Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of March 28, 2019 by and among Aileron Therapeutics, Inc., a Delaware
corporation (the “Company”), and the Investors identified on Exhibit A attached
hereto (each an “Investor” and collectively the “Investors”).

RECITALS

A.    The Company and the Investors are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended; and

B.    The Investors wish to purchase from the Company, and the Company wishes to
sell and issue to the Investors, upon the terms and subject to the conditions
stated in this Agreement, (i) (A) shares (the “Shares”) of the Company’s Common
Stock, par value $0.001 per share (the “Common Stock”) and (B) warrants in the
form attached hereto as Exhibit B to purchase Common Stock (each, a “Common
Warrant” and collectively, the “Common Warrants”) and/or (ii) (A) pre-funded
warrants in the form attached hereto as Exhibit C to purchase common stock
(each, a “Pre-Funded Warrant” and collectively, the “Pre-Funded Warrants”) and
(B) Common Warrants.

C.    Contemporaneously with the sale of the Shares and Common Warrants, the
parties hereto will execute and deliver a Registration Rights Agreement, in the
form attached hereto as Exhibit D (the “Registration Rights Agreement”),
pursuant to which the Company will agree to provide certain registration rights
in respect of the Shares and the Common Warrant Shares (as defined below) under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws.

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.    Definitions. For the purposes of this Agreement, the following terms shall
have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person.

“Board” means the Company’s Board of Directors.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

“Closing” has the meaning set forth in Section 3.1.

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“Closing Date” has the meaning set forth in Section 3.1.

“Closing Securities” means the Shares and the Common Warrants.

“Common Stock Equivalents” means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.

“Common Warrants” has the meaning set forth in the recitals to this Agreement.

“Common Warrant Shares” means the shares of Common Stock issuable upon exercise
of the Common Warrants.

“Company Intellectual Property” has the meaning set forth in Section 4.14.

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company.

“Control” (including the terms “controlling”, “controlled by” or “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.

“Disclosure Schedules” has the meaning set forth in Section 4.

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a
Trading Day or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time) on the
Trading Day immediately following the date hereof and (ii) if this Agreement is
signed between midnight (New York City time) and 9:00 a.m. (New York City time)
on any Trading Day, no later than 9:01 a.m. (New York City time) on the date
hereof.

“Draft Form 10-K” means the draft of the Company’s Annual Report on Form 10-K
for the year ended December 31, 2018 as provided to the Investors prior to the
execution of this Agreement.

“Environmental Laws” has the meaning set forth in Section 4.15.

“Exempt Issuance” means the issuance of (a) Common Warrant Shares, (b) the
Pre-Funded Warrants Shares, (c) Common Stock or Common Stock Equivalents
pursuant to any Company stock-based compensation plans approved by the Company’
stockholders or in accordance with Nasdaq Stock Market Rule 5635(c)(4), (d)
Common Stock upon the exercise or exchange of or conversion of any Common Stock
Equivalents issued and outstanding on the date of this Agreement, (e) Common
Stock or Common Stock Equivalents in connection with a transaction with an
unaffiliated third party approved by the Board that includes a bona fide
commercial relationship with the Company (including any joint venture, marketing
or distribution arrangement, strategic alliance, collaboration agreement or
corporate partnering,

 

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intellectual property license agreement or acquisition agreement with the
Company), (f) Common Stock or Common Stock Equivalents in connection with a
merger with, or acquisition of, an unaffiliated third party approved by the
Board and (g) shares of Common Stock or Common Stock Equivalents issued to
banks, equipment lessors or other financial institutions, or to real property
lessors, pursuant to a debt financing, equipment leasing or real property
leasing transaction approved by the Board.

“FDA” has the meaning set forth in Section 4.30.

“GAAP” has the meaning set forth in Section 4.17.

“Losses” has the meaning set forth in Section 8.2.

“Major Investor” means any Investor that, individually or together with such
Investor’s Affiliates, has purchased Securities with an aggregate purchase price
of at least $5,000,000 under this Agreement.

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, financial condition or business of the
Company, (ii) the legality or enforceability of any of the Transaction Documents
or Closing Securities or (iii) the ability of the Company to perform its
obligations under the Transaction Documents.

“Material Contract” means any contract, instrument or other agreement to which
the Company is a party or by which it is bound that has been filed or was
required to have been filed as an exhibit to the SEC Filings pursuant to
Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

“Nasdaq” means The Nasdaq Global Market.

“New Securities” means, collectively, equity securities of the Company, whether
or not currently authorized, as well as options or warrants to purchase such
equity securities, or securities of any type whatsoever that are convertible or
exchangeable into or exercisable for such equity securities.

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

“Placement Agent” means William Blair & Company, L.L.C.

“Pre-Funded Warrants” has the meaning set forth in the recitals to this
Agreement.

“Pre-Funded Warrant Shares” means the shares of Common Stock issuable upon
exercise of the Pre-Funded Warrants.

“Press Release” has the meaning set forth in Section 9.7.

 

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“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be The Nasdaq Global Market.

“Registration Rights Agreement” has the meaning set forth in the recitals to
this Agreement.

“Required Investors” has the meaning set forth in the Registration Rights
Agreement.

“Rule 144” means Rule 144 promulgated under the 1933 Act.

“SEC Filings” means (i) all documents and reports filed by the Company with the
SEC pursuant to the 1934 Act, including pursuant to Section 13(a) or 15(d)
thereof, since January 1, 2019 and (ii) the Draft Form 10-K.

“Securities” means the Shares, the Common Warrants, the Pre-Funded Warrants and
the Warrant Shares.

“Shares” has the meaning set forth in the recitals to this Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the 1934 Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

“Subscription Amount” means, as to an Investor, the aggregate amount to be paid
for the Closing Securities purchased hereunder as specified opposite such
Investor’s name on Exhibit A attached hereto, under the column entitled
“Aggregate Purchase Price of Closing Securities,” in U.S. Dollars and in
immediately available funds.

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American (formerly the American Stock Exchange), the Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market or the OTC Bulletin
Board on which the Common Stock is listed or quoted for trading on the date in
question.

“Transfer Agent” means Computershare Trust Company, N.A.

“Transaction Documents” means this Agreement, the Common Warrants, the
Pre-Funded Warrants and the Registration Rights Agreement.

 

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“Warrants” means the Common Warrants and the Pre-Funded Warrants.

“Warrant Shares” means the Common Warrant Shares and the Pre-Funded Warrant
Shares.

“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

2.    Purchase and Sale.

2.1.    On the Closing Date, upon the terms and subject to the conditions set
forth herein, the Company will issue and sell, and the Investors will purchase,
severally and not jointly, (i) (A) the number of Shares set forth opposite the
name of such Investor under the heading “Number of Shares to be Purchased” on
Exhibit A attached hereto and (B) a Common Warrant to purchase one share of
Common Stock for every one Share purchased at Closing and (ii) the number of
Pre-Funded Warrants set forth opposite the name of such Investor under the
heading “Number of Shares to be Purchased” on Exhibit A attached hereto, if any,
and (ii) a Common Warrant to purchase one share of Common Stock for every one
Pre-Funded Warrant purchased at Closing. The purchase price per Share and
associated Common Warrant shall be $2.01. The purchase price per Pre-Funded
Warrant and associated Common Warrant shall be $2.01.

2.2.    The Pre-Funded Warrants shall have an exercise price equal to $0.01 per
Pre-Funded Warrant Share and shall be exercisable for one share of Common Stock
(subject to adjustment as provided therein). The Common Warrants shall have an
exercise price equal to $2.00 per Common Warrant Share (subject to adjustment as
provided therein).

3.    Closing.

3.1.    Upon the satisfaction of the conditions set forth in Section 6, the
completion of the purchase and sale of the Closing Securities (the “Closing”)
shall occur remotely via exchange of executed documents and funds on April 2,
2019 (the “Closing Date”).

3.2.    On the Closing Date, each Investor shall deliver or cause to be
delivered to the Company the Subscription Amount via wire transfer of
immediately available funds pursuant to the wire instructions delivered to such
Investor by the Company on or prior to the Closing Date.

