. The Company and its subsidiaries have been
and are in compliance with all applicable laws, rules and regulations, except
where failure to be so in compliance would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change.

 

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

 

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

 

14

 

 

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

 

(mm)        Clinical Data and Regulatory Compliance. The preclinical tests and
clinical trials, and other studies (collectively, “studies”) that are described
in, or the results of which are referred to in, the Registration Statement or
the Prospectus were and, if still pending, are being conducted in all material
respects in accordance with the protocols, procedures and controls designed and
approved for such studies and with standard medical and scientific research
procedures; each description of the results of such studies is accurate and
complete in all material respects and fairly presents the data derived from such
studies, and the Company and its subsidiaries have no knowledge of any other
studies the results of which are inconsistent with, or otherwise call into
question, the results described or referred to in the Registration Statement or
the Prospectus; the Company and its subsidiaries have made all such filings and
obtained all such approvals as may be required by the Food and Drug
Administration of the U.S. Department of Health and Human Services or any
committee thereof or from any other U.S. or foreign government or drug or
medical device regulatory agency, or health care facility Institutional Review
Board (collectively, the “Regulatory Agencies”); neither the Company nor any of
its subsidiaries has received any notice of, or correspondence from, any
Regulatory Agency requiring the termination, suspension or modification of any
clinical trials that are described or referred to in the Registration Statement
or the Prospectus; and the Company and its subsidiaries have each operated and
currently are in compliance in all material respects with all applicable rules,
regulations and policies of the Regulatory Agencies.

 

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

 

15

 

 

(oo)         Sarbanes-Oxley. There is and has been no failure on the part of the
Company or any of the Company’s directors or officers, in their capacities as
such, to comply with any provision of the Sarbanes-Oxley Act of 2002, as amended
and the rules and regulations promulgated in connection therewith (the
“Sarbanes-Oxley Act”), with which the Company is required to comply, including
Section 402 related to loans.

 

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

 

(qq)         Cybersecurity. The Company’s and its subsidiaries’ information
technology assets and equipment, computers, systems, networks, hardware,
software, websites, applications, and databases (collectively, “IT Systems”) are
adequate for, and operate and perform in all material respects as required in
connection with the operation of the business of the Company and its
subsidiaries as currently conducted, free and clear of all material bugs,
errors, defects, Trojan horses, time bombs, malware and other corruptants. The
Company and its subsidiaries have implemented and maintained commercially
reasonable physical, technical and administrative controls, policies,
procedures, and safeguards to maintain and protect their material confidential
information and the integrity, continuous operation, redundancy and security of
all IT Systems and data, including “Personal Data,” used in connection with
their businesses. “Personal Data” means (i) a natural person’s name, street
address, telephone number, e-mail address, photograph, social security number or
tax identification number, driver’s license number, passport number, credit card
number, bank information, or customer or account number; (ii) any information
which would qualify as “personally identifying information” under the Federal
Trade Commission Act, as amended; (iii) “personal data” as defined by GDPR (as
defined below); (iv) any information which would qualify as “protected health
information” under the Health Insurance Portability and Accountability Act of
1996, as amended by the Health Information Technology for Economic and Clinical
Health Act (collectively, “HIPAA”); and (v) any other piece of information that
allows the identification of such natural person, or his or her family, or
permits the collection or analysis of any data related to an identified person’s
health or sexual orientation. There have been no breaches, violations, outages
or unauthorized uses of or accesses to same, except for those that have been
remedied without material cost or liability or the duty to notify any other
person, nor any incidents under internal review or investigations relating to
the same. The Company and its subsidiaries are presently in material compliance
with all applicable laws or statutes and all judgments, orders, rules and
regulations of any court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the privacy and
security of IT Systems and Personal Data and to the protection of such IT
Systems and Personal Data from unauthorized use, access, misappropriation or
modification.

 

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

 

16

 

 

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

 

