Securities Purchase Agreement, dated August 5, 2008



 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this
“Agreement”) is dated as of August 5, 2008 by and among Achillion Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and the several purchasers identified in the attached Exhibit A (each a
“Purchaser” and, collectively, the “Purchasers”). 
 WHEREAS, the Company desires to issue and sell to the
Purchasers an aggregate of (i) 10,714,655 shares (the “Shares”) of the authorized but unissued shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”); (ii) warrants in the
form attached hereto as Exhibit B to purchase an aggregate of 2,678,664 shares of Common Stock (each, a “Common Warrant” and collectively, the “Common Warrants”); and (iii) warrants in the form attached
hereto as Exhibit C to purchase an aggregate of 3,679,078 Units (as defined below) of the Company (each, a “Unit Warrant” and collectively, the “Unit Warrants”); and 
 WHEREAS, the Purchasers, severally and not jointly, wish to purchase the Shares, the Common Warrants and the Unit Warrants on the terms and subject to
the conditions set forth in this Agreement. 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 1.1: 
 “Action” shall have the meaning ascribed to such term in Section 3.1(j). 
 “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled
by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. 
 “Board of
Directors” means the Company’s board of directors, as constituted from time to time. 
 “Closing” means the closing of the purchase and sale of the Closing Securities pursuant to Section 2.1. 
 “Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Closing Securities have been satisfied or waived. 









 “Closing Securities” means the Shares, the Common Warrants and the Unit
Warrants. 
 “Commission” means the Securities and Exchange Commission. 
 “Common Stock” shall have the meaning ascribed to such term in the recitals to this Agreement. 
 “Common Stock Equivalents” means any securities of the Company that 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 exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock. 
 “Common Warrants” shall have the meaning ascribed to such term in the recitals to this
Agreement. 
 “Common Warrant Shares” means the shares of Common Stock issuable upon exercise of the Common
Warrants. 
 “Company Counsel” means Wilmer Cutler Pickering Hale & Dorr LLP, with offices located
at 1100 Winter Street, Waltham, Massachusetts 02451. 
 “Company Intellectual Property Rights” shall have the
meaning ascribed to such term in Section 3.1(p). 
 “Disclosure Schedules” shall have the meaning
ascribed to such term in Section 3.1. 
 “Effective Date” means the date that a Registration Statement
filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission. 
 “Environmental Laws” shall have the meaning ascribed to such term in Section 3.1(ii). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
 “FDA” shall have the meaning ascribed to such term in Section 3.1(n)(i). 
 “GAAP” shall have the meaning ascribed to such term in Section 3.1(h). 
 “IRA” means the Second Amended and Restated Investor Rights Agreement, dated as of November 17, 2005, by and among the Company and the Holders identified therein. 
  

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 “IRA Amendment” means an amendment to amend and restate the IRA, duly
executed by the Company and the requisite Holders (as defined in the IRA), in the form of Exhibit D attached hereto. 
 “knowledge” means, with respect to any person, what such person actually knows or reasonably should know, and, in the case of a corporation or other entity, what its executive officers and directors actually know or
reasonably should know. 
 “Legend Removal Date” shall have the meaning ascribed to such term in
Section 4.1(c). 
 “Liens” means a lien, charge, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including conditional sale or other retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). 
 “Majority Purchasers” means (i) prior to the Closing, Purchasers which agreed to purchase an aggregate of greater
than fifty percent (50%) of the Shares to be issued and sold pursuant to this Agreement and (ii) following the Closing, Purchasers which, at any given time, hold greater than fifty percent (50%) of the outstanding Shares issued and
sold pursuant to this Agreement that have not been resold pursuant to an effective Registration Statement or Rule 144. 
 “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). 
 “Non-Disclosure Agreements” means the non-disclosure agreements entered into by the Company with the Purchasers in connection with the transactions contemplated by this Agreement. 
 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or sub-division thereof) or other entity of any kind. 
 “Purchaser Party” shall have the meaning ascribed to such term in Section 4.8. 
 “Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit E attached hereto. 
 “Registration Statement” means a registration statement meeting the requirements set forth in Section 2(a) of the
Registration Rights Agreement, including without limitation, covering the resale of the Shares and/or the Underlying Shares, as applicable, by the Purchasers as provided for in the Registration Rights Agreement. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 
  

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 “Required Minimum” means, as of any date, the maximum aggregate number
of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Common Warrants, all Unit Warrants and all Unit Common Warrants,
in each case ignoring any exercise limits set forth therein. 
 “Rule 144” means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
 “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h). 
 “Securities” means the Shares, the Common Warrants, the Common Warrant Shares, the Unit Warrants, the Units, the Unit
Shares, the Unit Common Warrants and Unit Common Warrant Shares. 
 “Securities Act” means the Securities Act
of 1933, as amended. 
 “Shares” shall have the meaning ascribed to such term in the recitals to this
Agreement. 
 “Short Sales” shall include all “short sales” as defined in Rule 200 of Regulation
SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 
 “Subscription Amount” means, as to a Purchaser, the aggregate amount to be paid for the Closing Securities purchased hereunder as specified opposite such Purchaser’s name on Exhibit A
attached hereto, under the column entitled “Aggregate Purchase Price of Closing Securities,” in United States Dollars and in immediately available funds. 
 “Trading Affiliate” shall have the meaning assigned to such term in Section 3.2(f). 
 “Trading Day” means a day on which the Common Stock is traded on a Trading Market. 
 “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the Nasdaq Capital Market, the Nasdaq Global Market or the New York Stock Exchange. 
 “Transaction Documents” means this Agreement, the Common Warrants, the Unit Warrants, the Unit Common Warrants and the Registration Rights Agreement. 
 “Underlying Shares” means the Common Warrant Shares, the Unit Shares and the Unit Common Warrant Shares. 
 “Unit” means one share of Common Stock and one Common Warrant. 
  