3.3.    At or before the Closing, the Company shall deliver or cause to be
delivered

(a)    to each Investor purchasing Shares the following:

(i)    a number of Shares, in the form of a certificate registered in the name
of the Investor or via book entry to the applicable account registered in the
name of the

 

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Investor at the Transfer Agent, as may be requested by the Investor, equal to
the number of Shares set forth opposite the name of such Investor under the
heading “Number of Shares to be Purchased” on Exhibit A attached hereto; and

(ii)    a Common Warrant, registered in the name of such Investor, to purchase
up to the number of Common Warrant Shares set forth opposite the name of such
Investor under the heading “Number of Common Warrant Shares Underlying Common
Warrant Purchased” on Exhibit A attached hereto.

(b)    to each Investor purchasing Pre-Funded Warrants the following:

(i)    a Pre-Funded Warrant, registered in the name of such Investor, to
purchase up to the number of Pre-Funded Warrant Shares set forth opposite the
name of such Investor under the heading “Number of Pre-Funded Warrant Shares
Underlying Pre-Funded Warrant Purchased” on Exhibit A attached hereto; and

(ii)    a Common Warrant, registered in the name of such Investor, to purchase
up to the number of Common Warrant Shares set forth opposite the name of such
Investor under the heading “Number of Common Warrant Shares Underlying Common
Warrant Purchased” on Exhibit A attached hereto.

4.    Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except (a) as set forth in the
schedules delivered herewith (collectively, the “Disclosure Schedules”) and
arranged in numbered and lettered sections corresponding to the numbered and
lettered sections contained in this Section 4 or (b) or disclosed in the SEC
Filings (excluding exhibits and information incorporated therein):

4.1.    Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now conducted and to own or lease its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and would not
reasonably be expected to have a Material Adverse Effect.

4.2.    Authorization. The Company has the requisite corporate power and
authority and has taken all requisite corporate action necessary for, and no
further action on the part of the Company, its officers, directors and
stockholders is necessary for, (i) the authorization, execution and delivery of
the Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Closing Securities.
The Transaction Documents constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally and to general equitable principles.

 

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4.3.    Capitalization. The Company is authorized under its Certificate of
Incorporation to issue 150,000,000 shares of Common Stock. The Company’s
disclosure of its issued and outstanding capital stock in its most recent SEC
Filing containing such disclosure was accurate in all material respects as of
the date indicated in such SEC Filing. All of the issued and outstanding shares
of the Company’s capital stock have been duly authorized and validly issued and
are fully paid and nonassessable; none of such shares were issued in violation
of any pre-emptive rights; and such shares were issued in compliance in all
material respects with applicable state and federal securities law and any
rights of third parties. No Person is entitled to pre-emptive or similar
statutory or contractual rights with respect to the issuance by the Company of
any securities of the Company. There are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which the Company is or may be obligated to issue any equity
securities of any kind and except as contemplated by this Agreement. Except for
the Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the securityholders of the Company
relating to the securities of the Company held by them. Except as provided in
the Registration Rights Agreement, no Person has the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person.

The issuance and sale of the Closing Securities hereunder will not obligate the
Company to issue shares of Common Stock or other securities to any other Person
(other than the Investors) and will not result in the adjustment of the
exercise, conversion, exchange or reset price of any outstanding security.

The Company does not have outstanding stockholder purchase rights or “poison
pill” or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.

4.4.    Valid Issuance. The Shares have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and shall be free and clear of all encumbrances
and restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws. The Common Warrant Shares have been duly and validly
authorized and reserved for issuance and, upon exercise of the Common Warrants
in accordance with their terms, including the payment of any exercise price
therefor, will be validly issued, fully paid and nonassessable and will be free
and clear of all encumbrances and restrictions (other than those created by the
Investors), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Pre-Funded Warrant
Shares have been duly and validly authorized and reserved for issuance and, upon
exercise of the Pre-Funded Warrants in accordance with their terms, including
the payment of any exercise price therefor, will be validly issued, fully paid
and nonassessable and will be free and clear of all encumbrances and
restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.

 

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4.5.    Consents. Subject to the accuracy of the representations and warranties
of each Investor set forth in Section 5 hereof, the execution, delivery and
performance by the Company of the Transaction Documents and the offer, issuance
and sale of the Closing Securities require no consent of, action by or in
respect of, or filing with, any Person, governmental body, agency, or official
other than filings that have been made pursuant to applicable state securities
laws and post-sale filings pursuant to applicable state and federal securities
laws and the rules and regulations of Nasdaq which the Company undertakes to
file within the applicable time periods and other than the registration
statement required to be filed by the Registration Rights Agreement. The Company
has taken all action necessary to exempt (i) the issuance and sale of the
Closing Securities and (ii) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or
other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company, including Section 203 of
the General Corporation Law of the State of Delaware, or to which the Company or
any of its assets and properties is subject that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of the Closing
Securities and the acquisition, ownership, disposition or voting of the Shares
or the Warrant Shares by the Investors or the exercise of any right granted to
the Investors pursuant to this Agreement or the other Transaction Documents.

4.6.    Use of Proceeds. The net proceeds of the sale of the Closing Securities
hereunder shall be used by the Company for working capital and general corporate
purposes.

4.7.    No Material Adverse Change. Since December 31, 2018, except as
identified and described in the SEC Filings, there has not been:

(i)    any change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Draft Form 10-K as provided to Investors prior to execution of this
Agreement, except for changes in the ordinary course of business which have not
had and would not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;

(ii)    any declaration or payment by the Company of any dividend, or any
authorization or payment by the Company of any distribution, on any of the
capital stock of the Company, or any redemption or repurchase by the Company of
any securities of the Company;

(iii)    any material damage, destruction or loss, whether or not covered by
insurance, to any assets or properties of the Company;

(iv)    any waiver, not in the ordinary course of business, by the Company of a
material right or of a material debt owed to it;

(v)    any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted);

 

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(vi)    any change or amendment to the Company’s Certificate of Incorporation or
Bylaws, or material change to any material contract or arrangement by which the
Company or is bound or to which any of its assets or properties is subject;

(vii)    any material labor difficulties or, to the Company’s Knowledge, labor
union organizing activities with respect to employees of the Company;

(viii)    any material transaction entered into by the Company other than in the
ordinary course of business;

(ix)    the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company;

(x)    any transaction disclosable under Item 404 of Regulation S-K;

(xi)    the loss or, to the Company’s Knowledge, threatened loss of any customer
which has had or would reasonably be expected to have a Material Adverse Effect;
or

(xii)    any other event or condition of any character that has had or would
reasonably be expected to have a Material Adverse Effect.

4.8.    SEC Filings.

(a)    The Company has filed all reports, schedules, certifications, forms,
statements and other documents (including all exhibits, amended and supplements
thereto) required to be filed or furnished by the Company under the 1934 Act,
including pursuant to Section 13(a) or 15(d) thereof, for the one year preceding
the date hereof. As of their respective dates, or, if amended or supplemented,
as of the date of the last such amendment or supplement filed prior to date
hereof, each of the SEC Filings complied in all material respects with the
applicable requirements of the 1933 Act, the 1934 Act and the Sarbanes-Oxley Act
of 2002, and the applicable rules and regulations promulgated thereunder, as the
case may be, each as in effect on the date so filed.

4.9.    No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Closing Securities in accordance with the provisions thereof will
not, (i) conflict with or result in a breach or violation of (a) any of the
terms and provisions of, or constitute a default under, the Company’s
Certificate of Incorporation or the Company’s Bylaws, both as in effect on the
date hereof (true and complete copies of which have been made available to the
Investors through the Electronic Data Gathering, Analysis, and Retrieval system
(the “EDGAR system”)), or (b) assuming the accuracy of the representations and
warranties in Section 5, any applicable statute, rule, regulation or order of
any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its assets or properties, or (ii) except
for such violations, conflicts or defaults as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, result in the creation of any lien,
encumbrance or other adverse claim upon any of the properties or assets of the
Company or give to others any rights of termination, amendment, acceleration or
cancellation

 

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(with or without notice, lapse of time or both) of, any Material Contract. This
Section does not relate to matters with respect to tax status, which are the
subject of Section 4.10, employee relations and labor matters, which are the
subject of Section 4.13, and environmental laws, which are the subject of
Section 4.15.

