INFINITY PHARMACEUTICALS, INC. (Form: 8-K, Received: 07/19/2012 07:01:55)

INFINITY PHARMACEUTICALS, INC.

Date: July 19, 2012

/s/ Gerald E. Quirk

Gerald E. Quirk

Vice President, Corporate Affairs & General Counsel

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 17, 2012

Infinity Pharmaceuticals, Inc.

(Exact name of registrant as specified in charter)

Delaware

000-31141

33-0655706

(State or other jurisdiction

of incorporation)

(Commission
File Number)

(IRS Employer

Identification No.)


780 Memorial Drive, Cambridge, MA		02139
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 453-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement

Termination and Revised Relationship Agreements

On July 17, 2012, we entered into Termination and Revised Relationship Agreements (the “Termination and Revised Relationship Agreements”) with Mundipharma International Corporation Limited (“Mundipharma”) and Purdue Pharmaceutical Products L.P. (“Purdue”). The text of Item 1.02 of this Current Report on Form 8-K, which sets forth the terms and conditions of the Termination and Revised Relationship Agreements and describes the continuing obligations of the parties, is hereby incorporated by reference into this Item 1.01.

Securities Purchase Agreement

On July 17, 2012, we executed a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Purdue Pharma L.P. (“PPLP”), Beacon Company (“Beacon”) and Rosebay Medical Company L.P. (“Rosebay” and collectively, the “BRP Entities”), each of which is an associated entity of Mundipharma and Purdue.

Under the Securities Purchase Agreement, we have agreed to issue and sell 5,416,565 shares (the “New Shares”) of our common stock, $0.001 par value per share (“Common Stock”), to PPLP for an aggregate consideration of $78,540,191. The consideration will be composed of (i) conversion and cancellation of an amount equal to $51,040,191 of principal and interest due and owing to PPLP under a promissory note issued to PPLP on November 28, 2011 (the “Note”) pursuant to the Line of Credit Agreement, dated November 19, 2008, between us and PPLP, directly and as assignee of Purdue (the “Credit Agreement”), and (ii) the payment of $27,500,000 in cash. The sale will occur at a closing, to take place on the third business day following the first date on which each of the closing conditions set forth in the agreement have been satisfied or waived, as further discussed below. At the closing, the Credit Agreement will terminate in its entirety.

We agreed to file with the Securities and Exchange Commission (the “SEC”), within 30 days following the closing, a registration statement covering the resale to the public by the BRP Entities of the New Shares. In connection therewith, we have agreed to (i) use commercially reasonable efforts to cause such registration statement to be declared effective by the SEC within 90 days after the filing thereof and (ii) cause such registration statement to remain effective until all New Shares covered thereby have been sold or may be sold without volume restrictions pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

The Securities Purchase Agreement also provides that any time in the period beginning January 1, 2013 and ending December 31, 2018, in the event we propose to make an underwritten offering of our Common Stock, subject to certain limitations, the BRP Entities will have “piggyback” registration rights, which require us, at the election of the BRP Entities, to use our reasonable best efforts to cause to be included in such underwritten offering, Common Stock then held by the BRP Entities representing up to 20% of the total estimated maximum dollar amount of Common Stock proposed to be sold in such underwritten offering.

In addition, the BRP Entities have agreed to enter into a lockup agreement if requested by us and/or the managing underwriters, placement agents or initial purchasers for any offering of our stock

prior to December 31, 2013, pursuant to which the BRP Entities will agree not to, among other things, offer, sell or otherwise transfer or dispose of, directly or indirectly, any Common Stock held by the BRP Entities or to enter into any agreement that transfers, in whole or in part, any of the economic consequences of ownership of any Common Stock held by the BRP Entities, for a specified period of time requested by us, the managing underwriters, the placement agents or the initial purchasers.

The Securities Purchase Agreement also terminates, as of July 17, 2012, all attendance rights to meetings of our Board of Directors held by the BRP Entities under a prior securities purchase agreement with PPLP and Purdue.

The sale and issuance of the New Shares is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. If these conditions are not satisfied on or before September 30, 2012, or if at any time such conditions become impossible to fulfill, then at the election of either us or PPLP, the Securities Purchase Agreement will terminate and the respective obligations of us and PPLP to sell and purchase the New Shares will terminate.

In the event the Securities Purchase Agreement terminates prior to the closing, we have agreed with PPLP to amend the Credit Agreement to provide, among other things, that the Note shall become due and payable on December 31, 2015. In addition, the highest aggregate royalty rate payable to Mundipharma and Purdue under the Termination and Revised Relationship Agreements would be lowered from 4% to 3%.

For the five years following the closing, the BRP Entities and each associated company holding shares of Common Stock have agreed to be present at each regular or special meeting of our stockholders and to vote all of their shares of Common Stock as recommended by our Board of Directors in the proxy materials mailed to our stockholders in connection with such meeting, except that with respect to any proposal to amend our corporate charter or approve certain extraordinary transactions, all shares of Common Stock that are owned by those entities that are not New Shares will be voted in proportion to the manner in which all of our stockholders (other than those entities) vote in respect of such proposal, regardless of the recommendation of our Board of Directors.

The foregoing summary description of the Securities Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Securities Purchase Agreement which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information set forth under the caption “Safe Harbor For Forward-Looking Statements” following Item 8.01 below is incorporated herein by reference.

Item 1.02

Termination of a Material Definitive Agreement

Strategic Alliance Agreements

On November 19, 2008, we entered into a strategic alliance with Mundipharma and Purdue to develop and commercialize pharmaceutical products. The alliance was governed by Strategic Alliance Agreements (the “Strategic Alliance Agreements”) with each of Mundipharma and Purdue. The agreement with Purdue focused on the development and commercialization in the United States of products targeting fatty acid amide hydrolase (“FAAH”). The agreement with Mundipharma focused on

the development and commercialization outside of the United States of all products and product candidates covered by the alliance, including those targeting FAAH. The alliance included product candidates that inhibit or target the Hedgehog pathway, FAAH, phosphoinositide-3-kinase (“PI3K”) and product candidates arising out of our early discovery projects in all disease fields that were conducted during the pendency of the Strategic Alliance Agreements. Further information on the terms and conditions of the Strategic Alliance Agreements is set forth in the subsection entitled “Strategic Alliance Agreements” contained in Item 1.01 to our Current Report on Form 8-K filed on November 20, 2008, which is incorporated herein by reference.

On July 17, 2012, we terminated the Strategic Alliance Agreements by entry into the Termination and Revised Relationship Agreements. Under the terms of those agreements:

•

all intellectual property rights that we had previously licensed to Mundipharma and Purdue to develop and commercialize products under the Strategic Alliance Agreements terminated, with the result that we have sole, worldwide development and commercialization rights to all product candidates that had previously been covered by the strategic alliance;

•

Mundipharma has no further obligation to provide research and development funding to us; and

•

we are obligated to pay Mundipharma and Purdue a 4% royalty in the aggregate (subject to reduction as described in the discussion of the Securities Purchase Agreement above), on worldwide net sales of products that were covered by the alliance until such time as they have recovered all research and development expenses paid to us under the strategic alliance. After this cost recovery, we will owe: (i) Purdue a 1% royalty on net sales in the United States of products targeting FAAH that were subject to the strategic alliance, and (ii) Mundipharma a 1% royalty on net sales in the United States of all products that were subject to the strategic alliance other than those targeting FAAH.

Royalties are payable until the later to occur of the last-to-expire of specified patent rights and the expiration of non-patent regulatory exclusivities in a country, provided that if royalties are payable solely on the basis of non-patent regulatory exclusivity, each of the royalty rates is reduced by one-half. In addition, royalties payable under the Termination and Revised Relationship Agreements after Mundipharma and Purdue have recovered all research and development expenses paid to us are subject to reduction on account of third party royalty payments or patent litigation damages or settlements required to be paid by us, with any such reductions capped at 50% of the amounts otherwise payable during the applicable royalty payment period.

Each of the Termination and Revised Relationship Agreements expires when the parties thereto have no further obligations to each other thereunder.

The foregoing summary description of the Strategic Alliance Agreements does not purport to be complete and is qualified in its entirety by reference to the Strategic Alliance Agreements, which are filed as Exhibits 10.1 and 10.2 to our Annual Report on Form 10-K for the year ended December 31, 2008 and Exhibit 99.1 to our Current Report on Form 8-K filed on December 14, 2010, and which are incorporated herein by reference.

The foregoing summary description of the Termination and Revised Relationship Agreements does not purport to be complete and is qualified in its entirety by reference to these agreements, which are attached as Exhibits 10.2 and 10.3 to this Current Report on Form 8-K and are incorporated herein by reference.

Line of Credit Agreement

At the closing of the sale and issuance of the New Shares, the Credit Agreement will terminate in its entirety. Further information on the terms and conditions of the Credit Agreement is set forth under the subsection entitled “Line of Credit Agreement” contained in Item 1.01 to our Current Report on Form 8-K filed on November 20, 2008, which is incorporated herein by reference. Such description does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit 10.2 to our Current Report on Form 8-K filed on November 20, 2008, and which is incorporated herein by reference.

The information set forth in Item 1.01 above with respect to the Credit Agreement is incorporated herein by reference.

The information set forth under the caption “Safe Harbor For Forward-Looking Statements” following Item 8.01 below is incorporated herein by reference.

Item 3.02

Unregistered Sales of Equity Securities

The information set forth in Item 1.01 above under the caption “Securities Purchase Agreement” is incorporated herein by reference.

The New Shares will be issued in reliance on the exemption from the registration provisions of the Securities Act set forth in Section 4(2) promulgated thereunder relative to sales by an issuer not involving any public offering. PPLP represented to us in the Securities Purchase Agreement that it is acquiring the securities for investment and not distribution, that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act, that it can bear the risks of the investment, and that it has made detailed inquiry concerning our company, our business and our personnel in connection with its purchase of the securities.

Item 8.01

Other Events

On July 18, 2012, we issued a press release announcing the transactions described in this report. A copy of this press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

* * *

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Statements in this document regarding the transactions between us, the BRP Entities, Purdue and Mundipharma, including, without limitation: the expected timetable for completing the closing under the Securities Purchase Agreement and statements about our goals, plans and prospects, including with respect to the development and commercialization of products previously covered under the Strategic Alliance Agreements, constitute forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “may,” “will,” “would,” “intends,” “estimates” and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability of each of us and PPLP to satisfy the closing conditions with respect to the closing under the Securities Purchase Agreement; risks relating to our ability to successfully research, develop and commercialize products previously covered by the Strategic Alliance Agreements; and factors described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, as filed with the SEC, and other filings that we make with the SEC from time to time. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this document reflect our expectations and beliefs as of the date of this document. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. However, while we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this Current Report on Form 8-K.

Item 9.01

Financial Statements and Exhibits

(d) The following exhibits are included in this report:


Exhibit No.		Description

10.1		Securities Purchase Agreement, dated as of July 17, 2012, between Infinity Pharmaceuticals, Inc., Purdue Pharma L.P., Beacon Company and Rosebay Medical Company L.P.