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 “Unit Common Warrant” means the Common Warrant contained within a Unit.

 “Unit Common Warrant Shares” means the shares of Common Stock issuable upon exercise of the Unit Common
Warrants. 
 “Unit Share” means the share of Common Stock contained within a Unit. 
 “Unit Warrant” shall have the meaning ascribed to such term in the recitals to this Agreement. 
 ARTICLE II 
 PURCHASE AND SALE 

 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company will issue and sell,
and the Purchasers will purchase, severally and not jointly, (i) the number of Shares set forth opposite the name of such Purchaser under the heading “Number of Shares to be Purchased” on Exhibit A attached hereto at a price
per Share equal to $2.82, (ii) Common Warrants to purchase one-quarter of a share of Common Stock for every one Share purchased at Closing at a price per Common Warrant equal to $0.03125, and (iii) a Unit Warrant to purchase the number of
Units set forth opposite the name of such Purchaser under the heading “Number of Units Underlying Unit Warrants Purchased” on Exhibit A attached hereto (which number of Units issuable upon exercise of the Unit Warrants shall be
subject to adjustment as provided in the Unit Warrants) at a price per Unit Warrant equal to $0.05365. Each Purchaser shall deliver to the Company via wire transfer of immediately available funds pursuant to wire instructions sent by the Company to
each Purchaser on or prior to the Closing Date, an amount equal to the Subscription Amount. The Closing shall take place as soon as practicable upon satisfaction or waiver of the conditions set forth in Section 2.3, but in any event no later
than 5:00 pm (Eastern Time) on August 15, 2008, remotely via exchange of documents and signatures. 
 2.2 Deliveries. 

(a) On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following: 
 (i) Shares registered in the names of the Purchaser, in an amount equal to number of Shares set forth opposite the name of such Purchaser
under the heading “Number of Shares to be Purchased” on Exhibit A attached hereto; 
 (ii) a Common Warrant,
substantially in the form of Exhibit B attached hereto, registered in the name of such Purchaser, to purchase up to the number of Common Warrant Shares set forth opposite the name of such Purchaser under the heading “Number of Common
Warrant Shares Underlying Common Warrants Purchased” on Exhibit A attached hereto; and 
  

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 (iii) a Unit Warrant, substantially in the form of Exhibit C attached hereto,
registered in the name of the Purchaser, to purchase up to the number of Units set forth opposite the name of such Purchaser under the heading “Number of Units Underlying Unit Warrants Purchased” on Exhibit A attached hereto (which
number of Units issuable upon exercise of the Unit Warrants shall be subject to adjustment as provided in the Unit Warrants). 
 (b) On the Closing Date, each Purchaser 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 Purchaser by the
Company on or prior to the Closing Date. 
 2.3 Closing Conditions. 
 (a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met, any or all
of which may be waived by the Company in writing: 
 (i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein; 
 (ii) all obligations, covenants and agreements of the
Purchasers required to be performed at or prior to the Closing Date shall have been performed; and 
 (iii) the delivery by
the Purchasers of the Registration Rights Agreement duly executed by such Purchaser. 
 (b) The obligations of each Purchaser
hereunder in connection with the Closing are subject to the following conditions being met, any or all of which may be waived by the Majority Purchasers in writing: 
 (i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained herein;

 (ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date
shall have been performed; 
 (iii) the delivery by the Company to such Purchaser of the following items: 
 (A) a legal opinion of Company Counsel, substantially in the form of Exhibit F attached hereto; 
 (B) a certificate, dated the Closing Date, duly executed by an officer of the Company to the effect that the conditions specified in
Sections 2.3(b)(i) and 2.3(b)(ii) have been satisfied; 
 (C) the IRA Amendment duly executed by the Company and the
requisite Holders (as defined in the IRA) necessary in order to amend and restate the IRA in the form attached hereto as Exhibit D; and 
  

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 (D) the Registration Rights Agreement duly executed by the Company. 
 (iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and 
 (v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the
Company’s principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material
adverse change in the financial markets which, in each case, makes it impracticable or inadvisable to purchase the Closing Securities at the Closing. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the disclosure schedules delivered to
each Purchaser concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof, and except as otherwise described in the SEC Reports, which qualify the following representations and
warranties in their entirety, the Company hereby makes the representations and warranties set forth below to each Purchaser. 
 (a) Subsidiaries. The Company does not own or control, directly or indirectly, any interest in any other Person. The Company is not a participant in any joint venture, partnership or similar arrangement. 
 (b) Organization and Qualification. Except as described in Schedule 3.1(b), the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or
default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to
result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, condition (financial or otherwise) or prospects
of the Company or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 
  

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 (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required by the Company, its board of directors or
its stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate of incorporation, bylaws or other organizational or charter documents, or
(ii) subject to the Required Approvals and assuming the accuracy of the representations and warranties in Section 3.2, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, or (iii) 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 upon any of the properties or assets of the Company, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other agreement or understanding to which the Company is
a party or by which any property or asset of the Company is bound or affected; except in the case of clause (iii), such as could not have a Material Adverse Effect. 
 (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 4.5, (ii) the filing with the Commission of any Registration Statements and any other filings required pursuant to the Registration Rights Agreement, (iii) the notice and/or
application(s) to each applicable Trading Market for the issuance and sale of the Closing Securities and the listing of the Shares and the Underlying Shares for trading thereon in the time and manner required thereby and (iv) the filing of a
Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”). 
  