4.10.    Tax Matters. The Company has timely prepared and filed all tax returns
required to have been filed by it with all appropriate governmental agencies and
timely paid all taxes shown thereon or otherwise owed by the Company. The
charges, accruals and reserves on the books of the Company in respect of taxes
for all fiscal periods are adequate in all material respects, and there are no
material unpaid assessments against the Company nor, to the Company’s Knowledge,
any basis for the assessment of any additional taxes, penalties or interest for
any fiscal period or audits by any federal, state or local taxing authority
except for any assessment which is not material to the Company. All taxes and
other assessments and levies that the Company is required to withhold or to
collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or, to the Company’s Knowledge, threatened against the Company or any of
its assets or property. There are no outstanding tax sharing agreements or other
such arrangements between the Company and any other corporation or entity.

4.11.    Title to Properties. The Company has good and marketable title to all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects, except such as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect; and the Company holds any leased real or personal property under valid
and enforceable leases with no exceptions, except such as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.

4.12.    Certificates, Authorities and Permits. The Company possesses adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, except where
failure to so possess would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect. The Company has not received
any written notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that would reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate, on the
Company.

4.13.    Labor Matters.

(a)    The Company is not party to or bound by any collective bargaining
agreements or other agreements with labor organizations. To the Company’s
knowledge, Company has not violated in any material respect any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.

(b)    No material labor dispute with the employees of the Company, or with the
employees of any principal supplier, manufacturer, customer or contractor of the
Company, exists or, to the knowledge of the Company, is threatened or imminent.

 

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4.14.    Intellectual Property. Except as expressly contemplated by the SEC
Filings, the Company owns, possesses, licenses or has other rights to use, the
patents and patent applications, copyrights, trademarks, service marks, trade
names, service names and trade secrets described in the SEC Filings as necessary
or material for use in connection with its business and which the failure to so
have would have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Company Intellectual Property”). There is no pending or, to
the Company’s Knowledge, threatened action, suit, proceeding or claim by any
Person that the Company’s business as now conducted infringes or otherwise
violates any patent, trademark, copyright, trade secret or other proprietary
rights of another. To the Company’s Knowledge, there is no existing infringement
by another Person of any of the Intellectual Property Rights that would have or
would reasonably be expected to have a Material Adverse Effect. The Company has
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of its Intellectual Property Rights, except where failure to do so
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

4.15.    Environmental Matters. The Company is not in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), has not released any hazardous substances
regulated by Environmental Law on to any real property that it owns or operates,
has not received any written notice or claim it is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, which violation,
release, notice, claim, or liability would reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect,; and to the Company’s
Knowledge, there is no pending or threatened investigation that would reasonably
be expected to lead to such a claim.

4.16.    Legal Proceedings. There are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company is or
may reasonably be expected to become a party or to which any property of the
Company is or may reasonably be expected to become the subject that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

4.17.    Financial Statements. The financial statements included in each SEC
Filing filed prior to the date hereof comply in all material respects with
applicable accounting requirements and the rules and regulations of the SEC with
respect thereto as in effect at the time of filing and present fairly, in all
material respects, the financial position of the Company as of the dates shown
and its results of operations and cash flows for the periods shown, subject in
the case of unaudited financial statements to normal, immaterial year-end audit
adjustments, and such financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”) (except as may be disclosed therein
or in the notes thereto, and except that the unaudited financial statements may
not contain all footnotes required by GAAP, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934 Act). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, the Company has not incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect.

 

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4.18.    Insurance Coverage. The Company maintains in full force and effect
insurance coverage that is customary for comparably situated companies for the
business being conducted and properties owned or leased by the Company, and the
Company reasonably believes such insurance coverage to be adequate against all
liabilities, claims and risks against which it is customary for comparably
situated companies to insure.

4.19.    Compliance with Nasdaq Continued Listing Requirements. The Company is
in compliance with applicable Nasdaq continued listing requirements and the
execution, delivery and performance by the Company of the Transaction Documents
and the offer, issuance and delivery of the Closing Securities will not violate
applicable Nasdaq continued listing requirements. There are no proceedings
pending or, to the Company’s Knowledge, threatened against the Company relating
to the continued listing of the Common Stock on Nasdaq and the Company has not
received any notice of, nor to the Company’s Knowledge is there any reasonable
basis for, the delisting of the Common Stock from Nasdaq.

4.20.    Brokers and Finders. Other than the Placement Agent, no Person will
have, as a result of the transactions contemplated by the Transaction Documents,
any valid right, interest or claim against or upon the Company or an Investor
for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Company. No
Investor shall have any obligation with respect to any fees, or with respect to
any claims made by or on behalf of other Persons for fees, in each case of the
type contemplated by this Section 4.20 that may be due in connection with the
transactions contemplated by this Agreement or the Transaction Documents.

4.21.    No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Closing Securities.

4.22.    No Integrated Offering. Neither the Company nor any Person acting on
its behalf has, directly or indirectly, made any offers or sales of any Company
security or solicited any offers to buy any Company security, under
circumstances that would adversely affect reliance by the Company on
Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Closing Securities
under the 1933 Act.

4.23.    Private Placement. Assuming the accuracy of the representations and
warranties of the Investors set forth in Section 5, the offer and sale of the
Closing Securities to the Investors as contemplated hereby is exempt from the
registration requirements of the 1933 Act. The issuance and sale of the Closing
Securities does not contravene the rules and regulations of Nasdaq.

4.24.    Questionable Payments. Neither the Company nor, to the Company’s
Knowledge, any of its current or former directors, officers, employees, agents
or other Persons acting on behalf of the Company, has on behalf of the Company
in connection with its business:

 

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(a) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets which is in violation of law; (d) made any
false or fictitious entries on the books and records of the Company; or (e) made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature.

4.25.    Transactions with Affiliates. None of the executive officers or
directors of the Company and, to the Company’s Knowledge, none of the employees
of the Company is presently a party to any transaction with the Company (other
than as holders of stock options and/or warrants, and for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the Company’s Knowledge, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

4.26.    Internal Controls. The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-15 and 15d-15 under the 1934
Act), which are designed to ensure that material information relating to the
Company is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities. Since the end of
the Company’s most recent audited fiscal year, there have been no significant
deficiencies or material weakness 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
controls 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.

4.27.    Disclosures. Neither the Company nor any Person acting on its behalf
has provided the Investors or their agents or counsel with any information that
constitutes or would reasonably be expected to constitute material, non-public
information which according to applicable law, rule or regulation was required
to have been disclosed publicly by the Company, but which has not been so
disclosed, other than with respect to the transactions contemplated hereby and
except as will be disclosed in the Press Release (as defined below). The SEC
Filings do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. The
Company understands and confirms that the Investors will rely on the foregoing
representations in effecting transactions in securities of the Company.

4.28.    Required Filings. Since December 31, 2018, no event or circumstance has
occurred or information exists with respect to the Company or its business,
properties, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which have not been so publicly announced or disclosed (assuming for this
purpose that the SEC Filings are being incorporated by reference into an
effective registration statement filed by the Company under the 1933 Act).

 

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4.29.    Investment Company. The Company is not required to be registered as,
and is not an Affiliate of, and immediately following the Closing will not be
required to register as, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

4.30.    Tests and Preclinical and Clinical Trials. The studies, tests and
preclinical and clinical trials conducted by or, to the Company’s Knowledge, on
behalf of the Company that are described in the SEC Filings were and, if still
pending, are being, conducted in all material respects in accordance with the
protocols submitted to the U.S. Food and Drug Administration (the “FDA”) or any
foreign governmental body exercising comparable authority, procedures and
controls pursuant to, where applicable, accepted professional and scientific
standards, and all applicable laws and regulations; the descriptions of the
studies, tests and preclinical and clinical trials conducted by or, to the
Company’s Knowledge, on behalf of the Company, and the results thereof,
contained in the SEC Filings are accurate and complete in all material respects;
the Company is not aware of any other studies, tests or preclinical and clinical
trials, the results of which call into question the results described in the SEC
Filings; and the Company has not received any notices or correspondence from the
FDA, any foreign, state or local governmental body exercising comparable
authority or any Institutional Review Board requiring the termination,
suspension, material modification or clinical hold of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the Company.