(tt)           Compliance with Health Care Laws. The Company and its
subsidiaries are, and at all times have been, in material compliance with all
applicable Health Care Laws. For purposes of this Agreement, “Health Care Laws”
means: (i) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Section 301 et
seq.), the Public Health Service Act (42 U.S.C. Section 201 et seq.), and the
regulations promulgated thereunder; (ii) all applicable federal, state, local
and foreign health care fraud and abuse laws, including, without limitation, the
Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the Civil False Claims
Act (31 U.S.C. Section 3729 et seq.), the criminal false statements law (42
U.S.C. Section 1320a-7b(a)), 18 U.S.C. Sections 286 and 287, the health care
fraud criminal provisions under HIPAA (42 U.S.C. Section 1320d et seq.), the
Stark Law (42 U.S.C. Section 1395nn), the civil monetary penalties law (42
U.S.C. Section 1320a-7a), the exclusion law (42 U.S.C. Section 1320a-7), the
Physician Payments Sunshine Act (42 U.S.C. Section 1320-7h), and applicable laws
governing government funded or sponsored healthcare programs; (iii) HIPAA, as
amended by the Health Information Technology for Economic and Clinical Health
Act (42 U.S.C. Section 17921 et seq.) and comparable state health care data
privacy and security laws; (iv) the Patient Protection and Affordable Care Act
of 2010, as amended by the Health Care and Education Reconciliation Act of 2010;
and (v) licensure, quality, safety and accreditation requirements under
applicable federal, state, local or foreign laws or regulatory bodies. Neither
the Company nor any of its subsidiaries has 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 material violation of any Health Care Laws nor, to the Company’s
knowledge, is any such claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action threatened. The Company and its
subsidiaries have filed, maintained or submitted all material reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments as required by any Health Care Laws, and all such
reports, documents, forms, notices, applications, records, claims, submissions
and supplements or amendments were complete and accurate on the date filed in
all material respects (or were corrected or supplemented by a subsequent
submission). Neither the Company nor any of its subsidiaries is 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. Additionally, neither the Company, any of its subsidiaries
nor any of their respective employees, officers, directors, or agents has been
excluded, suspended or debarred from participation in any U.S. federal health
care program or human clinical research or, to the knowledge of the Company, is
subject to a governmental inquiry, investigation, proceeding, or other similar
action that could reasonably be expected to result in debarment, suspension, or
exclusion.

 

17

 

 

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

 

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

 

Section 3.          ISSUANCE AND SALE OF COMMON SHARES

 

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

 

(b)            Mechanics of Issuances.

 

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

 

18

 

 

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

 

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

 

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

 

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

 

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

 

19

 

 

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

 

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

 

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

 

(d)            Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Shares
(including all printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Shares; (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Prospectus, any
Free Writing Prospectus (as defined below) prepared by or on behalf of, used by,
or referred to by the Company, and all amendments and supplements thereto, and
this Agreement (it being understood that this clause (v) shall not include any
fees and expenses of counsel for Agent); (vi) all filing fees, attorneys’ fees
and expenses incurred by the Company or the Agent in connection with qualifying
or registering (or obtaining exemptions from the qualification or registration
of) all or any part of the Shares for offer and sale under the state securities
or blue sky laws or the provincial securities laws of Canada, and, if requested
by the Agent, preparing and printing a “Blue Sky Survey” or memorandum and a
“Canadian wrapper”, and any supplements thereto, advising the Agent of such
qualifications, registrations, determinations and exemptions; (vii) the
reasonable and documented fees and disbursements of the Agent’s counsel,
including the reasonable and documented fees and expenses of counsel for the
Agent in connection with, FINRA review, if any, and approval of the Agent’s
participation in the offering and distribution of the Shares; (viii) the filing
fees incident to FINRA review, if any; and (ix) the fees and expenses associated
with listing the Shares on the Principal Market. The fees and disbursements of
Agent’s counsel pursuant to subsections (vi) and (vii) above shall not exceed
(A) $50,000 in connection with execution of this Agreement and (B) $15,000 in
connection with each Triggering Event Date (as defined below) on which the
Company is required to provide a certificate pursuant to Section 4(o).

 

20

 

 

Section 4.          ADDITIONAL COVENANTS

 

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

 

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

 

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

 

21

 

 

(c)            Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus so that the Prospectus does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Agent or counsel for the Agent it is otherwise
necessary to amend or supplement the Prospectus to comply with applicable law,
including the Securities Act, the Company agrees (subject to Section 4(d) and
Section 4(f)) to promptly prepare, file with the Commission and furnish at its
own expense to the Agent, amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with applicable
law including the Securities Act. Neither the Agent’s consent to, or delivery
of, any such amendment or supplement shall constitute a waiver of any of the
Company’s obligations under Section 4(d) and Section 4(f). Notwithstanding the
foregoing, the Company shall not be required to file such amendment or
supplement if there is no pending Issuance Notice and the Company believes that
it is in its best interests not to file such amendment or supplement.

 

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

 

(e)            Use of Free Writing Prospectus. Neither the Company nor the Agent
has prepared, used, referred to or distributed, or will prepare, use, refer to
or distribute, without the other party’s prior written consent (such consent of
the Agent not to be unreasonably withheld, conditioned or delayed), any “written
communication” that constitutes a “free writing prospectus” as such terms are
defined in Rule 405 under the Securities Act with respect to the offering
contemplated by this Agreement (any such free writing prospectus being referred
to herein as a “Free Writing Prospectus”).