10.2		Termination and Revised Relationship Agreement, dated as of July 17, 2012, between Infinity Pharmaceuticals, Inc. and Mundipharma International Corporation Limited.

10.3		Termination and Revised Relationship Agreement, dated as of July 17, 2012, between Infinity Pharmaceuticals, Inc. and Purdue Pharmaceutical Products L.P.

99.1		Press release dated July 18, 2012.

99.2		Strategic Alliance Agreement, dated as of November 19, 2008, by and between Infinity Pharmaceuticals, Inc. and Mundipharma International Corporation Limited (filed as Exhibit 10.2 to our Annual Report on Form 10-K for the year ended December 31, 2008), as amended by Amendment No. 1 to Strategic Alliance Agreement, dated as of December 10, 2010, by and between Infinity Pharmaceuticals, Inc. and Mundipharma International Corporation Limited (previously filed as Exhibit 99.1 to our Current Report on Form 8-K filed December 14, 2010 (File No. 000-31141) and incorporated herein by reference).



99.3		Strategic Alliance Agreement, dated as of November 19, 2008, by and between Infinity Pharmaceuticals, Inc. and Purdue Pharmaceuticals Products L.P. (previously filed as Exhibit 10.1 to our Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-31141) and incorporated herein by reference).

99.4		Line of Credit Agreement, dated as of November 19, 2008, by and between Infinity Pharmaceuticals, Inc. and Purdue Pharma L.P., directly and as assignee of Purdue Pharmaceutical Products L.P. (previously filed as Exhibit 10.2 to our Current Report on Form 8-K filed on November 20, 2008 (File No. 000-31141) and incorporated herein by reference).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 10.1

EXECUTION VERSION

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”) dated as of July 17, 2012 (“ Effective Date ”) is between Infinity Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”), Purdue Pharma L.P. (the “ Purchaser ”) and, solely with respect to Sections 4 through 10 herein, Beacon Company (“ Beacon ”) and Rosebay Medical Company L.P. (“ Rosebay ” and, together with the Purchaser and Beacon, the “ BRP Entities ”).

BACKGROUND

WHEREAS, the Company desires to issue and sell, and the Purchaser desires to purchase, shares of the Company’s common stock, $0.001 par value per share (the “ Common Stock ”) pursuant to the terms and conditions set forth herein.

WHEREAS, capitalized terms not defined above or elsewhere in this Agreement have the respective meanings assigned to such terms in Section 9.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Issuance of New Shares; Closing; Obligations on Effective Date . The Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, at an aggregate purchase price of $78,540,191.21 (the “Purchase Price”), 5,416,565 shares of Common Stock (the “ New Shares ”). The closing of the sale (the “ Closing ”) shall take place at 10:00 a.m., Boston time, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts (or remotely via the exchange of signatures and documents) on the third Business Day following the first date on which each of the conditions precedent to Closing set forth in Section 7 have been satisfied or waived or at such other, place, time and date as the Company and the Purchaser shall agree (the “ Closing Dat e”). On the Effective Date,

(i) the Company shall deliver to the Purchaser the Disclosure Schedule;

(ii) the Company and Mundipharma International Corporation Limited shall execute and deliver the MICL Termination Agreement; and

(iii) the Company and Purdue shall execute and deliver the Purdue Termination Agreement.

2. Representations and Warranties of the Company . Except as disclosed by the Company in a written Disclosure Schedule provided by the Company to the Purchaser (the “ Disclosure Schedule ”), which Disclosure Schedules shall be deemed a part hereof, the Company hereby represents and warrants to the Purchaser that the statements contained in this Section 2 are complete and accurate as of the date of this Agreement (or such other date as is specified below). The Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Section 2, and the disclosures in

any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Section 2 to the extent it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

(a) Corporate Organization; Subsidiary . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Subsidiary is duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the Company and the Subsidiary is duly qualified and is in good standing as a foreign corporation in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it require such qualification except for any such failure so to qualify or be in good standing which, individually or in the aggregate, would not have a Material Adverse Effect on the Company and the Subsidiary, taken as a whole. The Subsidiary has the requisite power and authority to carry on its business as it is now being conducted. The Company has heretofore made available to Purchaser complete and correct copies of the Certificate of Incorporation of the Company (the “ Company Charter ”) and the Bylaws of the Company (the “ Company Bylaws ”) and the certificate of incorporation and bylaws of the Subsidiary, each as amended to date and currently in full force and effect.

(b) Corporate Authority . The Company has the requisite corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company, the issuance and sale by the Company of the New Shares and the performance by the Company of the other transactions contemplated hereby have been duly authorized by the Company’s Board of Directors, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or for the Company to consummate the transactions so contemplated herein. This Agreement is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies.

(i) Neither the execution, delivery or performance by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby (A) require approval by the stockholders of the Company, (B) will result in a violation or breach of the Company Charter or the Company Bylaws or the charter or bylaws of the Company’s Subsidiary or (C) will result in a violation or breach of (or give rise to any right of termination, revocation, cancellation or acceleration under or increased payments under), or constitute a default (with or without due notice or lapse of time or both) under, or result in the creation of any lien, mortgage, charge, encumbrance or security interest of any kind (a “ Lien ”) upon any of the properties or assets of the Company or its Subsidiary under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, contract, agreement, obligation, instrument, offer, commitment, understanding or other arrangement to which the Company or its Subsidiary is a party (each a “ Contract ”), except, in the case of clause (C), for violations, breaches,

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defaults, rights of termination, revocations, cancellations or accelerations or Liens that would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.

(ii) Except for filings or consents as may be required under, and other applicable requirements of, (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), (B) applicable securities laws and (C) Nasdaq Marketplace Rule 5250(e)(2), no consent, approval, order or authorization of, or registration, declaration or filing with, any government or any court, administrative agency or commission or other governmental authority or agency, federal, state, local or foreign (a “ Governmental Entity ”), is required with respect to the Company in connection with the execution, delivery or performance by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby (except where the failure to obtain such consents, approvals, orders or authorizations, or to make such filings would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole).

(d) Capital Stock . The authorized capital stock of the Company consists of (i) 100,000,000 shares of Common Stock, of which an aggregate of 27,269,697 shares of Common Stock were issued and outstanding as of the close of business on June 30, 2012, and (ii) 1,000,000 shares of preferred stock, $.001 par value per share, of which none were issued and outstanding as of the close of business on June 30, 2012 2012. All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. As of June 30, 2012, the Company had outstanding (i) stock options to purchase 7,662,752 shares of Common Stock and 3,606,046 shares of Common Stock are reserved for future issuance pursuant to the Company’s stock incentive plans and (ii) 3,170,086 warrants that are exercisable for shares of Common Stock. There are no preemptive or similar rights on the part of any holders of any class of securities of the Company and, except as set forth in this paragraph (d), no securities convertible into or exchangeable for, or options, warrants, calls, subscriptions, rights, contracts, commitments, arrangements or understandings of any kind to which the Company is a party or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company.

(e) Subsidiary . All of the outstanding shares of capital stock of the Subsidiary are owned by the Company free and clear of all Liens.

(f) SEC Filings; Financial Statements . The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC under the Securities Act and the Exchange Act since January 1, 2011 (the “ Company SEC Documents ”). As of its filing date, each Company SEC Document, as amended or supplemented, if applicable, (i) complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations thereunder and (ii) did not, at the time it was filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents comply in all material respects with

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applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, 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 and its Subsidiary 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, year-end audit adjustments.

(g) Absence of Certain Events and Changes . Since the date of filing of the Company’s Current Report on Form 10-Q for the quarter ended March 31, 2012 with the SEC, and except as set forth on any Company SEC Documents filed on or after such date (i) the Company and its Subsidiary have conducted their respective businesses in the ordinary course consistent with past practice, (ii) there has not been any event, change or development which, individually or in the aggregate, would have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, (iii) 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 SEC, (iv) the Company has not altered its method of accounting, (v) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (vi) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option or stock plans. The Company does not have pending before the SEC any request for confidential treatment of information.

(h) Compliance with Applicable Law . Each of the Company and its Subsidiary is in compliance with all statutes, laws, regulations, rules, judgments, orders and decrees of all Governmental Entities applicable to it that relate to its respective business, and neither the Company nor its Subsidiary has received any notice alleging noncompliance except, with reference to all the foregoing, where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. Each of the Company and its Subsidiary has all Permits that are required in order to permit it to carry on its business as it is presently conducted, except where the failure to have such Permits or rights would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. All such Permits are in full force and effect and to the Knowledge of the Company, the Company and its Subsidiary are in compliance with the terms of such Permits, except where the failure to be in full force and effect or in compliance would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.

(i) Litigation . There are no civil, criminal or administrative actions, suits, or proceedings pending or, to the Knowledge of the Company, threatened, against the Company or its Subsidiary that, individually or in the aggregate, are likely to have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. There are no outstanding judgments, orders, decrees, or injunctions of any Governmental Entity naming the Company or its Subsidiary

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that, insofar as can reasonably be foreseen, individually or in the aggregate, in the future would have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.

(j) Contracts .

(i) The Company has filed as exhibits to the Company SEC Documents all material agreements required to be filed under the rules and regulations of the SEC (the “ Material Contracts ”). A list of the Material Contracts is set forth on Schedule 2(j) .

(ii) All Material Contracts are valid, binding and in full force and effect and enforceable against the Company or the Subsidiary, as the case may be, except to the extent that any failure to be enforceable, individually or in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, provided that no representation is made as to the enforceability of any non-competition provision in any employment agreement. There does not exist under any Material Contract any violation, breach or event of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder, on the part of any of the Company or its Subsidiary or, to the Knowledge of the Company, any other Person, other than such violations, breaches or events of default as would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.

(k) Environmental Matters . Except for such matters that, individually or in the aggregate, would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, (i) the Company and its Subsidiary are in compliance with all applicable Environmental Laws (as defined below), (ii) the Company and its Subsidiary have all Permits required under Environmental Laws for the operation of their respective businesses as presently conducted (“ Environmental Permits ”), (iii) neither the Company nor its Subsidiary has received notice from any Governmental Entity asserting that either the Company or its Subsidiary may be in violation of, or liable under, any Environmental Law, and (iv) there are no actions, proceedings or claims pending (or, to the Knowledge of the Company threatened) against the Company or its Subsidiary seeking to impose any liability under any Environmental Law or on Environmental Permits or with respect to any Hazardous Substances (as defined below). The representations and warranties in this Section 2(k) are the Company’s only representations and warranties in this Agreement concerning environmental matters.

For the purposes of this Agreement, “ Environmental Law ” means any applicable federal, state, local or foreign law, statute, regulation or decree directly relating to (x) the protection of the environment or (y) the use, storage, treatment, generation, transportation, processing, handling, release or disposal of Hazardous Substances, in each case, as in effect on the Effective Date. “ Hazardous Substance ” means any waste, substance, material, pollutant or contaminant listed, defined, designated or classified as hazardous, toxic or radioactive, or otherwise regulated, under any Environmental law.