4.31.    Manipulation of Price. The Company has not, and, to the Company’s
Knowledge, no Person acting on its behalf has taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Securities.

4.32.    Anti-Bribery and Anti-Money Laundering Laws. Each of the Company and
any of its officers, directors, supervisors, managers, agents, or employees, are
and have at all times been in compliance with and its participation in the
offering will not violate: (A) anti-bribery laws, including but not limited to,
any applicable law, rule, or regulation of any locality, including but not
limited to any law, rule, or regulation promulgated to implement the OECD
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions, signed December 17, 1997, including the U.S. Foreign
Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or any
other law, rule or regulation of similar purposes and scope or (B) anti-money
laundering laws, including but not limited to, applicable federal, state,
international, foreign or other laws, regulations or government guidance
regarding anti-money laundering, including, without limitation, Title 18 US.
Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and
international anti-money laundering principles or procedures by an
intergovernmental group or organization, such as the Financial Action Task Force
on Money Laundering, of which the United States is a member and with which
designation the United States representative to the group or organization
continues to concur, all as amended, and any Executive order, directive, or
regulation pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder.

 

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4.33.    Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).

5.    Representations and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:

5.1.    Organization and Existence. Such Investor is a validly existing
corporation, limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power and
authority to enter into and consummate the transactions contemplated by the
Transaction Documents and to carry out its obligations hereunder and thereunder,
and to invest in the Securities pursuant to this Agreement.

5.2.    Authorization. The execution, delivery and performance by such Investor
of the Transaction Documents to which such Investor is a party have been duly
authorized and each has been duly executed and when delivered will constitute
the valid and legally binding obligation of such Investor, enforceable against
such Investor in accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights generally.

5.3.    Purchase Entirely for Own Account. The Securities to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Securities
in compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

5.4.    Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

5.5.    Disclosure of Information. Such Investor has had an opportunity to
receive, review and understand all information related to the Company requested
by it and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Securities, and has conducted and completed its own independent due diligence.
Such Investor acknowledges that copies of the SEC Filings are available on the
EDGAR system. Based on the information such Investor has deemed appropriate, and
without reliance upon any Placement Agent, it has independently made its own
analysis and decision to enter into the Transaction Documents. Such Investor is
relying exclusively on its own sources of information, investment analysis and
due diligence (including professional advice it deems appropriate) with respect
to the execution, delivery and performance of the Transaction Documents, the
Securities and the business, condition (financial and otherwise), management,
operations, properties and prospects of the Company, including but

 

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not limited to all business, legal, regulatory, accounting, credit and tax
matters. Neither such inquiries nor any other due diligence investigation
conducted by such Investor shall modify, limit or otherwise affect such
Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement.

5.6.    Restricted Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

5.7.    Accredited Investor. Such Investor is (a) an “accredited investor”
within the meaning of Rule 501 under the 1933 Act and has executed and delivered
to the Company a questionnaire in substantially the form attached hereto as
Exhibit E (the “Investor Questionnaire”), which such Investor represents and
warrants is true, correct and complete. Such investor has sufficient knowledge
and experience in investing in private equity transactions to properly evaluate
the risks and merits of its purchase of the Securities. Such Investor has
determined based on its own independent review and such professional advice as
it deems appropriate that its purchase of the Securities and participation in
the transactions contemplated by the Transaction Documents (i) are fully
consistent with its financial needs, objectives and condition, (ii) comply and
are fully consistent with all investment policies, guidelines and other
restrictions applicable to such Investor, (iii) have been duly authorized and
approved by all necessary action, (iv) do not and will not violate or constitute
a default under such Investor’s charter, bylaws or other constituent document or
under any law, rule, regulation, agreement or other obligation by which such
Investor is bound and (v) are a fit, proper and suitable investment for such
Investor, notwithstanding the substantial risks inherent in investing in or
holding the Securities.

5.8.    Placement Agent. Such Investor hereby acknowledges and agrees that
(a) the Placement Agent is acting solely as placement agent in connection with
the execution, delivery and performance of the Transaction Documents and is not
acting as an underwriter or in any other capacity and is not and shall not be
construed as a fiduciary for such Investor, the Company or any other person or
entity in connection with the execution, delivery and performance of the
Transaction Documents, (b) the Placement Agent has not made and will not make
any representation or warranty, whether express or implied, of any kind or
character and has not provided any advice or recommendation in connection with
the execution, delivery and performance of the Transaction Documents, (c) the
Placement Agent will not have any responsibility with respect to (i) any
representations, warranties or agreements made by any person or entity under or
in connection with the execution, delivery and performance of the Transaction
Documents, or the execution, legality, validity or enforceability (with respect
to any person) thereof, or (ii) the business, affairs, financial condition,
operations, properties or prospects of, or any other matter concerning the
Company, and (d) the Placement Agent will not have any liability or obligation
(including without limitation, for or with respect to any losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs, expenses
or disbursements incurred by such Investor, the Company or any other person or
entity), whether in contract, tort or otherwise, to such Investor, or to any
person claiming through it, in respect of the execution, delivery and
performance of the Transaction Documents.

 

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5.9.    No General Solicitation. Such Investor did not learn of the investment
in the Securities as a result of any general solicitation or general
advertising.

5.10.    Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor.

5.12 Short Sales and Confidentiality Prior to the Date Hereof. Other than
consummating the transactions contemplated hereunder, such Investor has not, nor
has any Person acting on behalf of or pursuant to any understanding with such
Investor, directly or indirectly executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Investor was first contacted by the Company, the Placement
Agent or any other Person regarding the transactions contemplated hereby and
ending immediately prior to the date hereof. Notwithstanding the foregoing, in
the case of an Investor that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Investor’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Investor’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement and their representatives, such Investor
has maintained the confidentiality of all non-public disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing
of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.

5.13 No Government Recommendation or Approval. Such Investor understands that no
United States federal or state agency, or similar agency of any other country,
has reviewed, approved, passed upon, or made any recommendation or endorsement
of the Company or the purchase of the Securities.

5.15    No Rule 506 Disqualifying Activities. Such Investor has not taken any of
the actions set forth in, and is not subject to, the disqualification provisions
of Rule 506(d)(1) of the 1933 Act.

5.16    Residency. Such Investor is a resident of the jurisdiction specified
below its address on the Schedule of Investors.

6.    Conditions to Closing.

6.1.    Conditions to the Investors’ Obligations. The obligation of each
Investor to purchase Closing Securities at the Closing is subject to the
fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by such Investor (as to
itself only):

(a)    The representations and warranties made by the Company in Section 4
hereof shall be true and correct in all material respects as of the date hereof
and on the Closing

 

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Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be
true and correct in all material respects as of such earlier date. The Company
shall have performed in all material respects all obligations and covenants
herein required to be performed by it on or prior to the Closing Date.

(b)    The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase and sale of
the Closing Securities and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in full force
and effect.

(c)    The Company shall have executed and delivered the Registration Rights
Agreement.

(d)    The Company shall have filed with Nasdaq a Notification Form: Listing of
Additional Shares for the listing of the Shares and the Warrant Shares.

(e)    No judgment, writ, order, injunction, award or decree of or by any court,
or judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

(f)    The Company shall have received gross proceeds of at least $25 million
from the sale of the Closing Securities.

(g)    The Company shall have delivered a Certificate, executed on behalf of the
Company by its Chief Executive Officer or its Chief Financial Officer, dated as
of the Closing Date, certifying to the fulfillment of the conditions specified
in subsections (a), (b), (d), (e), (f), (i) and (j) of this Section 6.1.

(h)    The Company shall have delivered a Certificate, executed on behalf of the
Company by its Secretary, dated as of the Closing Date, certifying the
resolutions adopted by the Board approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Closing
Securities, certifying the current versions of the Certificate of Incorporation
and Bylaws of the Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the
Company.