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 (f) Issuance of the Securities. The Closing Securities have been duly authorized
for issuance and sale to the Purchasers pursuant to this Agreement and, when issued and delivered by the Company against payment therefor in accordance with the terms of this Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of all Liens. The Common Warrant Shares, the Units, the Unit Shares, the Unit Common Warrants and the Unit Common Warrant Shares have been duly and validly authorized and reserved for issuance and, upon
exercise of the Common Warrants, the Unit Warrants and the Unit Common Warrants, as applicable, in accordance with their terms, including the payment of any exercise price therefor, will be validly issued, fully paid and nonassessable and will be
sold free and clear of any Liens. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Shares and the Underlying Shares at least equal to the Required Minimum on the date hereof. The
Company has not, and to the knowledge of the Company, no Affiliate of the Company has sold, offered for sale or solicited offers to buy or otherwise negotiated in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of any of the Securities in a manner that would require the registration under the Securities Act of the sale of any of the Securities to the Purchasers, or that would be integrated with the offer or sale
of any of the Securities for purposes of the rules and regulations of any Trading Market. 
 (g) Capitalization.
Schedule 3.1(g) sets forth the number of authorized and outstanding shares of the Company’s capital stock and outstanding Common Stock Equivalents. The Company has not issued any capital stock since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plan and pursuant
to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
  

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 (h) SEC Reports; Financial Statements. Except as described on Schedule 3.1(h), the
Company has complied with requirements to file all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of rules and regulations of
the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
The Company has not provided to the Purchasers any material non-public information or other 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 by this Agreement and which is covered by the Non-Disclosure Agreements. 
 (i) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports (i) there has been no event, occurrence or development that could have a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not materially altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. Except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists with
respect to the Company or its business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable federal securities laws at the time this representation is made that has not been publicly
disclosed. 
  

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 (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against the Company or any of its properties or intellectual property rights before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could
reasonably be expected to have a Material Adverse Effect. Neither the Company nor any director or executive officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or executive
officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any outstanding registration statement filed by the Company under the Exchange Act or the Securities Act. 
 (k) Employee Benefit Plans; Employee Matters. The consummation of the transactions contemplated by this Agreement will not
(i) entitle any current or former employee or other service provider of the Company to severance benefits or any other payment, compensation or benefit (including forgiveness of indebtedness), except as expressly provided by this Agreement, or
(ii) accelerate the time of payment or vesting, or increase the amount of compensation or benefit due any such employee or service provider, alone or in conjunction with any other possible event (including termination of employment). Except as
set forth on Schedule 3.1(k), the Company does not have any employment agreements, or any other similar agreements that contain any severance or termination pay liabilities or obligations, that are not filed as exhibits to the SEC Documents and that
have annual cash compensation in excess of $100,000 or that have potential severance or termination liabilities in excess of $50,000 per person. The Company is in compliance in all material respects with all U.S. federal, state, local and foreign
laws and regulations respecting employment, discrimination in employment, terms and conditions of employment, wages, hours and occupational safety and health and employment practices, and is not engaged in any unfair labor practice. To the
Company’s knowledge, no employees of the Company are in violation of any term of any material employment contract, patent disclosure agreement, noncompetition agreement, or any restrictive covenant to a former employer relating to the right of
any such employee to be employed by the Company because of the nature of the business conducted or presently proposed to be conducted by the Company or to the use of trade secrets or proprietary information of others. No key employee of the Company
has given written notice to the Company, and the Company is not otherwise aware, that any such key employee intends to terminate his or her employment with the Company. 
 (l) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, and the Company is
not a party to a collective bargaining agreement. No executive officer or key employee is, or, to the knowledge of the Company, is expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or
proprietary information and inventions agreement or non-competition agreement, or any other contract or 

  

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agreement or any restrictive covenant, and the continued employment of such executive officer or key employee does not subject the Company to any liability
with respect to any of the foregoing matters. 
 (m) Compliance. The Company (i) is not in violation of any order
of any court, arbitrator or governmental body, (ii) is not or has not been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its
business, employees, wages and all such laws that affect the environment, or (iii) is not in default under or in violation of (and no event has occurred that, with notice or lapse of time or both, would result in a default by the Company
under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived); except in the case of clauses (ii) and (iii), such as could not reasonably be expected to have a Material Adverse Effect. 
 (n) Regulatory Compliance. 
 (i) The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as described in the SEC
Reports, including without limitation, and as applicable, all such certificates, authorizations and permits required by the United States Food and Drug Administration (the “FDA”) or any other federal, state or foreign agencies or
bodies engaged in the regulation of pharmaceuticals or biohazardous materials, except where the failure to possess could not reasonably be expected to have a Material Adverse Effect. The Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit. 
 (ii) The Company has not received any
written notices or statements from the FDA or any other governmental agency that (i) any new drug application or marketing authorization application for any product or potential product of the Company is or has been rejected or determined to be
non-approvable in a final determination by any such regulatory authority; (ii) any license, approval, permit or authorization to conduct any clinical trial of or market any product or potential product of the Company has been, will be or may be
suspended, revoked, modified or limited. 
 (iii) To the Company’s knowledge, and to the extent submitted by the Company
in an application to support regulatory approval, the preclinical and clinical testing, application for marketing approval of, manufacture, distribution, promotion and sale of the products and potential products of the Company is in compliance, in
all material respects, with all laws, rules and regulations applicable to such activities, including without limitation applicable good laboratory practices, good clinical practices and good manufacturing practices. The descriptions of the results
of such tests and trials contained in the SEC Reports are accurate in all material respects. The Company has not received any written notice of adverse finding, warning letter or clinical hold notice from the FDA or any non-U.S. counterpart of any
of the foregoing, or any untitled letter or other correspondence or notice from the FDA or any other governmental authority or agency or any institutional or ethical review board alleging or 

  