(l) Status of New Shares . The New Shares being issued at the Closing have been duly authorized by all necessary corporate action on the part of the Company, and at the Closing, such New Shares (i) will have been validly issued and will be fully paid and nonassessable, free

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and clear of all Liens imposed by the Company other than restrictions on transfer provided in this Agreement, and (ii) will not be subject to any claims by the Company or any other Person that the Purchaser is an “acquiring person” under any shareholder rights plan, including the Rights Agreement or similar plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving New Shares under this Agreement. The issuance of such New Shares will not be subject to preemptive rights of any other shareholder of the Company. The New Shares will be listed on Nasdaq when issued in accordance with the terms of this Agreement. As of the Closing, the Company will have reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.

(m) Intellectual Property . The Company Intellectual Property is owned free from any Liens (other than Permitted Liens). All material Intellectual Property Licenses are in full force and effect, except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and by general equitable principles and public policy constraints (including those pertaining to limitations and/or exclusions of liability, competition laws, penalties and jurisdictional issues including conflicts of laws). To the Knowledge of the Company, all Company Intellectual Property is valid and enforceable and all intellectual property that is the subject of such Intellectual Property is valid and enforceable. Neither the Company nor its Subsidiary has received written notice from any third party that the development or commercialization of the Company’s or its Subsidiary’s products or product candidates infringes or misappropriates the rights of any third party in respect of any Intellectual Property owned by such third party. To the Knowledge of the Company, none of the Company Intellectual Property is being infringed or misappropriated by any third party. There is no written claim or demand of any Person pertaining to, or any proceeding which is pending or, to the Knowledge of the Company, threatened, that challenges the rights of the Company or its Subsidiary in respect of any Company Intellectual Property, or that claims that any default exists under any Intellectual Property License. “ Company Intellectual Property ” means the Intellectual Property and Intellectual Property Licenses that are owned by the Company or its Subsidiary.

(n) Brokers or Finders . No agent, broker, investment banker or other firm is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement as a result of any actions taken by the Company or its Subsidiary.

(o) Taxes . Each of the Company and the Subsidiary has timely filed with the appropriate tax authorities all tax returns required to be filed by or on behalf of the Company or the Subsidiary or any predecessor corporation of either of them, or any consolidated, combined or unitary group of which the Company is or has ever been a member (but only with respect to taxable periods during which the Company has been a member thereof) in all jurisdictions in which such tax returns are or were required to be filed. All such filings are true, complete and correct in all material respects. The Company and the Subsidiary have timely paid all taxes, including penalties and interest, assessments, withholding taxes, fees and other charges for which the Company or the Subsidiary is liable other than (i) those taxes being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles, and (ii) those taxes not yet due and payable. To the Knowledge of the

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Company, the Company has no tax deficiency which has been asserted or threatened against the Company or the Subsidiary. There is no action, suit, proceeding, investigation, audit, or claim now pending or, to the Knowledge of the Company or the Subsidiary, threatened by any authority regarding any taxes relating to the Company or the Subsidiary. Neither the Company nor the Subsidiary has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of the Company or the Subsidiary, or, to the Knowledge of the Company or its Subsidiary, aware of any circumstances that would cause the taxable years or other taxable periods of the Company or the Subsidiary not to be subject to the normally applicable statute of limitations. Neither the Company nor the Subsidiary is a party to or is bound by any tax indemnity agreement, tax sharing agreement or tax allocation agreement.

(p) Insurance . The Company and the Subsidiary are insured by insurers of recognized financial responsibility against losses and risks and in amounts as are prudent and customary in the businesses in which the Company and the Subsidiary are engaged. The Company’s insurance contracts are in effect in accordance with their respective terms. Neither the Company nor the Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and the Subsidiary’s respective lines of business.

(q) Sarbanes-Oxley; Internal Accounting Controls . The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiary maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiary, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the date prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Knowledge of the Company, in other factors that could significantly affect the Company’s internal controls.

(r) Private Placement . Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3, no registration under the Securities Act is required for the offer

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and sale of the New Shares by the Company to the Purchaser as contemplated hereby. Subject to the requirement that the Company file, no later than 10 days after the Closing, a “Notification Form: Change in the Number of Shares Outstanding” in accordance with Marketplace Rule 5250(e)(2).

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

(t) Registration Rights . No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(u) Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the Knowledge of the Company is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the Effective Date, received notice from Nasdaq to the effect that the Company is not in compliance with the listing or maintenance requirements of Nasdaq. 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.

(v) Disclosure . All disclosure provided to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedule 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 the Purchaser does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.

(w) No Integrated Offering . Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the New Shares to be integrated with prior offerings by the Company for purposes of the Securities Act, which would require the registration of any such securities under the Securities Act or under the rules and regulations of Nasdaq on which any of the securities of the Company are listed or designated, if such integration would cause this Agreement or the transactions contemplated herein to require shareholder approval.

(x) Solvency . Based on the consolidated financial condition of the Company and the Subsidiary as of the Closing after giving effect to the receipt by the Company of the proceeds from the sale of the New Shares hereunder, (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other known liabilities (including known contingent liabilities) as they mature; and (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the

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current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof. The Company has no present intention to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). To the Knowledge of the Company, there are no facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction from the Effective Date until the one year anniversary of the Closing Date. Schedule 2(x) sets forth all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or the Subsidiary has commitments. Neither the Company nor the Subsidiary is in default with respect to any Indebtedness.

(y) Form S-3 Eligibility . The Company is eligible to register the resale of the New Shares for resale by the Purchaser on Form S-3 promulgated under the Securities Act.

(z) No General Solicitation . Neither the Company nor any person acting on behalf of the Company has offered or sold any of the New Shares by any form of general solicitation or general advertising. The Company has offered the New Shares only to the Purchaser.

(aa) 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 expenses related to foreign or domestic political activity, (ii) made any 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, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(bb) Transactions With Affiliates . None of the officers or directors of the Company is presently a party to any transaction with the Company or the Subsidiary (other than for services as officers or directors), which would require disclosure under Item 404(a) of Regulation S-K of the Exchange Act, which has not been so disclosed.

(cc) 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.

(dd) Title to Assets . Neither the Company nor the Subsidiary owns any real property. The Company and the Subsidiary have good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiary, in each case free and clear of all Liens, except for Permitted Liens. Any real property and facilities held under lease by the Company and the Subsidiary are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiary are in compliance, except as could not have or reasonably be expected to result in a Material Adverse Effect.

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3. Representations and Warranties of the Purchaser . The Purchaser represents and warrants to the Company as follows:

(a) Organization . Purchaser is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization, with all requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to conduct its business as now being conducted.

(b) Authority . Purchaser has the requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. All necessary action required to have been taken by or on behalf of Purchaser by applicable law or otherwise to authorize the approval, execution, delivery and performance by Purchaser of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized, and no other proceedings on its part are or will be necessary to authorize this Agreement or for it to consummate such transaction. This Agreement is valid and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies.

(c) Conflicting Agreements and Other Matters . Neither the execution and delivery of this Agreement nor the performance by Purchaser of its obligations hereunder will conflict with, result in a breach of the terms, conditions or provisions of, constitute a default under, result in the creation of any Lien upon any of the properties or assets of Purchaser pursuant to, or require any consent, approval or other action by or any notice to or filing with any Government Entity pursuant to, the organizational documents or agreements of Purchaser or any agreement, instrument, order, judgment, decree, statute, law, rule or regulation by which Purchaser is bound, except for filings after the Closing under Section 13(d) of the Exchange Act and filings under the HSR Act.

(d) Acquisition for Investment . Immediately following the Closing, Purchaser, in a series of successive transfers, is transferring half of the New Shares to each of its ultimate parents, Beacon and Rosebay. Purchaser (i) is acquiring the New Shares for BRP Entity’s account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and has no present intention to effect, or any present or contemplated plan, agreement, undertaking, arrangement, obligation, indebtedness, or commitment providing for, any distribution of the New Shares, (ii) is an “accredited investor” as defined in Rule 501(a) under the Securities Act, (iii) has carefully reviewed the representations concerning the Company and the Subsidiary contained in this Agreement and has made detailed inquiry concerning the Company and the Subsidiary, their respective business and their respective personnel, and (iv) has sufficient knowledge and experience in finance and business that it is capable of evaluating the risks and merits of its investment in the Company and is able financially to bear the risks thereof.

(e) General Solicitation . Purchaser is not purchasing the New Shares as a result of any advertisement, article, notice or other communication regarding the New Shares published in

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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) Brokers or Finders . No agent, broker, investment banker or other firm is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement as a result of any actions taken by Purchaser.

4. Registration Rights .

4.1 Registration of the Shares . The Company shall file with the SEC, within 30 days following the Closing Date, a Registration Statement covering the resale to the public by the BRP Entities of the New Shares. The Company shall use commercially reasonable efforts to cause the Registration Statement covering the New Shares to be declared effective by the SEC (collectively, the “ Registrable Shares ”) within 90 days after the filing thereof. The Company shall cause such Registration Statement to remain effective under the Securities Act until all Registrable Shares covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144. The Company shall promptly, and in no event in more than two (2) Business Days, notify the BRP Entities of the effectiveness of such Registration Statement after the Company confirms effectiveness with the SEC. In connection with the Company’s preparation and filing of the Registration Statement, the BRP Entities holding the New Shares shall deliver to the Company within 10 days after the Closing, a customary form of selling stockholder questionnaire.

4.2 Registration Representations and Warranties and Covenants .

(a) Other Registrations . The Company shall not file any other registration statements, other than registration statements on Form S-4 or Form S-8, until the Registration Statement required to be filed pursuant to Sections 4.1 hereunder is declared effective by the SEC, provided that this Section 4.2(a) shall not prohibit the Company from filing amendments to registration statements already filed.

(b) Compliance . The BRP Entities covenant and agree that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Shares pursuant to a Registration Statement. The Company shall comply in all material respects with all applicable rules and regulations of the SEC applicable to the filing of a Registration Statement.

4.3 Registration Procedures .

(a) In connection with the filing by the Company of a Registration Statement covering Registrable Shares, the Company shall furnish to the BRP Entities (i) a copy of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act and (ii) such other documents as the BRP Entities may reasonably request, in order to facilitate the public sale or other disposition of Registrable Shares.

(b) The Company shall use commercially reasonable efforts to register or qualify the Registrable Shares covered by a Registration Statement under the securities laws of each state of

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the United States as the Purchaser shall reasonably request; provided , however , that the Company shall not be required in connection with this paragraph (b) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction.