(i)    The Board shall have, effective as of the Closing, (i) elected Nolan
Sigal to the Board as a Class II director (with an initial term expiring at the
Company’s 2019 annual meeting of stockholders, which is to be held on June 19,
2019), (ii) determined to nominate Dr. Sigal for election as a Class II director
at the 2019 annual meeting of stockholders (with an initial term expiring at the
Company’s 2022 annual meeting of stockholders) and to recommend that the
Company’s stockholders vote “for” Dr. Sigal at the 2019 annual meeting of
stockholders, (iii) appointed Dr. Sigal to the compensation committee and the
nominating and governance committee of the Board and (iv) adopted written
policies to require that the approval of the following matters by the Board will
require a vote of at least two-thirds of the independent and disinterested
members of the Board to (a) any increase in the Company’s aggregate indebtedness
for borrowed money to any amount exceeding $2 million; (b) any transaction with
Affiliates or related party transactions, (c) any increase in the size of the
Board and (d) any amendment to the policies contemplated by clauses (a), (b) and
(c).

 

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(j)    The Investors shall have received an opinion from Wilmer Cutler Pickering
Hale and Dorr LLP, the Company’s counsel, dated as of the Closing Date, in form
and substance reasonably acceptable to the Placement Agent and addressing such
legal matters as the Investors may reasonably request.

(k)    No stop order or suspension of trading shall have been imposed by Nasdaq,
the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock.

6.2.    Conditions to Obligations of the Company. The Company’s obligation to
sell and issue Closing Securities at the Closing is subject to the fulfillment
to the satisfaction of the Company on or prior to the Closing Date of the
following conditions, any of which may be waived by the Company:

(a)    The representations and warranties made by the Investors in Section 5
hereof shall be true and correct in all material respects as of the date hereof,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. The
Investors shall have performed in all material respects all obligations and
covenants herein required to be performed by them on or prior to the Closing
Date.

(b)    The Investors shall have executed and delivered the Registration Rights
Agreement and each Investor Questionnaire.

(c)    Any Investor purchasing Closing Securities at the Closing shall have paid
in full its Subscription Amount to the Company.

6.3.    Termination of Obligations to Effect Closing; Effects.

(a)    The obligations of the Company, on the one hand, and the Investors, on
the other hand, to effect the Closing shall terminate as follows:

(i)    Upon the mutual written consent of the Company and Investors that agreed
to purchase a majority of the Closing Securities to be issued and sold pursuant
to this Agreement;

(ii)    By the Company if any of the conditions set forth in Section 6.2 shall
have become incapable of fulfillment, and shall not have been waived by the
Company;

(iii)    By an Investor (with respect to itself only) if any of the conditions
set forth in Section 6.1 shall have become incapable of fulfillment, and shall
not have been waived by the Investor; or

 

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(iv)    By either the Company or any Investor (with respect to itself only) if
the Closing has not occurred on or prior to fifth Trading Day following the date
of this Agreement;

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

(b)    In the event of termination by the Company or any Investor of its
obligations to effect the Closing pursuant to this Section 6.3, written notice
thereof shall be given to the other Investors by the Company and the other
Investors shall have the right to terminate their obligations to effect the
Closing upon written notice to the Company and the other Investors. Nothing in
this Section 6.3 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Transaction Documents.

7.    Covenants and Agreements of the Company.

7.1.    No Conflicting Agreements. The Company will not take any action, enter
into any agreement or make any commitment that would conflict or interfere in
any material respect with the Company’s obligations to the Investors under the
Transaction Documents.

7.2.    Nasdaq Listing; Depository Trust Company. The Company will use
commercially reasonable efforts to continue the listing and trading of its
Common Stock on Nasdaq and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of such market or
exchange, as applicable. The Company will use commercially reasonable efforts to
maintain the eligibility of its Common Stock for electronic transfer through the
Depository Trust Company or another established clearing corporation.

7.3.    Termination of Covenants. The provisions of Sections 7.1 and 7.2 shall
terminate and be of no further force and effect on the date on which the
Company’s obligations under the Registration Rights Agreement to register or
maintain the effectiveness of any registration covering the Registrable
Securities (as such term is defined in the Registration Rights Agreement) shall
terminate.

7.4.    Annual Meeting; Board of Directors. The Company will hold its 2019
annual meeting of stockholders on June 19, 2019. The Company will reduce the
size of the Board to seven directors at such annual meeting, unless otherwise
approved by a vote of at least a two-thirds of the independent and disinterested
members of the Board.

7.5.    Transfer Restrictions.

(a)    The Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Securities other
than pursuant to an

 

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effective registration statement or Rule 144, to the Company or to an Affiliate
of an Investor or in connection with a pledge as contemplated in Section 7.5(b),
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the 1933 Act. As a condition
of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and the Registration Rights Agreement and shall have the
rights and obligations of an Investor under this Agreement and the Registration
Rights Agreement.

(b)    The Investors understands that, unless provided otherwise in this
Agreement, a Common Warrant or a Pre-Funded Warrant, any of the Shares and
Warrant Shares, whether certificated or in book-entry form, will be endorsed
with the following legend:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

An Investor may from time to time pledge pursuant to a bona fide margin
agreement with a registered broker-dealer or grant a security interest in some
or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the 1933 Act and who agrees to be
bound by the provisions of this Agreement and, if required under the terms of
such arrangement, such Investor may transfer pledged or secured Securities to
the pledgees or secured parties in compliance with applicable law. Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the applicable Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities.

(c)    Notwithstanding Section 7.5(b), upon the written request of an Investor,
any legend (including the legend set forth in Section 7.5(b) hereof) on the
Shares or Warrant Shares held by such Investor may be removed (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the 1933 Act, (ii) following any sale
of such Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or
Warrant Shares are eligible for sale under Rule 144 without the requirement to
be in compliance

 

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with Rule 144(c)(1), or (iv) if such legend is not required under applicable
requirements of the 1933 Act (including judicial interpretations and
pronouncements issued by the staff of the Commission), subject in the case of
clauses (ii), (iii) and (iv) to receipt from the Investor by the Company and the
Transfer Agent of customary representations reasonably acceptable to the Company
and the Transfer Agent in connection with such request. Upon such request, the
Company shall (A) deliver to the Transfer Agent irrevocable instructions to the
Transfer Agent to remove the legend, and (B) cause its counsel to deliver to the
Transfer Agent one or more legal opinions to the effect that the removal of such
legend in such circumstances may be effected under the 1933 Act if required by
the Transfer Agent to effect the removal of the legend in accordance with the
provisions of this Agreement. If all or any portion of a Common Warrant is
exercised and (i) a registration statement (including the Registration
Statement) covering the resale of such security is then effective under the 1933
Act, (ii) the Warrant Shares issuable upon such exercise are then eligible for
sale under Rule 144 and without the requirement to be in compliance with Rule
144(c)(1), or (iii) if a legend is not required under applicable requirements of
the 1933 Act (including judicial interpretations and pronouncements issued by
the staff of the Commission), then such Warrant Shares shall be issued free of
all legends, subject in the case of clauses (ii) and (iii) to receipt from the
Investor by the Company and the Transfer Agent of customary representations
reasonably acceptable to the Company and the Transfer Agent in connection
therewith. The Company agrees that following the effective date of a
registration statement covering the resale of the Shares and Warrant Shares or
at such time as such legend is no longer required under this Section 7.5(c), it
will, no later than two Trading Days following the delivery by an Investor to
the Company or the Transfer Agent of a request for legend removal and in the
case of a Shares or Warrant Shares evidenced by a physical certificate, the
delivery of the physical certificate, and if relying on Rule 144, receipt from
the Investor by the Company and the Transfer Agent of customary representations
reasonably acceptable to the Company and the Transfer Agent in connection
therewith (such second Trading Day, the “Legend Removal Date”), deliver or cause
to be delivered to such Investor, as may be requested by the Investor, a
certificate or book-entry position evidencing such Shares and Warrant Shares
that is free from all restrictive and other legends or by crediting the account
of the Investor’s or its designee’s account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system if the Company is then a
participant in such system. The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in Section 7(b).