 

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

 

22

 

 

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

 

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

 

23

 

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

 

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

 

 

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

 

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

 

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

 

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

 

25

 

 

(p)            Legal Opinions. On or prior to the date of the first Issuance
Notice and on or prior to each Triggering Event Date with respect to which the
Company is obligated to deliver a certificate pursuant to Section 4(o) for which
no waiver is applicable and excluding the date of this Agreement, a negative
assurances letter and the written legal opinion of Hughes Hubbard & Reed LLP,
counsel to the Company and McCarter & English, LLP, intellectual property
counsel to the Company, each dated the date of delivery, in form and substance
reasonably satisfactory to Agent and its counsel, substantially similar to the
form previously provided to the Agent and its counsel, modified, as necessary,
to relate to the Registration Statement and the Prospectus as then amended or
supplemented. In lieu of such opinions for subsequent periodic filings, in the
discretion of the Agent, the Company may furnish a reliance letter from such
counsel to the Agent, permitting the Agent to rely on a previously delivered
opinion letter, modified as appropriate for any passage of time or Triggering
Event Date (except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and the Prospectus as amended or
supplemented as of such Triggering Event Date).

 

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

 

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

 

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

 

26

 

 

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

 

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

 

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

 

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

 

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

 

27

 

 

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

 

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

 

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

 

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

 

28

 

 

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

 

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

 

(d)            Agent Counsel Legal Opinion. Agent shall have received from
Cooley LLP, counsel for Agent, such opinion or opinions, on or before the date
on which the delivery of the Company counsel legal opinion is required pursuant
to Section 4(p), with respect to such matters as Agent may reasonably require,
and the Company shall have furnished to such counsel such documents as they
request for enabling them to pass upon such matters.

 

Section 6.          INDEMNIFICATION AND CONTRIBUTION

 

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

 

29

 

 

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

 

30

 

 

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

 

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

 

31

 

 

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

 

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

 

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

 

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

 

32

 

 

Section 7.          TERMINATION & SURVIVAL

 

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

 

(b)            Termination; Survival Following Termination.

 

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

 

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

 

Section 8.          MISCELLANEOUS

 

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

 

33

 

 

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

 

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

 

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

 

If to the Agent:

 

Jefferies LLC

520 Madison Avenue

New York, NY 10022

Facsimile: (646) 786-5719

Attention: General Counsel

 

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

 

Cooley LLP

55 Hudson Yards

New York, NY 10001

Attention: Daniel I. Goldberg, Esq.

Facsimile: (212) 479-6275

 

34

 

 

If to the Company:

 

Cyclerion Therapeutics, Inc.

301 Binney Street

Cambridge, MA 02142

Attention: William Huyett

Facsimile: whuyett@cyclerion.com

 

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

 

Hughes Hubbard & Reed LLP

One Battery Park Plaza, 12th Floor

New York, NY 10004-1482

Attention: Gary J. Simon

Email: gary.simon@hugheshubbard.com

 

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

 

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

 

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

 

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

 

35

 

 

(h)            General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and may be delivered by facsimile transmission or by electronic delivery of a
portable document format (PDF) file (including any electronic signature covered
by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the
Electronic Signatures and Records Act or other applicable law, e.g.,
www.docusign.com). This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit. The Article and Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

 

[Signature Page Immediately Follows]

 

36

 

 

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

 

  Very truly yours,       CYCLERION THERAPEUTICS, INC.           By: /s/ William
I. Huyett                      Name: William I. Huyett      Title: Chief
Financial Officer

 

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

 

JEFFERIES LLC           By: /s/ Michael Magarro     Name: Michael Magarro    
Title: Managing Director  

 

 

 

EXHIBIT A

 

ISSUANCE NOTICE

 

[Date]

 

Jefferies LLC

520 Madison Avenue

New York, New York 10022

 

Attn: [__________]

 

Reference is made to the Open Market Sale AgreementSM between Cyclerion
Therapeutics, Inc. (the “Company”) and Jefferies LLC (the “Agent”) dated as of
September 3, 2020. The Company confirms that all conditions to the delivery of
this Issuance Notice are satisfied as of the date hereof.

 

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

 

_______________________

 

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

 

  $   Number of days in selling period:     First date of selling period:    
Last date of selling period:     Settlement Date(s) if other than standard T+2
settlement:      

 

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

 

Comments:  

 

          By:       Name:     Title:

 

 

 

Schedule A

 

Notice Parties

 

The Company

 

[●]

 

The Agent

 

[●]