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asserting noncompliance with any law, rule or regulation applicable in any jurisdiction. The Company has not, either voluntarily or involuntarily, initiated,
conducted or issued, or caused to be initiated, conducted or issued, any recall, field correction, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, or other notice or action relating to an alleged or potential
lack of safety or efficacy of any product or potential product of the Company, any alleged product defect of any product or potential product of the Company, or any violation of any material applicable law, rule, regulation or any clinical trial or
marketing license, approval, permit or authorization for any product or potential product of the Company, and the Company has no knowledge of any facts that would reasonably cause it to initiate any such notice or action and has no knowledge or
reason to believe that the FDA or any other governmental agency or authority or any institutional or ethical review board or other non-governmental authority intends to impose, require, request or suggest such notice or action. 
 (o) Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it and good and
marketable title in all personal property owned by it, in each case free and clear of all Liens, except as disclosed on Schedule 3.1(o). Any real property and facilities held under lease by the Company are held by it under valid, subsisting and
enforceable leases of which the Company is in compliance. 
 (p) Intellectual Property. The Company solely owns, or has
sufficient rights to use and otherwise exercise, exploit and license all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses, domain names, and similar rights
necessary or material for use in connection with its business, as currently conducted (collectively, the “Company Intellectual Property Rights”). There are no outstanding options, licenses, agreements, claims, encumbrances or shared
ownership of interests of any kind relating to material Company Intellectual Property Rights, nor is the Company bound by or a party to any material options, licenses or agreements of any kind with respect to the patents, trademarks, service marks,
trade names, domain names, copyrights, trade secrets, licenses, information, proprietary rights and/or processes of any other person or entity. The Company has not received a written notice that the Intellectual Property Rights used by the Company
violates or infringes upon the rights of any Person, and Company does not have any specific basis to believe any such notice may be forthcoming. To the Company’s knowledge, all such Company Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Company Intellectual Property Rights. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties. Each
present and former employee and officer of the Company has executed a proprietary information and inventions agreement, and each consultant to the Company has executed a Consulting Agreement either in the forms provided to Purchaser’s counsel
or a substantially similar form. The Company is not aware that any of its present and former employees, officers or consultants are in violation thereof, and the Company will use its commercially reasonable efforts to prevent any such violation. All
persons who have had access to Company trade secrets or confidential information have signed a customary non-disclosure and non-use agreement in the form previously provided to the Purchasers. 
 (q) Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which the Company is engaged, including, but not limited to, directors and 

  

 13 








 
officers insurance coverage. Such insurance contracts and policies are accurate and complete. The Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business. 
 (r) Transactions With Affiliates and Employees. None of the executive officers or directors of the Company and, to the knowledge of
the Company, none of the employees of the Company is presently a party to any transaction with the Company (other than for services as employees, executive 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 executive officer, director or such employee or any entity in which any executive officer, director, or
any such employee has a substantial interest or is an executive officer, director, trustee or partner other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company. 
 (s) Sarbanes-Oxley. The Company is in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and all applicable rules and regulations promulgated by the
Commission thereunder, which are applicable to it as of the Closing Date. The Company maintains a system of internal controls, including, but not limited to, disclosure controls and procedures, internal controls over accounting matters and financial
reporting (collectively, “Internal Controls”) that comply with the Securities Act, the Exchange Act, Sarbanes-Oxley, and the rules and regulations of the Nasdaq Global Market. The Internal Controls are overseen by the Audit
Committee of the Board of Directors in accordance with the rules and regulations of the Nasdaq Global Market. The Company has not publicly disclosed or reported to the Audit Committee or the Board of Directors, a significant deficiency, material
weakness, change in Internal Controls, any violation of, or failure to comply with, applicable securities laws, or any matter which, if determined adversely, would reasonably be expected to have a Material Adverse Effect. 
 (t) Certain Fees. Except for Lazard Frères & Co. LLC, no brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. Such Purchaser shall have no
obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 (u) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules
and regulations of the Trading Market. 
  

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 (v) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act. 
 (w) Registration Rights. Except as set forth on
Schedule 3.1(w), other than the Purchasers, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. The granting and performance of the registration rights under the
Transaction Documents will not violate or conflict with, or result in a breach of any provision of, or constitute a default under, any agreement, indenture or instrument to which the Company is a party. 
 (x) Listing and Maintenance Requirements. The Company has not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. 
 (y)
Disclosure. The Company understands and confirms that such Purchaser will rely on the foregoing representations and covenants in effecting transactions in the Securities. All disclosure provided to such Purchaser regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company with respect to the representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in the Transaction Documents.

 (z) Tax Status. The Company has filed all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes owed thereunder, and the Company has no knowledge of a tax deficiency or other tax liability which has been asserted or threatened against the Company or upon any of its properties or assets. The Company has complied
with all applicable legal requirements relating to the payment and withholding of taxes and, within the time and in the manner prescribed by law, has withheld from wages, fees and other payments and paid over to the proper governmental or regulatory
authorities all amounts required. 
 (aa) No General Solicitation. Neither the Company nor any person acting on behalf
of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers. 
 (bb) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful 

  

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expenses related to foreign or domestic political activity, (ii) made any direct or indirect unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law, (iv) violated, or is in violation of, in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (v) made or received any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to or from any domestic or foreign government official or employee. 
 (cc) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that such Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby. The Company further acknowledges that such Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser’s
purchase of the Securities. 
 (dd) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Section 4.10 hereof), it is understood and agreed by the Company (i) that such Purchaser has not been asked to agree, nor has such Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other
transactions by such Purchaser, including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the
Company’s publicly-traded securities; (iii) that such Purchaser, and counter parties in “derivative” transactions to which such Purchaser is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) that such Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that
(a) such Purchaser may engage in hedging activities at various times during the period that the Securities are outstanding and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests
in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities, if conducted in compliance with applicable law (including federal securities laws), do not
constitute a breach of any of the Transaction Documents. 
 (ee) Manipulation of Price. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, nor will take, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities (other than for the placement agent’s placement of the Securities), or (iii) paid or agreed
to pay to any person any compensation for soliciting another to purchase any other securities of the Company. 
  