(c) If the Company has delivered preliminary or final prospectuses to the BRP Entities and after having done so the prospectus is amended or supplemented to comply with the requirements of the Securities Act, the Company shall promptly notify the BRP Entities and, if requested by the Company, the BRP Entities shall immediately cease making offers or sales of Registrable Shares covered by a Registration Statement and return all prospectuses to the Company. The Company shall promptly provide the BRP Entities with revised or supplemented prospectuses and, following receipt of the revised or supplemented prospectuses, the BRP Entities shall be free to resume making offers and sales of Registrable Shares under such Registration Statement.

(d) The Company shall be entitled to include in a Registration Statement covering Registrable Shares the shares of Common Stock held by other shareholders of the Company, provided such other shares of Common Stock are excluded first from such Registration Statement in order to comply with any applicable laws or request from any Government Entity, Nasdaq or any applicable listing agency.

(e) The Company shall pay the expenses incurred by it in complying with its registration obligations under this Section 4, including all registration and filing fees, exchange listing fees, fees and expenses of counsel for the Company, and fees and expenses of accountants for the Company, but excluding (i) any brokerage fees, selling commissions or underwriting discounts incurred by the BRP Entities in connection with sales under any Registration Statement covering Registrable Shares and (ii) the fees and expenses of one counsel retained by the BRP Entities.

(f) The Company shall use commercially reasonable efforts to avoid the issuance of any order suspending the effectiveness of a Registration Statement, or any suspension of the qualifications (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction. The Company shall advise the BRP Entities promptly after it shall receive notice of any stop order or issuance of any order by the SEC delaying or suspending the effectiveness of a Registration Statement covering Registrable Shares or of the initiation of any proceeding for that purpose, and it will promptly use commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

4.4 Registration and Underwritten Offering Confidentiality . The BRP Entities agree to treat as confidential (unless otherwise publicly disclosed by the Company or a third party not to the knowledge of BRP Entities in breach of an agreement of confidentiality with the Company) any written notice from the Company regarding the Company’s plans to file a Registration Statement or effect an Underwritten Offering and shall not disclose such information to any other person, or use such information, except as is necessary to exercise its rights under this Agreement.

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4.5 Underwritten Offering

(a) In connection with an underwritten offering of any of the Common Stock at any time after January 1, 2013 (“ Underwritten Offering ”), the Company shall, each such time, promptly give the BRP Entities written notice of such proposed Underwritten Offering as soon as practicable. Upon written request of the BRP Entities given within five (5) Business Days after receipt of any such notice by the Company, the Company shall use its reasonable best efforts to cause to be included in such Underwritten Offering up to such number of the Shares then held by the BRP Entities as shall equal, in the aggregate, the lesser of (x) 20% of the total estimated maximum dollar amount of shares proposed to be sold in such Underwritten Offering by the Company and any other holders of securities of the Company, or (y) such number of Shares as the BRP Entities shall so specify in their written request, subject in either case to Section 4.5(b) below.

(b) If the managing underwriters advise the Company that their reasonable opinion of marketing factors require a limitation in the number of shares to be included by persons other than the Company in an Underwritten Offering under Section 4.5(a), the shares held by the BRP Entities and any other holders of securities of the Company who are entitled, by contract with the Company, to have securities included in such Underwritten Offering may be excluded from such Underwritten Offering on a pro rata basis based on the respective number of shares of Common Stock held by them on the date the Company gives notice as specified above. If the BRP Entities or any other holder would thus be entitled to include more shares than such holder requested to be registered, the excess shall be allocated among the BRP Entities and other holders in the manner described in the preceding sentence.

(c) In the event a BRP Entity intends to include its Shares in an Underwritten Offering, such right shall be conditioned upon such BRP Entity’s participation in such Underwritten Offering on the terms set forth herein and such BRP Entity shall enter into an underwriting agreement upon customary terms with the underwriter or underwriters selected by the Company.

(d) All of the Company’s obligations under this Section 4.5 shall terminate on the earlier of (a) December 31, 2018, (b) the date on which all of the Shares have been sold by the BRP Entities , or (c) a merger or consolidation of the Company, provided that the shares received as merger consideration in exchange for the Shares are freely tradable on a national securities exchange.

4.6 Indemnification .

(a) The Company agrees to indemnify and hold harmless each BRP Entity and their Associated Companies, each underwriter, and each other person, if any, who controls such BRP Entities and their Associated Companies or underwriter within the meaning of the Securities Act or Exchange Act from and against any losses, claims, damages or liabilities to which such BRP Entities and their Associated Companies, such underwriter or controlling person may become subject (under the Securities Act, the Exchange Act, state securities or Blue Sky laws or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon any untrue statement of a material fact contained in

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any registration statement covering the Shares or in any preliminary prospectus or final prospectus contained in such registration statement, or any amendment or supplement to such registration statement, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse each BRP Entity and their Associated Companies, underwriter or controlling person for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim, or preparing to defend any such action, proceeding or claim; provided , however , that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in such registration statement, preliminary prospectus or prospectus, or any amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such BRP Entity and their Associated Companies, underwriter or controlling person specifically for use in the preparation thereof or any statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to such BRP Entity prior to the pertinent sale or sales by such BRP Entity.

(b) Each BRP Entity, severally and not jointly, agrees to indemnify and hold harmless the Company, each underwriter and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each officer of the Company who signs the registration statement and each director of the Company, from and against any losses, claims, damages or liabilities to which the Company or any such underwriter, officer, director or controlling person may become subject (under the Securities Act, the Exchange Act, state securities or Blue Sky laws or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon any untrue statement of a material fact contained in any registration statement covering the Shares or in any preliminary prospectus, final prospectus contained in such registration statement, or any amendment or supplement to such registration statement or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if such untrue statement or omission was made in reliance upon and in conformity with written information furnished by or on behalf of such BRP Entity specifically for use in preparation of the registration statement, prospectus, amendment or supplement and such BRP Entity will reimburse the Company, or such underwriter, officer, director or controlling person, as the case may be, for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided , however , that the BRP Entity’s obligation to indemnify the Company shall be limited to the net amount received by such BRP Entity from the sale of the Shares.

(c) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 4.6, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 4.6 (except to the extent that such omission materially and adversely affects the indemnifying party’s ability to defend such action). Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice

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from such indemnified party, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided , however , that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any Affiliate or Associated Company or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided , however , that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided , however , that such consent shall not be unreasonably withheld. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in this Section 4.6 is unavailable to or insufficient to hold harmless an indemnified party under paragraph (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the BRP Entity on the other hand, in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among ether things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company on the one hand or the BRP Entity on the other hand and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and the BRP Entities agree that it would not be just and equitable if contribution pursuant to this paragraph (d) were determined by pro rata allocation (even if the BRP Entities were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this paragraph (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this paragraph (d), a BRP Entity shall not be required to contribute any amount in excess of the amount by which the net amount received by such BRP Entity from the sale of the Shares to which such loss relates exceeds the amount of any damages which such BRP Entity has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent misrepresentation (within the

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meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) The rights and obligation of the Company and the BRP Entities under this Section 4.6 shall survive the termination of this Agreement.

4.7 Lock-Up Agreement and Confidentiality of Notice .

(a) During the period between the date of this Agreement and December 31, 2013, the BRP Entities agree, if requested by the Company and/or the managing underwriters, placement agents or initial purchasers for any offering of capital stock proposed by the Company during such period, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares or other equity securities of the Company or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any Shares or other equity securities of the Company, whether any transaction described in clause (a) or (b) is to be settled by delivery of securities, in cash or otherwise, during such period as may be requested by the managing underwriters, placement agents or initial purchasers, as the case may be, for such offering and (ii) to execute any agreement (a “ Lock-Up Agreement ”) reflecting clause (i) above as may be requested by the Company, the managing underwriters, the placement agents or the initial purchasers, as the case may be, at the time of such offering; provided , that all officers, directors and Affiliates of the Company enter into similar agreements with equivalent terms. The foregoing sentence shall not apply to (a) transfers as a bona fide gift, (b) distributions to Associated Companies, (c) transfers by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the undersigned, (d) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act, provided that such plan does not provide for the transfer during the restricted period and no public announcement or filing under the Exchange Act regarding the establishment of such plan shall be required of or voluntarily made by or on behalf of the undersigned or the Company, or (e) sales to an underwriter pursuant to an Underwriting Offering; provided that in the case of any transfer or distribution pursuant to clause (a), (b), or (c) above, (y) each donee or distributee shall sign and deliver a Lock-Up Agreement, and (z) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the restricted period referred to in the foregoing sentence.

(b) The Company may impose stop-transfer instructions with respect to the Shares or other securities subject to a Lock-Up Agreement in accordance with the terms thereof.

(c) Any BRP Entity receiving any written notice from the Company regarding the Company’s plans to effect and offering shall treat such notice confidentially and shall not disclose such information to any person other than as necessary to exercise its rights under this Agreement.

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5. Rights Agreement .

(a) The Company shall at all times keep in full force and effect the Second Amendment to Rights Agreement, which generally provides that the BRP Entities and Associated Companies may own the number of shares of outstanding Common Stock that does not exceed 33.3% of the Company’s fully-diluted Common Stock outstanding (which assumes the exercise or conversion of all exercisable or convertible securities then outstanding) (the “ Maximum Percentage ”) without such ownership causing the BRP Entities and Associated Companies to be deemed “Acquiring Persons” for purposes of the Rights Agreement, which Maximum Percentage, as further provided in the Second Amendment to Rights Agreement, may be comprised of a combination of (i) Existing Shares, (ii) New Shares, and (iii) up to 2,400,000 shares of Common Stock (subject to adjustment for any stock split, reverse stock split, stock dividend, reclassification, recapitalization or other similar change to the Common Stock) that may be purchased from time to time in the sole discretion of the BRP Entities and their Associated Companies in open market purchases and/or privately negotiated acquisitions. The Second Amendment to Rights Agreement also provides that the BRP Entities’ and Associated Companies’ ownership of fully-diluted Common Stock outstanding in excess of the Maximum Percentage shall not result in the BRP Entities and/or Associated Companies being deemed an “Acquiring Person” for purposes of the Rights Agreement if as a result of an acquisition of Common Stock by the Company, or the exercise or cancellation of outstanding securities that are exercisable, convertible or exchangeable for shares of Common Stock (including but not limited to outstanding options and warrants to purchase Common Stock), which, by reducing the number of shares of fully-diluted Common Stock outstanding, increases the proportionate number of shares owned by the BRP Entities’ and Associated Companies’ to more than the Maximum Percentage. For the sake of clarity, the Company will use reasonable best efforts to ensure that the BRP Entities and/or Associated Companies compliance with this Section 5 does not trigger the provisions of any shareholder rights plan or similar plan or arrangement, the Second Amendment to the Rights Agreement, or the Rights Agreement, as may be further amended, and will take all further action as may be reasonably required to accomplish the intent of this Section 5.

(b) Quarterly and upon a BRP Entity’s written request, the Company shall provide (within five (5) Business Days of any request) a statement as to the number of current outstanding shares of Common Stock and the Company’s good faith estimate of the BRP Entities’ current ownership percentage (which shall be based upon publicly available information and/or information furnished by the BRP Entities to the Company in writing).