(d)    If the Company fails to deliver any such Shares or Warrant Shares free
from all restrictive legends on or before the applicable Legend Removal Date and
if after the Legend Removal Date, due to the Company’s continuing failure to
deliver such Shares or Warrant Shares, such Investor purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Investor of all or any portion of the Shares or
Warrant Shares anticipated receiving from the Company without any restrictive
legend, then the Company shall pay in cash to the Investor in an amount equal to
the excess of such Investor’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”) over the product of (A) such number of shares of Common Stock the
Company was required to deliver to such Investor by the Legend Removal Date
multiplied by (B) the lowest closing sale price of the Common Stock on any
Trading Day during the period commencing on the date of the delivery by such
Investor to the Company such shares of Common Stock and ending on the date of
such delivery and payment under this clause (ii).

 

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(e)    Each Investor, severally and not jointly with the other Investors, agrees
with the Company (i) that such Investor will sell any Shares or Warrant Shares
pursuant to either the registration requirements of the 1933 Act, including any
applicable prospectus delivery requirements, or an exemption therefrom,
(ii) that if Shares or Warrant Shares are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein, (iii) that if, after the effective date of the registration
statement covering the resale of the Shares and the Warrant Shares, such
registration statement ceases to be effective and the Company has provided
notice to such Investor to that effect, such Investor will sell Shares only in
compliance with an exemption from the registration requirements of the 1933 Act;
and acknowledges that the removal of the restrictive legend from the Shares and
Warrant Shares due to the effectiveness of a registration statement as set forth
in Section 7.5(c) is predicated upon the Company’s reliance upon this Agreement.

7.6.    Subsequent Equity Sales.

(a)    From the date hereof until thirty (30) days after the effective date of
the registration statement covering the resale of the Shares, without the
consent of the Required Investors, the Company shall not (A) issue shares of
Common Stock or Common Stock Equivalents or (B) file with the SEC a registration
statement under the 1933 Act relating to any shares of Common Stock or Common
Stock Equivalents, except pursuant to the Registration Rights Agreement.
Notwithstanding the foregoing, the provisions of this Section 7.6(a) shall not
apply to (i) the issuance of the Securities hereunder, (ii) the issuance of
Common Stock or Common Stock Equivalents upon the conversion or exercise of any
securities of the Company outstanding on the date hereof or outstanding pursuant
to clause (iii) or (iv) below, (iii) the issuance of any Common Stock or Common
Stock Equivalents pursuant to any Company stock-based compensation plans
approved by the Company’s stockholders or in accordance with Nasdaq Stock Market
Rule 5635(c)(4), (iv) the issuance of any Common Stock or Common Stock
Equivalents in connection with a transaction with an unaffiliated third party
approved by the Board that includes a bona fide commercial relationship with the
Company (including any joint venture, marketing or distribution arrangement,
strategic alliance, collaboration agreement or corporate partnering,
intellectual property license agreement or acquisition agreement with the
Company); provided, however, that the aggregate number of shares of Common Stock
issued pursuant to clause (iv) during the restricted period shall not exceed 10%
of the total number of shares of Common Stock issued and outstanding immediately
following the Closing.

(b)    The Company shall not, and shall use its commercially reasonable efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the 1933 Act) that will be integrated with the offer or
sale of the Securities in a manner that would require the registration under the
1933 Act of the sale of the Securities to the Investors, or that will be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any trading market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.

 

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7.7.    Preemptive Rights.

(a)    Subject to the terms and conditions of this Section 7.7 and any
applicable securities laws, if the Company proposes to offer or sell any New
Securities (a “Subsequent Financing”) for cash consideration, indebtedness or a
combination thereof, then each Major Investor shall have the right to purchase
the same securities as are offered in the Subsequent Financing and at the same
price as the securities offered in the Subsequent Financing and on the same
other terms as such securities are offered to other investors in the Subsequent
Financing in an amount of the Subsequent Financing up to the Major Investor’s
Pro-Rata Share (as defined below); provided that if the Subsequent Financing is
an offering that is registered under the 1933 Act, the Major Investor will have
the right to purchase New Securities in a side-by-side private placement. For
purposes of this Agreement, each Major Investor’s “Pro-Rata Share” shall be
equal to the number of Shares and Warrant Shares held by such Major Investor and
its Affiliates plus the number of Warrant Shares then issuable upon exercise of
the Warrants held by such Major Investor and its Affiliates immediately prior to
the closing of the Subsequent Financing (based upon documentation or written
representation reasonably satisfactory to the Company), divided by the total
number of shares of Common Stock outstanding (assuming full conversion and/or
exercise, as applicable, of all Warrants) immediately prior to the closing of
the Subsequent Financing.

(b)    At least five (5) Trading Days prior to the entering into a definitive
agreement for a Subsequent Financing, the Company shall deliver to the Major
Investors a confidential notice of its intention to effect a Subsequent
Financing (the “Subsequent Financing Notice”) describing in reasonable detail
the proposed terms of such Subsequent Financing, such Major Investor’s Pro-Rate
Share and the estimated date and time at which the Company expects to enter into
an definitive agreement for the sale of securities in the Subsequent Financing.

(c)    If a Major Investor desires to participate in a Subsequent Financing,
then such Major Investor must provide a written notice to the Company by not
later than 5:30 p.m. (New York City time) on the third (3rd) Trading Day after
such Major Investor has received a Subsequent Financing Notice, stating the
amount of such Major Investor’s elected participation. If the Company receives
no such notice from a Major Investor within the time period set forth herein,
such Major Investor shall be deemed to have notified the Company that it does
not elect to purchase any securities in connection with such Subsequent
Financing and the Company shall be free to sell such securities in the
Subsequent Financing. The closing of any purchase of New Securities by a Major
Investor shall occur concurrently with the sale of New Securities in the
Subsequent Financing and it shall be a condition to the participation of the
Major Investor in the Subsequent Financing that the Major Investor further agree
to execute such other documents and agreements as may reasonably be requested of
a Major Investor by the Company in connection with a Subsequent Financing.

(d)    Notwithstanding anything to the contrary in this Section 7.7 and unless
otherwise agreed by each Major Investor that has elected to participate in such
Subsequent Financing, in the event the Company determines to abandon a
Subsequent Financing, the Company shall, or shall cause the managing
underwriter(s) or placement agent(s), as the case may be, to confirm such
abandonment to each such Major Investor in the same manner and on the same day
as such abandonment is communicated to other potential investors. If, by the

 

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twentieth (20th) day following delivery of the Subsequent Financing Notice, no
public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, such Subsequent Financing shall be deemed to have been
abandoned and the applicable Major Investors shall be deemed to not be in
possession of any material, non-public information with respect to the proposed
Subsequent Financing by the Company, unless the Company advises the applicable
Major Investors that the Subsequent Financing has not been abandoned. The
Company understands and confirms that the Major Investors may rely on this
Section 7.7(d) when effecting transactions in securities of the Company

(e)    The rights set forth in this Section 7.7 shall remain in effect with
respect to a particular Major Investor as long as such Major Investor and its
Affiliates collectively own fifty percent (50%) or more of the number of shares
of Common Stock owned by the Investor and its Affiliates immediately following
the Closing.

(f)    Notwithstanding the foregoing, this Section 7.7 shall not apply in
respect of an Exempt Issuance and all rights of a Major Investor pursuant to
this Section 7.7 shall terminate upon the occurrence of a Fundamental
Transaction as defined in the Common Warrant.

7.8.    Short Sales and Confidentiality After the Date Hereof. Each Investor
covenants that neither it nor any Affiliates acting on its behalf or pursuant to
any understanding with it will execute any Short Sales during the period from
the date hereof until the earlier of such time as (i) the transactions
contemplated by this Agreement are first publicly announced or (ii) this
Agreement is terminated in full. Each Investor covenants that until such time as
the transactions contemplated by this Agreement are publicly disclosed by the
Company, such Investor will maintain the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of
this transaction).