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 (ff) Form S-3 Eligibility. The Company is not eligible to register the resale of
the Shares and the Underlying Shares, as applicable, pursuant to Form S-3 promulgated under the Securities Act, but reasonably expects to be eligible to use Form S-3 to register such resales no later than October 1, 2008. 
 (gg) Books and Records. The minute books of the Company for the Company’s fiscal years 2006, 2007 and year-to-date 2008
contain accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the Board of Directors and committees of the Board of Directors during such period, and no meeting of any such stockholders, the Board of
Directors or such committees has been held for which minutes have not been prepared and are not contained in such minute books. 
 (hh) Accountants. PricewaterhouseCoopers LLP, whose report on the financial statements of the Company was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, are independent registered
public accountants as required by the Securities Act and the rules and regulations of the Commission. Except as preapproved in accordance with the requirements set forth in Section 10A of the Exchange Act, to the Company’s knowledge,
PricewaterhouseCoopers LLP has not engaged in any “prohibited activities” (as defined in Section 10A of the Exchange Act) on behalf of the Company. 
 (ii) Environmental. The Company is in material compliance with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the environment (“Environmental Laws”) which are applicable to its business. The Company has not received any notice from any governmental authority or third party
of an asserted claim under Environmental Laws, which claim is required to be disclosed in the SEC Reports. The Company is not currently required to make future material capital expenditures to comply with Environmental Laws. No property that is
owned, leased or occupied by the Company has been designated a Superfund site pursuant to the Comprehensive Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law. 
 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby,
for itself, severally and not jointly, represents and warrants as of the date hereof and as of the Closing Date to the Company as follows: 
 (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof and thereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of 

  

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creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (b) Own
Account. Such Purchaser understands that (i) the Securities are “restricted securities” and that the offer and sale of the Securities have not been registered under the Securities Act or any applicable state securities law and
(ii) the Securities must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration. Such Purchaser is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or indirect arrangement or understanding with any other Persons regarding the distribution of such Securities (this representation and warranty not limiting such
Purchaser’s right to sell the Securities pursuant to a Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 
 (c) Purchaser Status. At the
time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises any Common Warrants, Unit Warrants or Unit Common Warrants it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. 
 (d) Experience of Such Purchaser. Such Purchaser, either
alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. Such Purchaser understands that
nothing in the Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. Such Purchaser acknowledges that it must rely on legal, tax and
investment advisors of its own choosing in connection with its purchase of the Securities. 
 (e) General Solicitation.
Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general advertisement. 
 (f) Certain Trading Activities.
Other than with respect to the transactions contemplated herein, since the earlier to occur of (1) the time that such Purchaser was first contacted by the Company or any other Person regarding this investment in the Company and (2) the
tenth (10th) day prior to the date of this Agreement, neither such Purchaser nor any Affiliate of such Purchaser which (x) had knowledge of the transactions contemplated hereby, (y) has or 

  

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shares discretion relating to such Purchaser’s investments or trading or information concerning such Purchaser’s investments, including in respect
of the Securities, and (z) is subject to such Purchaser’s review or input concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any Person acting
on behalf of or pursuant to any understanding with such Purchaser or Trading Affiliate, effected or agreed to effect any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s
securities). Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this
Agreement are first publicly announced, other than as provided in Section 4.10 and provided such Short Sales are conducted in compliance with applicable law (including federal securities laws). 
 (g) Independent Investigation. Such Purchaser, in acquiring the Securities, has relied solely upon an independent investigation
made by such Purchaser and his or her representatives, if any. Prior to the date hereof, such Purchaser has been given the opportunity to ask questions of, and receive answers from, representatives of the Company regarding the Company’s
management, finances, and business. Such Purchaser also has received and carefully reviewed the SEC Reports and is knowledgeable about the affairs of the Company. Neither such inquiries nor any other diligence investigation conducted by such
Purchaser or any of its advisors or representatives shall modify, amend or effect such Purchaser’s right to rely upon the Company’s representations and warranties and covenants contained herein or in the Transaction Documents. 

(h) No Government Recommendation or Approval. Such Purchaser 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. 
 (i) No Intent to Effect a Change of Control. Such Purchaser has no present intent to effect a “change of control” of the
Company as such term is understood under the rules promulgated pursuant to Section 13(d) of the Exchange Act. The Company acknowledges and agrees that such Purchaser does not make or has not made any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. 
 ARTICLE IV 
 OTHER AGREEMENTS OF THE PARTIES 
 4.1
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 effective registration statement or Rule 144, to the Company or to an affiliate of a Purchaser in accordance with Section 4.1(e)(iii), the Company may require the
transferor thereof to provide to the Company an opinion of counsel, 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 

  

 19 








 
transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. 
 (b) Each
Purchaser agrees to the imprinting, so long as is required by this Section 4.1(b), of a legend on any of the Securities in the following form: 
 NEITHER THIS SECURITY NOR ANY SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
 The Company acknowledges and agrees that a Purchaser 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 Securities Act and who agrees to be bound by the provisions of this Agreement and the
Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties in a manner permitted by applicable law. No notice shall be required of
such pledge. At the appropriate Purchaser’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, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. 
 (c) Certificates
evidencing the Securities shall not contain any legend (including, without limitation, the legend set forth in Section 4.1(b) hereof): (i) while a registration statement (including, without limitation, a Registration Statement) covering
the resale of such security is effective under the Securities Act, or (ii) following any sale of such Securities pursuant to Rule 144, or (iii) if such Securities are eligible for sale under Rule 144(b)(1), or (iv) if such legend is
not required under applicable requirements of the Securities 

  