(c) The Company will not enter into any shareholder rights plans or similar plan or arrangement, or further amendment to the Rights Agreement, that would allow a claim to be made or enforced by the Company that any BRP Entity or any Associated Company is an “Acquiring Person” for purposes of the Rights Agreement or otherwise deemed to trigger the provisions of any such plan provided that the BRP Entities and Associated Companies are in compliance with this Section 5.

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6. Covenants and Additional Agreements .

(a) Obligations . The Company and each BRP Entity shall use reasonable best efforts to take or cause to be taken all actions, and to do or cause to be done all other things, necessary, proper or advisable in order to fulfill and perform its obligations in respect of this Agreement, or otherwise to consummate and make effective the transactions contemplated hereby and thereby.

(b) Consents and Approvals . The Company and each BRP Entity shall, as promptly as practicable, (i) make, or cause to be made, all filings and submissions (including but not limited to under the HSR Act and foreign antitrust filings and any filings under the rules and regulations of the SEC) required under any law applicable to it or its Subsidiary or Associated Companies, and give such reasonable undertakings as may be required in connection therewith, and (ii) use all reasonable efforts to obtain or make, or cause to be obtained or made, all Permits necessary to be obtained or made by it, in each case in connection with this Agreement, the sale and transfer of the New Shares pursuant hereto and the consummation of the other transactions contemplated hereby or thereby. Without limiting the generality of the foregoing, the Company and each BRP Entity shall agree to use reasonable best efforts to make a Premerger Notification Filing under the HSR Act on or before August 3, 2012 and the Company and BRP Entities shall request early termination of the applicable waiting period.

(i) as promptly as practicable, obtain from any Governmental Entity any consents, licenses, permits, waivers, approvals, authorizations, or orders required to be obtained or made by the Company or the BRP Entities in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby;

(ii) as promptly as practicable, make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement and the transactions contemplated hereby required under (A) the HSR Act and any related governmental request thereunder, and (B) any other applicable law; and

(iii) cause each of their respective subsidiaries, to cooperate and to use their respective reasonable best efforts to obtain any government clearances or approvals required for Closing under the HSR Act, the Sherman Antitrust Act, as amended, the Clayton Antitrust Act, as amended, the Federal Trade Commission Act, as amended, and any other federal, state or foreign law, regulation or decree designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade (collectively “ Antitrust Laws ”), to respond to any government requests for information under any Antitrust Law, and, at the sole option of the Purchaser, to contest and resist any action, including any legislative, administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) (an “ Antitrust Order ”) that restricts, prevents or prohibits the consummation of the transactions contemplated by this Agreement under any Antitrust Law. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another, in connection with, and provide to the

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other parties in advance, any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to any Antitrust Law.

(d) Further Actions . The Company and each BRP Entity shall coordinate and cooperate with the other parties in exchanging such information and supplying such reasonable assistance as may be reasonably requested by such other parties in connection with the filings and other actions contemplated by this Agreement. The Company and each BRP Entity will execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

(e) SEC Filings; Financial Statements . The Company shall use commercially reasonable efforts to (i) timely file any reports, schedules, forms, statements and documents required to be filed by it with the SEC under the Securities Act and the Exchange Act (“ Future SEC Filings ”) and use commercially reasonable efforts to (A) comply in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations thereunder and (B) ensure that any Future SEC Filings do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) ensure that the financial statements of the Company included in the Future SEC Filings shall comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing; and (iii) ensure that the financial statements in its Future SEC Filings shall be prepared in accordance with GAAP applied on a consistent basis during the periods involved, 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 and its Subsidiary 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, year-end audit adjustments.

(f) Compliance with Applicable Law . Each of the Company and its Subsidiary shall (i) use commercially reasonable efforts to comply in all material respects with all statutes, laws, regulations, rules, judgments, orders and decrees of all Governmental Entities applicable to it that relate to its respective business; and (ii) maintain all Permits that are required in order to permit it to carry on its business as it is presently conducted, except such Permits for which the failure so to maintain shall not have a Material Adverse Effect. The Company will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002. The Company will not knowingly take action that would cause the Company to become subject to the Investment Company Act unless the Company so registers or has, or obtains, an exemption from registration.

(g) Board Attendance Rights . The BRP Entities hereby agree and acknowledge that, as of the Effective Date, the BRP Entities shall have no further board attendance rights under Section 6(h) of the Original Securities Purchase Agreement.

(h) Listing of Common Stock . The Company shall take no action designed to, or which to the Knowledge of the Company is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act. The Company hereby agrees to use

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commercially reasonable efforts to maintain the listing of the Common Stock, including the New Shares, on Nasdaq. The Company further agrees, if the Company applies to have the Common Stock traded on any other trading market, it will include in such application all of the New Shares, and will take such other action as is necessary to cause all of the New Shares to be listed on such other trading market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock, including the New Shares, on Nasdaq and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of Nasdaq.

(i) Agreement to Vote . From and after the Closing Date and until the fifth anniversary of the Closing Date, at any meeting of the stockholders of the Company (each, a “ Stockholder Meeting ”), each of the BRP Entities and Associated Companies holding Voting Shares (as defined below) shall:

(i) appear at each such Stockholder Meeting and at every adjournment or postponement thereof or otherwise cause all of its Existing Shares, New Shares and any other shares of Common Stock acquired after the Closing Date (the “ Post Closing Shares ”) entitled to vote at such Stockholder Meeting then Beneficially Owned and of record as of the applicable record date by such Stockholder (the “ Voting Shares ”) to be counted as present thereat for purposes of calculating a quorum; and

(ii) vote (or cause to be voted), in person or by proxy, its Voting Shares as recommended by the Company’s Board of Directors, as such recommendation is set forth in the definitive proxy statement mailed by the Company to its stockholders for such Stockholder Meeting, provided , however , that notwithstanding the foregoing, with respect to any proposal to (x) amend the Company’s Charter or (y) approve any Extraordinary Transaction (as defined below), each of the Stockholders instead shall vote (or cause to be voted), in person or by proxy, any Voting Shares, to the extent they are Existing Shares or Post Closing Shares, shall be voted in proportion to the manner in which all of the stockholders of the Company, other than the BRP Entities, vote their shares in respect of such proposal(s), regardless of the recommendation of the Company’s Board of Directors.

(iii) For purposes of this Section 6(i) only:

(A) The term “ Associated Company ” shall disregard the final sentence of the definition of such term contained in Section 9 hereof such that the voting restrictions and related covenants contained in this Section 6(i) shall apply to any Voting Shares now or hereafter held by The Purdue Frederick Company as if such company were an “Associated Company”.

(B) The term “ Extraordinary Transaction ” shall mean any transaction where the Company (1) must seek the vote of its stockholders under the Delaware General Corporation Law or (2) seeks approval or authorization of its stockholders solely under any rule of Nasdaq or any other then applicable stock exchange on which the Common Stock is listed.

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(C) In the event that the BRP Entities sell Voting Shares pursuant to the terms of this Agreement following the Effective Date, solely for purposes of the voting covenants contained in clause (ii) of this Section 6(i), the number of (1) Existing Shares and (2) New Shares held by the BRP Entities and Associated Companies shall be reduced proportionately as a result of any such sale such that 50% of the Voting Shares sold shall be deemed to have been Existing Shares and 50% of the Voting shares sold shall be deemed to have been New Shares.

7. Conditions Precedent to Closing .

7.1 Each Party’s Obligations . The obligations of the Company and the Purchaser to consummate the transaction contemplated to occur at the Closing shall be subject to the satisfaction prior to the Closing of the following condition:

(a) HSR, and Other Approvals . Any applicable waiting period under the HSR Act relating to the transactions contemplated hereby to be consummated at the Closing shall have expired or been terminated and all other material authorizations, consents, orders or approvals of, or regulations, declarations or filings with, or expirations of applicable waiting periods imposed by, any Governmental Entity (including, without limitation, any foreign antitrust filing) necessary for the consummation of the transactions contemplated hereby to be consummated at the Closing, shall have been obtained or filed or shall have occurred.

(b) No Litigation, Injunctions, or Restraints . No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement to be consummated at the Closing shall be in effect.

7.2 Conditions to the Obligations of the Company . The obligations of the Company to consummate the transaction contemplated to occur at the Closing shall be subject to the satisfaction or waiver thereof prior to or on the Closing Date of the following condition:

(a) Representations and Warranties . The representations and warranties of the Purchaser set forth in this Agreement that are qualified as to materiality shall be true and correct, and those that are not so qualified shall be true and correct in all material respects, as of the time of the Closing as though made at and as of such time, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties that are qualified as to materiality shall be true and correct, and those that are not qualified shall be true and correct in all material respects, on and as of such earlier date).

(b) Officer’s Certificate . At Closing, the Purchaser shall deliver to the Company a certificate signed by an authorized officer of the Purchaser certifying to the effect set forth in Sections 7.1(a) and 7.2(a);

(c) Payment of Purchase Price . At Closing, the Purchaser shall pay to the Company the Purchase Price for the New Shares being purchased by: (i) conversion and cancellation of an amount equal to $51,040,191.21 (representing $50,000,000 in principal and $1,040,192.21 in interest due and owing to Purchaser by the Company pursuant to the Line of Credit Notes as of

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the Effective Date), and (ii) by wire transfer of immediately available funds, or by other method acceptable to the Company, of $27,500,000.

(d) Conversion of Line of Credit Notes . At Closing, Purchaser shall surrender the Line of Credit Notes to the Company for cancellation and conversion in exchange for the issuance to the Purchaser of the New Shares. Purchaser and the Company hereby agree and acknowledge that, upon the issuance of the New Shares to Purchaser and the occurrence of the Closing, subject to Section 8.2(c) below (i) the Line of Credit Notes shall be deemed to be cancelled and converted into the New Shares without any further action by Purchaser or the Company (other than the issuance and delivery to the Purchaser of the New Shares), and the Line of Credit Notes shall thereafter have no further force or effect, (ii) the Line of Credit Agreement shall be deemed to be terminated in its entirety and shall have no further force or effect, and (iii) the Company shall have no further obligations of any kind whatsoever to Purchaser and Purchaser shall have no further obligations of any kind whatsoever to the Company (including, without limitation, the obligation to make Line of Credit Loans (as defined in the Line of Credit Agreement)), in each case, with respect to the Line of Credit Notes or the Line of Credit Agreement; provided that, notwithstanding the foregoing, the obligations of the Company under Sections 9.3 of the Line of Credit Agreement shall survive termination.

7.3 Conditions to the Obligations of Purchaser . The obligations of the Purchaser to consummate the transaction contemplated to occur at the Closing shall be subject to the satisfaction or waiver thereof prior to or on the Closing Date of each of the following conditions:

(a) Representations and Warranties . The representations and warranties of the Company set forth in this Agreement that are qualified as to materiality shall be true and correct, and those that are not so qualified shall be true and correct in all material respects, as of the time of the Closing as though made at and as of such time, except (i) to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties that are qualified as to materiality shall be true and correct, and those that are not so qualified shall be true and correct in all material respects, on and as of such earlier date), or (ii) as set forth in an amended Disclosure Schedule delivered by the Company to the Purchaser.