7.9.    Public Information. At any time during the period commencing from the
six (6) month anniversary of the Closing Date and ending at such time that all
of the Shares and Warrant Shares of an Investor, if a registration statement is
not available for the resale of all of the Shares and Warrant Shares of an
Investor, may be sold without restriction or limitation pursuant to Rule 144 and
without the requirement to be in compliance with Rule 144(c)(1), if the Company
shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1),
including, without limitation, the failure to satisfy the current public
information requirements under Rule 144(c) or (ii) if the Company has ever been
an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (each, a “Public Information Failure”) then, as partial relief for the
damages to any holder of Securities by reason of any such delay in or reduction
of its ability to sell the Shares and Warrant Shares (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to such Investor or its designee an amount in cash equal to one
percent (1.0%) of the aggregate Purchase Price of such holder’s Securities on
the day of a Public Information Failure and on every thirtieth day (pro-rated
for periods totaling less than thirty days) thereafter until the earlier of
(i) the date such Public Information Failure is cured and (ii) such time that
such Public Information Failure no longer prevents a holder of Securities from
selling such Shares and Warrant Shares pursuant to Rule 144 without any
restrictions or limitations. The payments to which a holder shall be entitled
pursuant to this Section 4(p) are referred to herein as “Public Information
Failure Payments.” Public Information Failure

 

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Payments shall be paid on the earlier of (I) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (II) the
third Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event the Company fails to make
Public Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of 1.0% per month (prorated for
partial months) until paid in full.

8.    Survival and Indemnification.

8.1.    Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement for the applicable statute of limitations.

8.2.    Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates and their respective directors, officers, trustees,
members, managers, employees and agents, and their respective successors and
assigns, from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses reasonably incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
which such Person may become subject (i) as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents or (ii) arising from the
Company’s fraud, gross negligence and willful misconduct in connection with the
execution, delivery and performance by the Company of the Transaction Documents
and the offer, issuance and sale of the Closing Securities, and will reimburse
any such Person for all such amounts as they are incurred by such Person.

8.3.    Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the Company of any
claim with respect to which it seeks indemnification and (ii) permit the Company
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided that any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be at
the expense of such person unless (a) the Company has agreed to pay such fees or
expenses, (b) the Company shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such person or (c) in the
reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the Company with
respect to such claims (in which case, if the person notifies the Company in
writing that such person elects to employ separate counsel at the expense of the
Company, the Company shall not have the right to assume the defense of such
claim on behalf of such person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
Company of its obligations hereunder, except to the extent that such failure to
give notice shall materially adversely affect the Company in the defense of any
such claim or litigation. It is understood that the Company shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. The Company will not, except with the consent of the
indemnified party, which consent shall not be unreasonably withheld, conditioned
or delayed,

 

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consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. No indemnified party will, except with the consent of the
Company, consent to entry of any judgment or enter into any settlement.

9.    Miscellaneous.

9.1.    Successors and Assigns. This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or each of the
Investors, as applicable, provided, however, that an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some or all of its Securities in a transaction
complying with applicable securities laws without the prior written consent of
the Company or the other Investors, provided such assignee agrees in writing to
be bound by the provisions hereof that apply to Investors. The provisions of
this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Without limiting the generality
of the foregoing, in the event that the Company is a party to a merger,
consolidation, share exchange or similar business combination transaction in
which the Common Stock is converted into the equity securities of another
Person, from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the obligations
of the Company hereunder, the term “Company” shall be deemed to refer to such
Person and the term “Securities” shall be deemed to refer to the securities
received by the Investors in connection with such transaction. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective permitted successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

9.2.    Counterparts; Faxes; E-mail. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile or e-mail, which shall be deemed an original.

9.3.    Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

9.4.    Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such
notice shall be deemed given upon such delivery, (ii) upon delivery, if given by
facsimile, so long as the sender receives a machine generated notice of
delivery, (iii) upon delivery, if delivered by e-mail so long as the send does
not receive an automatically generated notice of delivery failure, (iv) if given
by mail, then such notice shall be deemed given upon the earlier of (A) receipt
of such notice by the recipient or (B) three days after such notice is deposited
in first class mail, postage prepaid, and (v) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one
Business Day after delivery to such carrier. All notices shall be addressed to
the party to be notified at the address as follows, or at such other address as
such party may designate by ten days’ advance written notice to the other party:

 

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If to the Company:

Aileron Therapeutics, Inc.

490 Arsenal Way

Watertown, Massachusetts 02472

Attention: Chief Financial Officer

Email: ddougherty@aileronrx.com

With a copy to:

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Attention: Stuart M. Falber

Email: stuart.falber@wilmerhale.com

If to the Investors:

to the addresses set forth on the signature pages hereto.

9.5.    Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith regardless of whether the transactions contemplated hereby
are consummated; it being understood that each of the Company and each Investor
has relied on the advice of its own respective counsel.

9.6.    Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and (a) prior to the Closing, Investors that
agreed to purchase a majority of the Shares to be issued and sold pursuant to
this Agreement and (b) following the Closing, the Required Investors.
Notwithstanding the foregoing, this Agreement may not be amended and the
observance of any term of this Agreement may not be waived with respect to any
Investor without the written consent of such Investor unless such amendment or
waiver applies to all Investors in the same fashion. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon (i) prior to
Closing, each Investor and (ii) following the Closing, each holder of any
Securities purchased under this Agreement at the time outstanding, and in each
case, each future holder of all such Securities and the Company.

9.7.    Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Investors
without the prior consent of the Company (which consent shall not be
unreasonably withheld), except for such disclosure to Affiliates or limited
partners on a non-public basis consistent with public disclosure by the Company
and as such release or announcement may be required by law or the applicable
rules or regulations of any securities exchange or securities market, in which
case the Investors shall allow the Company, to the extent reasonably practicable
in the circumstances, reasonable time to comment on such release or announcement
in advance of such issuance. The Company shall not include the name of any
Investor in any press release or public announcement

 

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(which, for the avoidance of doubt, shall not include any SEC Filing) without
the prior written consent of such Investor. By the Disclosure Time, the Company
shall issue a press release disclosing all material terms of transactions
contemplated by this Agreement (the “Press Release”). No later than 5:30 p.m.
(New York City time) on the first Business Day following the date this Agreement
is executed, the Company will file a Current Report on Form 8-K (the “8-K
Filing”) attaching the press release described in the foregoing sentence as well
as copies of the Transaction Documents. In addition, the Company will make such
other filings and notices in the manner and time required by the SEC or Nasdaq.
The parties acknowledge that from and after the issuance of the Press Release,
no Investor shall be in possession of any material, nonpublic information
received from the Company or any of its respective officers, directors,
employees or agents, with respect to the transactions contemplated hereby that
is not disclosed in the Press Release. The Company shall not, and shall cause
each of its officers, directors, employees and agents, not to, provide any
Investor with any such material, nonpublic information regarding the Company
from and after the filing of the Press Release without the express prior written
consent of such Investor.

9.8.    Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

9.9.    Entire Agreement. This Agreement, including the signature pages,
Exhibits and the Disclosure Schedules, and the other Transaction Documents
constitute the entire agreement among the parties hereof with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.

9.10.    Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

9.11.    Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any

 

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objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.

9.12.    Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Closing Securities pursuant to the Transaction Documents has been made
by such Investor independently of any other Investor. Nothing contained herein
or in any Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no Investor will be acting as agent of such Investor in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Investors has been provided with the same Transaction Documents
for the purpose of closing a transaction with multiple Investors and not because
it was required or requested to do so by any Investor.