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Act (including, without limitation, judicial interpretations and pronouncements issued by the staff of the Commission). If all or any portion of a Common
Warrant, Unit Warrant and/or Unit Common Warrant is exercised at a time when there is an effective registration statement (including, without limitation, a Registration Statement) to cover the resale of the Common Warrant Shares, the Unit Shares,
the Unit Common Warrants and/or the Unit Common Warrant Shares, as applicable, or if such securities may be sold under Rule 144(b)(1) or if such legend is not otherwise required under applicable requirements of the Securities Act (including, without
limitation, judicial interpretations thereof) then such securities shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it
will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of (i) a certificate representing Securities issued with a restrictive legend and (ii) a letter acknowledging
that sales of such securities shall be made in a manner consistent with the plan of distribution set forth in the Registration Statement (such third Trading Day, the “Legend Removal Date”) deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on
transfer set forth in this Section. Certificates for Securities subject to legend removal hereunder shall be transmitted by the transfer agent of the Company to the Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System. The failure to timely deliver certificates without restrictive legends by the Legend Removal Date shall not be a breach of the foregoing covenant if such delay is solely due to the action or inaction of the
Company’s transfer agent and if the Company has taken all reasonable steps necessary to facilitate the removal of such legends. 
 (d) Each Purchaser agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom. 
 (e) Notwithstanding anything herein to the contrary, no registration statement or opinion of counsel shall be necessary for a transfer
(i) by a Purchaser that is a partnership to a partner (limited or general) of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, (ii) by a Purchaser that is a limited liability company to a member of such
limited liability company or a retired member of such limited liability company who retires after the date hereof, or to the estate of any such member or retired member or the transfer by gift, will or intestate succession of any member to his or
her spouse or to the siblings, lineal descendants or ancestors of such member or his or her spouse or (iii) by a Purchaser to an affiliate of such Purchaser, if the prospective transferee agrees in all such instances in writing to be subject to
the terms hereof to the same extent as if he or she were an original Purchaser hereunder. 
  

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 4.2 Furnishing of Information. As long as the Purchasers beneficially own any of the Securities,
the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the Purchasers
beneficially own any of the Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to each Purchaser and make publicly available in accordance with Rule 144(c) such information as is
required for such Purchaser to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 
 4.3 Integration. None of the Purchasers, the Company, nor any of their affiliates, nor any Person acting on its or their behalf 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 Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would
be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. 
 4.4 Warrant
Exercise Procedures. The forms of Notice of Exercise included in the Common Warrants, the Unit Warrants and the Unit Common Warrants, as applicable, set forth the totality of the procedures required of a Purchaser in order to exercise such
warrants. No additional legal opinion or other information or instructions shall be required of such Purchaser to exercise their Common Warrants, Unit Warrants and/or Unit Common Warrants, as applicable. The Company shall honor exercises of the
Common Warrants, Unit Warrants and/or Unit Common Warrants, as applicable, and shall deliver Common Warrant Shares, Unit Shares, Unit Common Warrants and/or Unit Common Warrant Shares, as applicable, in accordance with the terms, conditions and time
periods set forth in the Transaction Documents. 
 4.5 Securities Laws Disclosure; Publicity. The Company shall, by 5:30 p.m. Eastern
time on the fourth Trading Day following the Closing Date, file a Current Report on Form 8-K, reasonably acceptable to the Purchasers disclosing the material terms of the transactions contemplated hereby. The Company shall file the Transaction
Documents as attachments to such Form 8-K or on the Company’s Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2008. The Company and the Purchasers shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release without the prior consent of the Company, with respect to any press release of such Purchaser, or without the
prior consent of the Purchasers with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser or any of its affiliates, or include the name of any Purchaser or any of its
affiliates in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the Form 8-K referenced above and
the registration statement contemplated by the Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide such Purchaser with prior notice of
such disclosure permitted under subclause (i) or (ii). 
  

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 4.6 Investment Company Act. The Company shall conduct its business in a manner so as to reasonably
ensure that it will not become subject to the Investment Company Act. 
 4.7 Use of Proceeds. The Company shall use the net proceeds
from the sale of the Securities hereunder for working capital, research, product development and general corporate purposes and not for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary
course of the Company’s business and prior practices), to redeem any Common Stock or Common Stock Equivalents or to settle any outstanding litigation. 
 4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, stockholders, members, partners, employees
and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling person (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and reasonable expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser Party, by any third party with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder
or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party. The Company will not be liable to any Purchaser Party under this Agreement
(i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchasers in this Agreement or in the other Transaction Documents. 
  

 23 








 4.9 Reservation and Listing of Securities. 
 (a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents. 
 (b) If, on
any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s
certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date. 
 (c) The Company shall, if applicable: (i) in the time and manner required by the Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing on the Trading Market as soon as possible thereafter, (iii) provide to each Purchaser evidence of such listing, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on
such date on such Trading Market or another Trading Market. 
 4.10 Short Sales and Confidentiality After The Date Hereof. Each
Purchaser 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) after the
transactions contemplated by this Agreement are first publicly announced or (ii) this Agreement is terminated in full. Each Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by
the Company as described in Section 4.5, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Each Purchaser understands and
acknowledges that the Commission currently takes the position that coverage of short sales of shares of the Common Stock “against the box” prior to effectiveness of a resale registration statement with securities included in such
registration statement would be a violation of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office
of Chief Counsel, Division of Corporation Finance. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and
the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant 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. 
 4.11 Form D:
Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof promptly upon request of any Purchaser. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary in order to obtain an exemption 

  