(b) Performance of Obligations of the Company . The Company shall have performed or complied in all material respects (other than such covenants and obligations which are already qualified by a materiality standard in which case such covenant and agreement shall be performed or complied with exactly as stated) with all obligations and covenants required to be performed or complied with by the Company under this Agreement on or prior to the Closing.

(c) Officer’s Certificate . At Closing, the Company shall deliver to the Purchaser a certificate signed by the chief executive officer and chief financial officer of the Company certifying to the effect set forth in Sections 7.1(a), 7.1(b), 7.3(a) and 7.3(b).

(d) Disclosure Schedule . The Company shall deliver to the Purchaser the Disclosure Schedule updated as of the Closing Date.

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(e) Legal Opinion . Wilmer Cutler Pickering Hale and Dorr LLP, counsel for the Company, shall deliver to the Purchaser an opinion, dated the Closing Date, in the form attached hereto as Exhibit A .

(f) Stock Certificates . The Company shall deliver to the Purchaser a certificate for the number of New Shares registered in the name of the Purchaser.

8. Termination .

8.1 Termination . This Agreement may be terminated with respect to the respective obligations of the Company and the Purchaser to sell and purchase the New Shares and to deliver the other deliverables contemplated to be delivered at the Closing at any time prior to the Closing:

(a) by mutual written consent of Purchaser and the Company; or

(b) by the Purchaser or the Company if (i) there shall be any statute, law, regulation or rule that makes consummating the transactions contemplated hereby to be consummated at the Closing illegal or if any court or other Governmental Entity of competent jurisdiction shall have issued a judgment, order, decree or ruling, or shall have taken such other action restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby to be consummated at the Closing and such judgment, order, decree or ruling shall have become final and non-appealable; or (ii) if the Closing shall not have occurred prior to September 30, 2012; or (iii) if any of the conditions set forth in Section 7 shall become impossible to fulfill and shall not have been waived in accordance with the terms of this Agreement.

8.2 Effect of Termination . In the event of termination of this Agreement by either the Company or the Purchaser as provided in Section 8.1,

(a) the respective obligations of the Company and the Purchaser to sell and purchase the New Shares and to deliver the other deliverables contemplated to be delivered at the Closing shall forthwith become void and have no effect, without any liability or obligation on the part of the Purchaser or the Company (except to the extent that such termination results from the willful and material breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement applicable to the Closing);

(b) the remaining provisions of this Agreement shall survive such termination and remain in full force and effect;

(c) (i) the definition of the term “Line of Credit Maturity Date” as set forth in the Line of Credit Agreement shall, without any action on the part of the Company and the Purchaser, automatically be amended and restated in its entirety to read as follows: “Line of Credit Maturity Date” means December 31, 2015, and (ii) Section 2.3(c) of the Line of Credit Agreement shall be terminated in its entirety. For the avoidance of doubt, interest on the principal amount outstanding under the Line of Credit Agreement shall continue to accrue from and after the Effective Date and, in the event that this Agreement is terminated for any reason prior to the issuance of the New Shares, such accrued interest, together with the principal amount of all outstanding Line of Credit Notes, shall be payable in accordance with the terms and provisions of

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the Line of Credit Agreement as though this Agreement had not been entered into by the parties hereto. Nothing contained herein shall be deemed to waive, limit, prejudice or otherwise adversely affect any of the rights, powers, remedies or privileges of the Purchaser under the Line of Credit Agreement or the Line of Credit Notes, and the Purchaser expressly reserves all of its rights to enforce any or all of its rights and remedies under the Line of Credit Agreement and the Line of Credit Notes. Notwithstanding the foregoing, acting in accordance with Section 9.10 of the Line of Credit Agreement, the Purchaser: (x) hereby waives as of the Effective Date any rights it may have under Section 2.3(c) as a result of the termination of the Global Strategic Alliance Agreement (as defined in the Line of Credit Agreement) and the execution by the Company of the MICL Termination Agreement, and (y) agrees and acknowledges that the matters and circumstances leading up to the execution of the Termination Agreements shall not give rise to, or constitute, an “Event of Default” for purposes of Section 7.3 of the Line of Credit Agreement;

(d) the royalty rates set forth in Section 4.1(a) of the MICL Termination Agreement shall be amended as set forth in Section 4.1(a) of the MICL Termination Agreement; and

(e) the royalty rates set forth in Section 4.1(a) of the Purdue Termination Agreement shall be amended as set forth in Section 4.1(a) of the Purdue Termination Agreement.

9. Interpretation; Definitions .

(a) For purposes of this Agreement, the following terms shall have the following meanings:

“ Affiliate ” shall have the meaning set forth in Rule 12b-2 under the Exchange Act (as in effect on the date of this Agreement).

“ Agreement ” means this Agreement, together with all appendices, exhibits and schedules attached hereto and the Disclosure Schedule, as the same may be amended or supplemented from time to time, by written agreement of the Company and the BRP Entities.

“ Associated Company ” means, as to any BRP Entity, any person, firm, trust, partnership, corporation, company or other entity or combination thereof, which directly or indirectly (i) controls the BRP Entity, (ii) is controlled by the BRP Entity or (iii) is under common control with the BRP Entity. The terms “control” and “controlled” mean ownership of 50% or more, including ownership by trusts with substantially the same beneficial interests, of the voting and equity rights of such person, firm, trust, partnership, corporation, company or other entity or combination thereof or the power to direct the management of such person, firm, trust, partnership, corporation, company or other entity or combination thereof. “Associated Company” shall not include The Purdue Frederick Company Inc., a New York corporation.

“ Beacon ” is defined in the recitals to this Agreement.

“ Beneficial Ownership ” by a Person of any securities means ownership, directly or indirectly, through any contract, arrangement, understanding, relationship or

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otherwise, where such Person has or shares with another Person (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act. The terms “ Beneficially Own ” and “ Beneficially Owned ” shall have a correlative meaning.

“ BRP Entity ” is defined in the recitals.

“ Business Day ” means any day on which banking institutions are open in the City of Boston.

“ Closing ” is defined in Section 1.

“ Closing Date ” is defined in Section 1.

“ Common Stock ” is defined in the recitals to this Agreement.

“ Company ” means the Company’s Common Stock, $0.001 par value per share.

“ Company Bylaws ” is defined in Section 2(a).

“ Company Charter ” is defined in Section 2(a).

“ Company Intellectual Property ” is defined in Section 2(m).

“ Company SEC Documents ” is defined in Section 2(f).

“ Contract ” is defined in Section 2(c)(i).

“ Disclosure Schedule ” is defined in Section 2.

“ Environmental Law ” is defined in Section 2(k).

“ Environmental Permits ” is defined in Section 2(k).

“ Evaluation Date ” is defined in Section 2(q).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute and the rules and regulations of the SEC promulgated thereunder, all as the same shall be in effect from time to time.

“ Existing Shares ” means the (i) 3,000,000 shares of Common Stock Beneficially Owned by Beacon as of the Effective Date and (ii) 3,000,000 shares of Common Stock Beneficially Owned by Rosebay as of the Effective Date, issued pursuant to the Original Securities Purchase Agreement.

“ Extraordinary Transaction ” is defined in Section 6(i)(iii)(B).

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“ Future SEC Filings ” is defined in Section 6(e).

“ GAAP ” means United States generally accepted accounting principles.

“ Governmental Entity ” is defined in Section 2(c)(ii).

“ Hazardous Substance ” is defined in Section 2(k).

“ Indebtedness ” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP.

“ Intellectual Property ” means trademarks, trade names, trade dress, service marks, copyrights, domain names, and similar rights (including registrations and applications to register or renew the registration of any of the foregoing), patents and patent applications, trade secrets, rights of privacy and publicity, moral rights, and any other similar intellectual property rights.

“ Intellectual Property License ” means any written license, permit, authorization, approval, Contract or consent granted, issued by or with any Person relating to the use by Company or its Subsidiary of Intellectual Property.

“ Knowledge of the Company ,” “ Knowledge of the Company or its Subsidiary ” or any like expression means the actual knowledge of the executive officers and vice presidents of the Company and/or Subsidiary and the knowledge that would be reasonably expected to be known by such individuals in the ordinary and usual course of the performance of their professional responsibilities to the Company and/or Subsidiary.

“ Lien ” is defined in Section 2(c)(i).

“ Line of Credit Agreement ” means the Line of Credit Agreement dated November 19, 2008 by and between the Company and Purchaser.

“ Line of Credit Notes ” has the meaning set forth in the Line of Credit Agreement.

“ Material Adverse Effect ” on or with respect to an entity (or group of entities taken as a whole) means any state of facts, event, change or effect that has had, or would reasonably be expected to have, a material adverse effect on (a) the results of business, properties, results of operations or financial condition of such entity (or, if with respect thereto, of such group of entities taken as a whole),

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(b) the ability of such entity (or group of entities) to consummate the transactions and perform in any material respect on a timely basis its obligations contemplated under this Agreement, or (c) the legality, validity or enforceability of this Agreement.

“ Material Contract ” is defined in Section 2(j)(i).

“ Maximum Percentage ” is defined in Section 5(a).

“ MICL Termination Agreement ” means that certain Termination and Revised Relationship Agreement entered into as of the Effective Date by and between the Company and Mundipharma International Corporation Limited, a Bermuda corporation.

“ Nasdaq ” means the NASDAQ Stock Market.

“ New Shares ” is defined in Section 1.

“ Original Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated November 19, 2008, between the Company, the Purchaser and Purdue.

“ Permit ” all permits, licenses, registrations, certificates, orders or approvals from any Governmental Entity.

“ Permitted Liens ” means (a) those Liens (A) securing debt set forth on Schedule 9 , (B) for Taxes not yet due or payable or being contested in good faith and for which adequate reserves have been established in accordance with GAAP, (C) that constitute mechanics’, carriers’, workmen’s or like liens, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course, (D) Liens incurred or deposits made in the ordinary course of business consistent with past practice in connection with workers’ compensation, unemployment insurance and social security, retirement and other legislation, (E) easements, covenants, declarations, rights or way, encumbrances, or similar restrictions in connection with real property owned by the Company or its Subsidiary that do not materially impair the use of such real property by the Company and its Subsidiary, and in the case of Liens described in clauses (B), (C), (D) or (E) that, individually or in the aggregate, would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole; and (b) with respect to Company Intellectual Property, (A) the joint ownership of any Company Intellectual Property by Company or its Subsidiary, on the one hand, and any other Person(s) (each such Person, a “ Co-Owner ”), on the other hand, set forth on Schedule 9 , (B) licenses under the Company Intellectual Property granted by Company, its Subsidiary, any Co-Owner or any licensee of the foregoing set forth on Schedule 9 or (C) rights to use Company Intellectual Property granted by the Company or its Subsidiary under reasonable and customary service agreements, clinical trial agreements,

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consulting agreements, material transfer agreements and confidentiality agreements entered into in the ordinary course of business.