9.13.    Limitation of Liability. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such Investor shall be personally liable for any liabilities of such
Investor.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

COMPANY:   AILERON THERAPEUTICS, INC.   By:  

/s/ Manuel C. Alves Aivado

  Name:   Manuel C. Alves Aivado   Title:   Chief Executive Officer

--------------------------------------------------------------------------------

INVESTOR:   SATTER MEDICAL TECHNOLOGY PARTNERS, L.P.   By:   Satter Medical
Technology GP, L.P.   Its:   General Partner   By:   Satter Medical Technology
UGP, LLC   Its:   General Partner   By:   Muneer A. Satter Revocable Trust  
Its:   Managing Member   By:  

/s/ Muneer A. Satter

  Name:   Muneer A. Satter   Title:   Trustee INVESTOR:   ARMISTICE CAPITAL
MASTERFUND LLC   By:  

/s/ Anthony Cordone

  Name:   Anthony Cordone   Title:   CFO INVESTOR:   Jennison Global Healthcare
Master Fund, Ltd.   By:   Jennison Associates LLC, as the Investment Manager of
Jennison Global Healthcare Master Fund, Ltd.   By:  

/s/ David Chan

  Name:   David Chan   Title:   Managing Director of Jennison Associates LLC
INVESTOR:   Prudential Sector Funds, Inc. - PGIM Jennison Health Sciences Fund  
By:   Jennison Associates LLC, as the Subadvisor of Prudential Sector Funds,
Inc. - PGIM Jennison - Health Sciences Fund   By:  

/s/ David Chan

  Name:   David Chan   Title:   Managing Director of Jennison Associates LLC
INVESTOR:   Jenop Global Healthcare Fund Limited   By:   Jennison Associates
LLC, as the Investment Manager of Jenop Global Healthcare Fund Limited   By:  

/s/ David Chan

  Name:   David Chan   Title:   Managing Director of Jennison Associates LLC
INVESTOR:     By:  

/s/ Scott Kapnick

  Name:   Scott Kapnick   Title:   INVESTOR:   SABBY VOLATILITY WARRANT MASTER
FUND, LTD.   By:  

/s/ Robert Grundstein

  Name:   Robert Grundstein   Title:   COO of Investment Manager INVESTOR:  
SIGMA EMERGING MARKETS LTD.   By:  

/s/ Rafael Urquia II

  Name:   Rafael Urquia II   Title:   Secretary INVESTOR:   CVF, LLC   By:  

/s/ Gerrit Adams

  Name:   Gerrit Adams   Title:   Senior Associate INVESTOR:   Empery Asset
Master, LTD   By:   Empery Asset Management, LP, its authorized agent   By:  

/s/ Brett S. Director

  Name:   Brett S. Director   Title:   General Counsel of Empery Asset
Management, LP INVESTOR:   Empery Tax Efficient, LP   By:   Empery Asset
Management, LP, its authorized agent   By:  

/s/ Brett S. Director

  Name:   Brett S. Director   Title:   General Counsel of Empery Asset
Management, LP INVESTOR:   Empery Tax Efficient II, LP   By:   Empery Asset
Management, LP, its authorized agent   By:  

/s/ Brett S. Director

  Name:   Brett S. Director   Title:   General Counsel of Empery Asset
Management, LP INVESTOR:   Lincoln Park Capital Fund, LLC   By:   Lincoln Park
Capital LLC   By:   Rockledge Capital Corporation   By:  

/s/ Joshua Scheinfeld

  Name:   Joshua Scheinfeld   Title:   President INVESTOR:   DAFNA Lifescience
LP   By:  

/s/ Fariba Ghodsian

  Name:   Fariba Ghodsian   Title:   C.I.O. INVESTOR:   DAFNA Lifescience Select
LP   By:  

/s/ Fariba Ghodsian

  Name:   Fariba Ghodsian   Title:   C.I.O. INVESTOR:   Intracoastal Capital LLC
  By:  

/s/ Keith Goodman

  Name:   Keith Goodman   Title:   Authorized Signatory INVESTOR:   CVI
Investments Inc.   By:   Heights Capital Management Its Authorized Agent   By:  

/s/ Martin Kobinger

  Name:   Martin Kobinger   Title:   Investment Manager INVESTOR:     By:  

/s/ Josef von Rickenbach

  Name:   Josef von Rickenbach   Title:   Mg. Dir. INVESTOR:   Terry J. Gottlieb
Revocable Trust   By:  

/s/ Terry Gottlieb

  Name:   Terry Gottlieb   Title:   Trustee

--------------------------------------------------------------------------------

Investor Information   Entity Name:   Contact Person:   Address:   City:  
State:   Zip Code:   Telephone:   Facsimile:   Email:   Tax ID # or Social
Security #:   Name in which Securities should be issued:  

 

33

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EXHIBIT A

Schedule of Investors

 

Investor Name and Address

  Number of
Shares to
be
Purchased     Number of
Common Warrant
Shares
Underlying
Common
Warrants
Purchased     Number of
Pre-Funded
Warrants to be
Purchased     Number of
Pre-Funded
Warrant
Shares Underlying
Pre-Funded
Warrants
Purchased     Number of Common
Warrant Shares
Underlying
Common Warrants
Purchased     Aggregate
Purchase Price of
Closing Securities   Satter Medical Technology Partners, L.P.
676 N. Michigan Avenue, Suite 4000
Chicago IL, 60611     3,731,343       3,731,343       0       0       0     $
7,499,999.43   Armistice Capital Masterfund LLC
510 Madison Ave. 7th Floor
New York, NY 10022     2,137,089       2,137,089       1,096,741       1,096,741
      1,096,741     $ 6,499,998.30   Prudential Sector Funds, Inc. - PGIM
Jennison Health Sciences Fund
c/o Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017     895,522       895,522       0       0       0     $
1,799,999.22   Jennison Global Healthcare Master Fund, Ltd.
c/o Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017     402,985       402,985       0       0       0     $
809,999.85   Jenop Global Healthcare Fund Limited
c/o Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017     243,781       243,781       0       0       0     $
489,999.81   Scott Kapnick
[**]     1,492,537       1,492,537       0       0       0     $ 2,999,999.37  
SABBY VOLATILITY WARRANT MASTER FUND, LTD.
10 Mountainview Road, Suite 208
Upper Saddle River, NJ 07458     995,024       995,024       0       0       0  
  $ 1,999,998.24  

Sigma Emerging Markets Ltd.
OMC Chambers, Wickhams Cay 1
Road Town, Tortola
British Virgin Islands
Attn.: Jaime J. Montealegre

 

WITH A COPY TO:

 

Fox Horan & Camerini LLP
Attn.: Rafael Urquia II, Esq.
885 Third Avenue, 17th Floor
New York, NY 10022

    621,890       621,890       0       0       0     $ 1,249,998.90   CVF, LLC
222 N. LaSalle St, Suite 2000
Chicago, IL 60601     547,268       547,268       0       0       0     $
1,100,008.68  

 

34

--------------------------------------------------------------------------------

Empery Tax Efficient II, LP
By: Empery Asset Management, LP, its
authorized agent
One Rockefeller Plaza, Suite 1205
New York City, NY 10020     148,404       148,404       0       0       0     $
298,292.04   Empery Asset Master, LTD
By: Empery Asset Management, LP, its
authorized agent
One Rockefeller Plaza, Suite 1205
New York City, NY 10020     82,944       82,944       0       0       0     $
166,717.44   Empery Tax Efficient, LP
By: Empery Asset Management, LP, its
authorized agent
One Rockefeller Plaza, Suite 1205
New York City, NY 10020     17,408       17,408       0       0       0     $
34,990.08   Lincoln Park Capital Fund, LLC
440 N. Wells St., Suite 410
Chicago, IL 60654     199,004       199,004       0       0       0     $
399,998.04   DAFNA Lifescience LP
10990 Wilshire Blvd., Suite 1400
Los Angeles, CA 90024
    69,652       69,652       0       0       0     $ 140,000.52   DAFNA
Lifescience Select LP
10990 Wilshire Blvd., Suite 1400
Los Angeles, CA 90024     29,850       29,850       0       0       0     $
59,998.50   Intracoastal Capital LLC
2211A Lakeside Dr. 
Bannockburn, IL 60015     74,626       74,626       0       0       0     $
149,998.26   CVI Investments Inc.,
by Heights Capital Management its Authorized Agent
101 California St., Suite 3250
San Francisco, CA 94111     74,626       74,626       0       0       0     $
149,998.26  

Josef von Rickenbach

[**]

    49,752       49,752       0       0       0     $ 100,001.52   Terry J.
Gottlieb Revocable Trust
9913 Casabella Way
Bonita Springs, FL 34135     24,877       24,877       0       0       0     $
50,002.77    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

    11,838,582       11,838,582       1,096,741       1,096,741       1,096,741
    $ 25,999,999.23    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

35

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EXHIBIT B

Form of Common Warrant

 

36

--------------------------------------------------------------------------------

EXHIBIT C

Form of Pre-Funded Warrant

 

37

--------------------------------------------------------------------------------

EXHIBIT D

Registration Rights Agreement

 

38

--------------------------------------------------------------------------------

EXHIBIT E

Investor Questionnaire

 

39

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Disclosure Schedules

None.

 

40