 24 








 
for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request of any Purchaser. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue
Sky” laws of the states of the United States following the Closing Date. 
 4.12 Section 13(d)(3) of Exchange Act. The
parties to this Agreement acknowledge that the several Purchasers shall not constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder. 
 4.13 Stockholder Approval. The Company shall provide each stockholder entitled to vote at a special meeting of stockholders of the Company (the
“Stockholder Meeting”), which shall be promptly called and held not later than 180 calendar days from the date hereof, a proxy statement meeting the requirements of Section 14 of the Exchange Act and the related rules and
regulations thereunder promulgated by the Commission (“Proxy Statement”) soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions approving the Company’s issuance of the
Securities (the “Stockholder Approval”) in accordance with law and the rules and regulations of the Nasdaq Global Market (or any other applicable Trading Market) and the Delaware General Corporation Law, and the Company shall use
its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions. The Proxy Statement shall be in a form
reasonably acceptable to the Holders and accordingly, the Company shall provide the Legal Counsel (as defined in the Registration Rights Agreement) with reasonable opportunity to review and comment on the Proxy Statement. The Company shall keep the
Purchasers apprised of the status of matters relating to the Proxy Statement and the Stockholder Meeting, including promptly furnishing the Purchasers and their counsel with copies of notices or other communications related to the Proxy Statement,
the Stockholder Meeting or the transactions contemplated hereby received by the Company from the Commission or the Nasdaq Global Market. In the event that the Stockholder Approval is not obtained at the Stockholder Meeting, then the Company shall
use its reasonable best efforts to solicit the Stockholder Approval and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions at the Company’s annual meeting of stockholders to be
held in 2009, and at each successive annual meeting of stockholders thereafter until the Stockholder Approval has been obtained. 
 4.14
Board of Directors. Following the Closing, the Company shall take any and all actions as may be required to nominate Nicholas Simon of Clarus Ventures to be elected to the Board of Directors at the 2009 annual meeting of stockholders or, if a
vacancy should occur on the Board of Directors before that time, to elect Mr. Simon to fill that vacancy. 
 ARTICLE V 

MISCELLANEOUS 
 5.1
Termination. This Agreement may be terminated by the Majority Purchasers (on behalf of all Purchasers hereunder) by written notice to the Company, if the Closing has not been consummated on or before August 15, 2008; provided,
however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
  

 25 








 5.2 Fees and Expenses. Except as expressly set forth herein and in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of
this Agreement. The Company shall reimburse, at the Closing, the reasonable fees for the Purchasers’ legal counsel, fees to other advisors retained by the Purchasers to represent them in the transactions contemplated by this Agreement and the
Transaction Documents, as well as the Purchasers’ due diligence expenses, in an aggregate amount not to exceed $135,000. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers. 
 5.3 Entire Agreement. The Transaction Documents and any other written agreement
between the Company and the Purchasers dated of even date herewith, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the
next Trading Day after delivery, if such notice or communication is delivered via confirmed registered mail, (b) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or
(c) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto (unless later updated in writing by the parties
hereto to the other parties) and if to the Company, with a copy to: 
 Wilmer Cutler Pickering Hale & Dorr LLP 
 1100 Winter Street 
 Waltham, Massachusetts
02451 
 Attention: Susan L. Mazur 
 Fax: 781-966-2100 
 5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed by the Company and the Majority Purchasers. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 
 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 
  

 26 








 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Majority Purchasers. Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided the Purchaser obtains the prior written consent of the Company (not to be unreasonably withheld) and such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Purchaser”. 
 5.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.8. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers,
stockholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding. 
 5.10 Survival. The representations, warranties, covenants and other agreements contained herein shall
survive the Closing and the delivery and/or exercise of the Securities, as applicable, for the applicable statue of limitations. 
  

 27 








 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission (or electronic transmission of PDF file), such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile (or PDF file) signature page were an original thereof. 
 5.12 Severability. If any
provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 
 5.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. 
 5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
 5.15 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled. 
 5.16 Construction. The parties agree that each of
them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of the Transaction Documents or any amendments hereto. 
 5.17 Aggregation of Stock. All Securities
held or acquired by affiliated Persons or Persons under common management or control shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and the Transaction Documents. 
 [Signature Pages Follow] 
  

 28 








 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	ACHILLION PHARMACEUTICALS, INC.
		
	By:	 	/s/ Michael D. Kishbauch
		 	Name: Michael D. Kishbauch
		 	Title: President and Chief Executive Officer
	
	Address for Notice:
	
	Achillion Pharmaceuticals, Inc.
	300 George Street
	New Haven, CT 06511
	Attn: Michael D. Kishbauch
	Fax: 203-624-6003


 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOR PURCHASERS FOLLOW] 
  

 29 








 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	PROQUEST INVESTMENTS IV, L.P.
		
	By:	 	ProQuest Associates IV LLC
	Its:	 	General Partner
		
	By:	 	/s/ Pasquale DeAngelis
		 	Name:  Pasquale DeAngelis
		 	Title:     Managing Member
	
	Address for Notice of Purchaser:
	
	ProQuest Investments IV, L.P.
	90 Nassau Street
	Fifth Floor
	Princeton, NJ 08542
	Attn: Pasquale DeAngelis
	Fax: (609) 375-1047
	
	Address for Delivery of Securities for Purchaser (if not same as above):
	
	 
	
	 
	
	EIN Number:


  

 30 









			
	PROQUEST INVESTMENTS III, L.P.
		
	By:	 	ProQuest Associates III LLC
	Its:	 	General Partner
		
	By:	 	/s/ Pasquale DeAngelis
		 	Name:  Pasquale DeAngelis
		 	Title:     Managing Member
	
	Address for Notice of Purchaser:
	
	ProQuest Investments III, L.P.
	90 Nassau Street
	Fifth Floor
	Princeton, NJ 08542
	Attn: Pasquale DeAngelis
	Fax: (609) 375-1047
	
	Address for Delivery of Securities for Purchaser (if not same as above):
	
	 
	
	 
	
	EIN Number:


  

 31 









			
	CLARUS LIFESCIENCES II, L.P.
		