“ Person ” means any individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated organization, government or department or agency of a government or other entity.

“ Post Closing Shares ” is defined in Section 6(i)(i).

“ Purchase Price ” is defined in Section 1.

“ Purchaser ” is defined in the recitals to this Agreement.

“ Purdue ” means Purdue Pharmaceutical Products L.P., a Delaware limited partnership.

“ Purdue Termination Agreement ” means that Termination and Revised Relationship Agreement entered into as of the Effective Date by and between the Company and Purdue.

“ Registration Statement ” means the registration statements on Form S-3 (or any successor form related to secondary offerings) required to be filed hereunder and any additional registration statements contemplated by Section 4, including (in each case) the prospectus, amendments and supplements to such registration statement or prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“ Registrable Shares ” is defined in Section 4.1.

“ Representative ” shall mean any director, officer or employee of a BRP Entity or an Associated Company.

“ Rights Agreement ” means the Rights Agreement between Discovery Partners International, Inc. (“ DPI ”), and American Stock Transfer & Trust Company (“ Rights Agent ”) dated February 13, 2003, as amended by the First Amendment to Rights Agreement between DPI and Rights Agent dated April 10, 2006 and the Second Amendment to Rights Agreement.

“ SEC ” means the Securities and Exchange Commission.

“ Second Amendment to Rights Agreement ” means that Second Amendment to the Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC dated November 19, 2008.

“ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same shall be in effect from time to time.

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“ Shares ” means all shares of Common Stock currently held or acquired in the future by any BRP Entity or an Associated Company, including the New Shares and Existing Shares.

“ Subsidiary ” means Infinity Discovery, Inc., a wholly-owned subsidiary of the Company.

“ Termination Agreements ” shall mean collectively the MICL Termination Agreement and the Purdue Termination Agreement.

“ Underwritten Offering ” is defined in 4.5(a).

(b) The definitions of the terms herein apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun will include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation.” Unless the context requires otherwise, (A) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (B) any reference to any laws or regulations herein will be construed as referring to such laws and regulations as from time to time enacted, repealed or amended, (C) any reference herein to any Person will be construed to include the Person’s successors and assigns, (D) the words “herein”, “hereof” and “hereunder”, and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (E) any reference herein to the words “mutually agree” or “mutual written agreement” will not impose any obligation on either party to agree to any terms relating thereto or to engage in discussions relating to such terms except as such party may determine in such party’s sole discretion, and (F) all references herein to Sections, Exhibits or Schedules will be construed to refer to Sections, Exhibits and Schedules of this Agreement.

10. Miscellaneous

10.1 Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants, and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable.

10.2 Specific Enforcement . The BRP Entities, on the one hand, and the Company, on the other, acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions hereof, including, without limitation, Sections 4.1, 6(b) and 6(i), in the United States District Court for the Southern District

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of New York, Manhattan Courthouse, this being in addition to any other remedy to which they may be entitled at law or equity.

10.3 Entire Agreement . This Agreement, the Original Securities Purchase Agreement and the Termination Agreements contain the entire understanding of the parties and their Associated Companies with respect to the transactions contemplated hereby.

10.4 Counterparts . This Agreement may be executed in one or more counterparts, each of which, when so executed and delivered, shall be considered to be an original, and all of which counterparts, taken together, will constitute one and the same instrument even if the parties have not executed the same counterpart. Signatures provided by facsimile or electronic transmission will be deemed to be original signatures.

10.5 Notices . All notices and other communications required or permitted under this Agreement shall be in writing and addressed to the Company or the BRP Entity, as the case may be, at their respective addresses set forth below:

If to the Company:

Infinity Pharmaceuticals, Inc.

780 Memorial Drive

Cambridge, Massachusetts 02139

Attn: Adelene Q. Perkins, President

Telephone (617) 453-1000

Facsimile: (617) 453-1001

With copies to:

Infinity Pharmaceuticals, Inc.

780 Memorial Drive

Cambridge, Massachusetts 02139

Attn: Gerald E. Quirk, Esq., General Counsel

Telephone (617) 453-1000

Facsimile: (617) 453-1001

and to

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 01209

Attn: Steven D. Singer, Esq.

Telephone (617) 526-6000

Facsimile: (617) 526-5000

If to Purchaser:

Purdue Pharma L.P.

One Stamford Forum

201 Tresser Blvd.

Stamford, CT 06901-3431

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USA

Attn: John Stewart

Telephone: (203) 588-7500

Facsimile: (203) 588-6211

If to Beacon:

Beacon Company

c/o Jonathan G. White, Esq.

Ogier House

The Esplanade

St. Helier, Jersey JE4 9WG

Channel Islands

Telephone: (011-44-1534) 504-000

Facsimile: (011-44-1534) 887-379

If to Rosebay:

Rosebay Medical Company L.P.

c/o North Bay Associates

14000 Quail Springs Parkway

Oklahoma City, Oklahoma 73134

Attn: Stephen A. Ives

Telephone: (405) 936-6240

Facsimile: (405) 936-6241

With copies to:

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

Attn: Stuart D. Baker

Telephone (212) 408-5435

Facsimile: (212) 489-7130

All notices and other communications required or permitted under this Agreement shall be effective upon the earlier of actual receipt thereof by the person to whom notice is directed or (a) in the case of notices and communications sent by personal delivery or telecopy, one Business Day after such notice or communication arrives at the applicable address or was successfully sent to the applicable telecopy number, (b) in the case of notices and communications sent by overnight delivery service, at noon (local time) on the second Business Day following the day such notice or communications was delivered to such delivery service, and (c) in the case of notices and communications sent by United States mail, three days after such notice or communication shall have been deposited in the United States mail. Any notice delivered to a party hereunder shall be sent simultaneously, by the same means, to such party’s counsel as set forth above.

10.6 Amendments . This Agreement may be amended as to the BRP Entities and their successors and assigns (determined as provided in Section 10.7), and the Company may take any action herein prohibited, or omit to perform any act required to be performed by it, if the

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Company shall obtain the written consent of the BRP Entities, provided that the Company shall not require the consent of either Beacon or Rosebay with respect to any revisions to Sections 1 through 3 of this Agreement. This Agreement may not be waived, changed, modified, or discharged orally, but only by an agreement in writing signed by the party or parties against whom enforcement of any waiver, change, modification or discharge is sought or by parties with the right to consent to such waiver, change, modification or discharge on behalf of such party.

10.7 Successors and Assigns . All covenants and agreements contained herein shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement, and the rights and obligations of the BRP Entities hereunder, may be assigned by a BRP Entity to (a) any person or entity to which Shares are transferred by the BRP Entity, or (b) to any Associated Company of the BRP Entities, and, in each case, such transferee shall be deemed a “BRP Entity” for purposes of this Agreement; provided that such assignment of rights shall be contingent upon the transferee providing a written instrument to the Company notifying the Company of such transfer and assignment and agreeing in writing to be bound by the terms of this Agreement.

10.8 Expenses and Remedies . Whether or not the Closing takes place, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party incurring such expense.

10.9 Transfer of Securities . The Purchaser understands and agrees that the New Shares have not been registered under the Securities Act or the securities laws of any state and that they may only be sold or otherwise disposed of in compliance with state and federal securities laws and as set forth herein. The Purchaser understands and agrees that each certificate representing the New Shares (other than New Shares which have been transferred in a transaction registered under the Securities Act or exempt from the registration requirements of the Securities Act pursuant to Rule 144 thereunder or any similar rule or regulation) shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.”

and the Purchaser agrees to transfer the New Shares only in accordance with the provisions of such legend and as set forth herein. The foregoing legend shall be removed from any New Shares or from the certificates representing such New Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to an effective Registration Statement or Rule 144. Notwithstanding the foregoing and subject to compliance with any applicable securities laws, the Purchaser may sell, transfer, assign, pledge or otherwise dispose of the New Shares, in whole or in part, to any of their Associated Companies or the Company. Subject to

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compliance with any applicable securities laws and the conditions set forth in this Section 10.9, if a Purchaser wishes to transfer New Shares, at Purchaser’s request, and subject to the delivery by Purchaser of such documentation as may be reasonably requested by the Company or its counsel, the Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent if required by the Company’s transfer agent to effect a transfer of any of the New Shares.

10.10 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to choice of law and conflicts of law principles.

10.11 Publicity . The Company and the BRP Entities will consult and cooperate with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or otherwise making any public statement with respect to the transactions contemplated by this Agreement.

10.12 No Third Party Beneficiaries . Nothing contained in this Agreement is intended to confer upon any Person other than the parties hereto and their respective successors and permitted assigns, any benefit, right or remedies under or by reason of this Agreement.

10.13 Consent to Jurisdiction . The Company and the BRP Entities irrevocably submit to the personal exclusive jurisdiction of the United States District Court for the Southern District of New York, Manhattan Courthouse for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and, to the extent permitted under applicable rules of procedure, agrees not to commence any action, suit or proceeding relating hereto except in such court). The Company and the BRP Entities further agree that service of any process, summons, notice or document hand delivered or sent by registered mail to such party’s respective address set forth in Section 10.5 will be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. The Company and the BRP Entities irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the United States District court for the Southern District of New York, Manhattan Courthouse, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.

[ Signature Pages Follow ]

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto on the date first above written.


INFINITY PHARMACEUTICALS, INC.

By:		/s/ Adelene Q. Perkins
		Adelene Q. Perkins
		President and Chief Executive Officer


PURDUE PHARMA L.P.

By:		Purdue Pharma Inc., its general partner

By:		/s/ Stuart D. Baker
		Stuart D. Baker
		Executive Vice President, Counsel to the Board


And solely with respect to Sections 4 through 10 in consideration of the obligations of the Company in favor of such following BRP Entities set forth herein and in the Purdue Termination Agreement and the MICL Termination Agreement :


BEACON COMPANY

By:		/s/ Anthony M. Roncalli
		Anthony M. Roncalli
		Assistant Secretary


ROSEBAY MEDICAL COMPANY L.P.

By:		Rosebay Medical Company, Inc., its general partner

By:		/s/ Anthony M. Roncalli
		Anthony M. Roncalli Vice President

[Signature Page to Securities Purchase Agreement]

EXHIBIT A

FORM OF LEGAL OPINION

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LOGO

, 2012

Purdue Pharma L.P.

One Stamford Forum

201 Tresser Blvd.

Stamford, CT 06901-3431

Re:	Infinity Pharmaceuticals, Inc.

Ladies and Gentlemen:

This opinion is being furnished pursuant to Section 7.3(e) of the Securities Purchase Agreement, dated as of July 17, 2012 (the “Agreement”), by and among Infinity Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Purdue Pharma L.P. (the “Purchaser”) and, solely with respect to Sections 4 through 10 of the Agreement, Beacon Company and Rosebay Medical Company L.P. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Agreement.