	By:	 	Clarus Ventures II GP, LP
	Its:	 	General Partner
		
	By:	 	Clarus Ventures II, LLC
	Its:	 	General Partner
		
	By:	 	/s/ Nicholas Simon
		 	Name: Nicholas Simon
		 	Title: Managing Director
	
	Address for Notice of Holder:
	
	101 Main Street, Suite 1210
	Cambridge, MA 02142
	Tel: (617) 949-2200
	Fax: (617) 949-2201
	Attn: Robert W. Liptak
	
	Address for Delivery of Securities for Holder (if not same as above):
	
	 
	
	 


  

 32 









			
	INVESTOR GROWTH CAPITAL LIMITED
		
	By:	 	/s/ Lisa Crawford
		 	Name: Lisa Crawford
		 	Title:   ‘A’ Director
		
	By:	 	/s/ Robert de Heus
		 	Name: Robert de Heus
		 	Title:   B-Director
	
	Address for Notice of Holder:
	
	Canada Court, Upland Road, St Peter Port
	 Guernsey, GY1 3BQ
 Channel Islands

Tel: 011-44-1481-744-616
 Fax: 011-44-1481-744-555
 Email: investorab@rbc.com
 Attention: Ms. Lisa
Crawford

	
	With a copy to:
	 Investor Growth Capital Holding B.V.
 WTC
Schiphol, Schiphol Boulevard 353
 1118 BJ Schiphol, The Netherlands
 Attention: Robert de Heus

	
	Address for Delivery of Securities for Holder (if not same as above):
	
	 Investor Growth Capital
 630 Fifth Avenue,
Suite 1965
 New York, NY 10111
 Attention: Liza Page
Nelson



  

 33 









			
	INVESTOR GROUP, L.P.
		
	By:	 	Investor Group G.P., Limited
	Its:	 	General Partner
		
	By:	 	/s/ Lisa Crawford
		 	Name: Lisa Crawford
		 	Title:   ‘A’ Director
		
	By:	 	/s/ Robert de Heus
		 	Name: Robert de Heus
		 	Title:   B-Director
	
	Address for Notice of Holder:
	
	Canada Court, Upland Road, St Peter Port
	 Guernsey, GY1 3BQ
 Channel Islands

Tel: 011-44-1481-744-616
 Fax: 011-44-1481-744-555
 Email: investorab@rbc.com
 Attention: Ms. Lisa
Crawford

	
	With a copy to:
	 Investor Growth Capital Holding B.V.
 WTC
Schiphol, Schiphol Boulevard 353
 1118 BJ Schiphol, The Netherlands
 Attention: Robert de Heus

	
	Address for Delivery of Securities for Holder (if not same as above):
	
	 Investor Growth Capital
 630 Fifth Avenue,
Suite 1965
 New York, NY 10111
 Attention: Liza Page
Nelson

	
	 EIN Number: 98-0540232



  

 34 








 EXHIBIT A 
 Schedule of Purchasers 
  

														
	 Purchaser Name and Address
	  	Number of
Shares to be
Purchased	  	Number of
Common
Warrant
Shares
Underlying
Common
Warrants
Purchased	  	Number of
Units
Underlying
Unit
Warrants
Purchased	  	Number of
Unit
Shares
Underlying
Units	  	Number of
Unit
Common
Warrant
Shares
Underlying
Unit
Common
Warrants	  	Aggregate
Purchase Price of
Closing Securities
	 ProQuest Investments IV, L.P.
 90 Nassau Street
 Fifth Floor
 Princeton, NJ 08542
 Attn: Pasquale DeAngelis
 Fax: (609) 375-1047
	  	2,151,537	  	537,885	  	738,771	  	738,771	  	184,693	  	$	6,249,999.83
	 ProQuest Investments III, L.P.
 90 Nassau Street
 Fifth Floor
 Princeton, NJ 08542
 Attn: Pasquale DeAngelis
 Fax: (609) 375-1047
	  	1,075,769	  	268,942	  	369,385	  	369,385	  	92,346	  	 	3,125,001.37
	 Clarus Lifesciences II, L.P.
 101 Main Street, Suite 1210
 Cambridge, MA 02142
 Tel: (617) 949-2200
 Fax: (617) 949-2201
 Attn: Robert W. Liptak
	  	5,163,689	  	1,290,922	  	1,773,050	  	1,773,050	  	443,263	  	 	15,000,000.18
	 Investor Growth Capital Limited
 Canada Court, Upland Road, St Peter Port
 Guernsey, GY1 3BQ
 Channel Islands
 Attn: Lisa Crawford
 Tel: 011-44-1481-744-616
  
 With a copy to:
 Investor Growth Capital Holding B.V.
 WTC Schiphol, Schiphol Boulevard 353
 1118 BJ Schiphol, The Netherlands
 Attention: Robert de Heus
	  	1,626,562	  	406,641	  	558,510	  	558,510	  	139,628	  	 	4,724,999.95
	 Investor Group, L.P.
 Canada Court, Upland Road, St Peter Port
 Guernsey, GY1 3BQ
 Channel Islands
 Attn: Lisa Crawford
 Tel: 011-44-1481-744-616
  
 With a copy to:
 Investor Growth Capital Holding B.V.
 WTC Schiphol, Schiphol Boulevard 353
 1118 BJ Schiphol, The Netherlands
 Attention: Robert de Heus
	  	697,098	  	174,274	  	239,362	  	239,362	  	59,840	  	 	2,024,999.98
		  	 	  	 	  	 	  	 	  	 	  	 	 
	 TOTAL
	  	10,714,655	  	2,678,664	  	3,679,078	  	3,679,078	  	919,770	  	$	31,125,001.31
		  	 	  	 	  	 	  	 	  	 	  	 	 








 EXHIBIT B 
 Form of Common Warrant 







 EXHIBIT C 
 Form of Unit Warrant 







 EXHIBIT D 
 IRA Amendment 







 EXHIBIT E 
 Registration Rights Agreement 







 EXHIBIT F 
 Form of Opinion of Company Counsel