We have acted as counsel to the Company in connection with the preparation, execution and delivery of the Agreement. As such counsel, we have examined and are familiar with and have relied upon the following documents:

(a)

the Restated Certificate of Incorporation, as in effect on the date hereof (the “Charter”), and the Amended and Restated Bylaws, as in effect on the date hereof (the “By-laws”), of the Company;

(b)

a Certificate of the Secretary of State of the State of Delaware, dated , 2012, attesting to the continued legal existence and corporate good standing of the Company in Delaware (the “Company Domestic Certificate”);

(c)

a Certificate of the Secretary of State of the Commonwealth of Massachusetts, dated , 2012, attesting to the good standing and due qualification of the Company to transact business in Massachusetts (the “Company Foreign Qualification Certificate”);

(d)

a Certificate of the Secretary of State of the State of Delaware, dated , 2012, attesting to the continued legal existence and corporate good standing of Infinity Discovery, Inc. (the “Subsidiary”) in Delaware (the “Subsidiary Domestic Certificate”);

(e)

a Certificate of the Secretary of State of the Commonwealth of Massachusetts, dated , 2012, attesting to the good standing and due qualification

LOGO

Purdue Pharma L.P.

, 2012

Page 2

of the Subsidiary to transact business in Massachusetts (the “Subsidiary Foreign Qualification Certificate”);

(f)

the Agreement; and

(g)

a Secretary’s Certificate from the Company, dated as of the date hereof, attesting to the Company’s Charter and By-laws, certain resolutions adopted by the Board of Directors of the Company, and the incumbency of certain officers of the Company.

In our examination of the documents described above, we have assumed the genuineness of all signatures, the legal capacity of all individual signatories, the completeness of all corporate and stock records provided to us, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such latter documents.

In rendering this opinion, we have relied, as to all questions of fact material to this opinion, upon certificates of public officials and officers of the Company and upon the representations and warranties made by the Purchaser and the Company in the Agreement. We have not attempted to verify independently such facts. We have not conducted a search of any electronic databases or the dockets of any court, administrative or regulatory body, agency or other filing office in any jurisdiction.

For purposes of this opinion, we have assumed that the Agreement has been duly authorized, executed and delivered by all parties thereto other than the Company, and that all such other parties have all requisite power and authority to effect the transactions contemplated by the Agreement. We have also assumed that the Agreement is the valid and binding obligation of each party thereto other than the Company and is enforceable against such other parties in accordance with its terms. We do not render any opinion as to the application of any federal or state law or regulation to the power, authority or competence of any party to the Agreement other than the Company.

For purposes of this opinion, we have assumed that the Board of Directors of the Company has complied with its fiduciary duties in connection with the transactions contemplated by the Agreement.

Our opinions set forth below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws relating to or affecting the rights of creditors generally, (ii) statutory or decisional law concerning recourse by creditors to security in the absence of notice or hearing, (iii) duties and standards imposed on creditors and parties to contracts, including, without limitation, requirements of good faith, reasonableness and fair dealing, and (iv) general equitable principles. We express no opinion as to the availability of any equitable or specific remedy upon

Purdue Pharma L.P.

, 2012

Page 3

any breach of any of the agreements as to which we are opining herein, or any of the agreements, documents or obligations referred to therein, or to the successful assertion of any equitable defenses, inasmuch as the availability of such remedies or the success of any equitable defense may be subject to the discretion of a court. We are expressing no opinion herein as to the enforceability of Section 4.6 of the Agreement. We are expressing no opinion herein with respect to compliance by the Company with state securities or “blue sky” laws, or with any state or federal securities antifraud laws.

We also express no opinion herein as to any provision of any agreement (a) which may be deemed to or construed to waive any right of the Company, (b) to the effect that rights and remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy and does not preclude recourse to one or more other rights or remedies, (c) relating to the effect of invalidity or unenforceability of any provision of the Agreement on the validity or enforceability of any other provision thereof, (d) requiring the payment of penalties, consequential damages or liquidated damages, (e) which is in violation of public policy, including, without limitation, any provision relating to non-competition and non-solicitation or relating to indemnification and contribution with respect to securities law matters, (f) purporting to indemnify any person against his, her or its own negligence or intentional misconduct, (g) which provides that the terms of the Agreement may not be waived or modified except in writing or (h) relating to choice of law or consent to jurisdiction.

Our opinions expressed in paragraph 1 below, insofar as they relate to the valid existence, due qualification and good standing of the Company, are based solely on the Company Domestic Certificate and the Company Foreign Qualification Certificate and are limited accordingly, and, as to such matters, our opinions are rendered as of the respective dates of such certificates. Our opinions expressed in paragraph 1 below, insofar as they relate to the valid existence, due qualification and good standing of the Subsidiary, are based solely on the Subsidiary Domestic Certificate and the Subsidiary Foreign Qualification Certificate and are limited accordingly, and, as to such matters, our opinions are rendered as of the respective dates of such certificates. We express no opinion as to the tax good standing of the Company or the Subsidiary in any jurisdiction.

For purposes of our opinions in paragraphs 5 and 6 below, we have relied upon representations made by the Purchaser in Section 3 of the Agreement, and have assumed (without any independent investigation) the accuracy of such representations. For purposes of our opinions in paragraphs 5 and 6 below, we have also assumed that in connection with the offer and sale of securities to the Purchaser, neither the Company nor any person acting on its behalf has engaged in any form of “general solicitation or general advertising” within the meaning contemplated by Rule 502 (c) of Regulation D.

We are opining herein solely as to the state laws of the State of New York, the statutes codified as 8 Del. C. §§101-398 and known as the General Corporation Law of the State of Delaware (the “DGCL Statute”) and the federal laws of the United States of America. To the

Purdue Pharma L.P.

, 2012

Page 4

extent that any other laws govern any of the matters as to which we are opining below, we have assumed, with your permission and without independent investigation, that such laws are identical to the state laws of the State of New York, and we express no opinion as to whether such assumption is reasonable or correct.

For purposes of our opinions rendered below, we have assumed that the facts and law governing the future performance by the Company of its obligations under the Agreement will be identical to the facts and law governing its performance on the date of this opinion.

Based upon and subject to the foregoing, we are of the opinion that:

The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to conduct its business as it is, to our knowledge, currently conducted, to enter into and perform its obligations under the Agreement, and to carry out the transactions contemplated by the Agreement. The Company is duly qualified to do business and is in good standing in the Commonwealth of Massachusetts. The Subsidiary is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to conduct its business as it is, to our knowledge, currently conducted. The Subsidiary is duly qualified to do business and is in good standing in the Commonwealth of Massachusetts.

The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, $0.001 par value per share.

The New Shares have been duly authorized by all necessary corporate action on the part of the Company, and the New Shares, when issued, sold and delivered against payment therefor in accordance with the provisions of the Agreement, will be duly and validly issued, fully paid and non-assessable.

The execution and delivery by the Company of the Agreement, and the consummation by the Company of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of the Company, and the Agreement has been duly executed and delivered by the Company. The Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

The execution and delivery by the Company of the Agreement, and the consummation by the Company of the transactions contemplated thereby, do not and will not (a) violate the provisions of any U.S. federal or New York state law, rule or regulation to which the Company is subject or which is applicable to the

Purdue Pharma L.P.

, 2012

Page 5

Company; (b) violate the provisions of the Company’s Charter or By-laws; (c) violate any judgment, decree, order or award of any court, governmental body or arbitrator specifically naming the Company of which we are aware; or (d) with or without notice and/or the passage of time, conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the properties or assets of the Company pursuant to, any agreement to which the Company is a party and which is listed on Schedule A hereto.

Based in part on the representations of each of the Purchaser in Section 3 of the Agreement, the offer, issuance and sale of the New Shares pursuant to the Agreement are exempt from registration under the Securities Act of 1933, as amended.

The issuance of the New Shares will not be subject to any preemptive or similar statutory rights under the DGCL Statute, the Company’s Charter or By-Laws, or similar contractual rights granted by the Company (except for such contractual rights as have been waived) pursuant to any contract or agreement to which the Company is a party and which is listed on Schedule A hereto.

Assuming the accuracy of the representations of the Purchaser in Section 3 of the Agreement, no approval or consent of, or registration or filing with, any U.S. federal or New York state governmental authority is required to be obtained or made by the Company under applicable law in connection with the execution, delivery and performance of the Agreement, except (a) such as have been obtained for any state “blue sky filings,” (b) a Form D to be filed pursuant to the Securities Act, or (c) any other such filings that may be required by the terms of the Agreement or required or permitted to be made after the date hereof under applicable federal and state securities laws or as required by the rules and regulations of the NASDAQ Global Select Market.

The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

This opinion is provided to the Purchaser as a legal opinion only and not as a guaranty or warranty of the matters discussed herein. This opinion is based upon currently existing statutes, rules, regulations and judicial decisions and is rendered as of the date hereof, and we disclaim any obligation to advise you of any change in any of the foregoing sources of law or subsequent developments in law or changes in facts or circumstances which might affect any matters or opinions set forth herein.

Purdue Pharma L.P.

, 2012

Page 6

This opinion is rendered only to the Purchaser, and solely with respect to Sections 4 through 10 of the Agreement, to Beacon Company and Rosebay Medical Company L.P., and is solely for the benefit of the Purchaser in connection with the transactions contemplated by the Agreement. This opinion may not be relied upon by the Purchaser, Beacon Company or Rosebay Medical Company L.P. for any other purpose, nor may this opinion be provided to, quoted to or relied upon by any other person or entity for any purpose without our prior written consent.


Very truly yours,

WILMER CUTLER PICKERING HALE AND DORR LLP

By:
		Joshua D. Fox, a Partner

Schedule A

Agreements

Rights Agreement between Infinity Pharmaceuticals, Inc. and American Stock Transfer & Trust Company dated February 13, 2003

First Amendment to Rights Agreement between Infinity Pharmaceuticals, Inc. and American Stock Transfer & Trust Company dated April 11, 2006

Second Amendment to the Rights Agreement between the Registrant and American Stock Transfer & Trust Company, LLC dated November 19, 2008

Development and License Agreement, dated as of July 7, 2010, by and between Infinity Pharmaceuticals, Inc. and Intellikine, Inc.

Collaboration Agreement by and between MedImmune, Inc. and Infinity Discovery, Inc. dated as of August 25, 2006

Lease Agreement dated July 2, 2002 between Infinity Discovery, Inc. and ARE-770/784/790 Memorial Drive LLC, as amended by First Amendment to Lease dated March 25, 2003, Second Amendment to Lease dated April 30, 2003, Third Amendment to Lease dated October 30, 2003 and Fourth Amendment to Lease dated December 15, 2003

Fifth Amendment to Lease dated July 8, 2011 between Infinity Pharmaceuticals, Inc. and ARE-770/784/790 Memorial Drive LLC

Sublease dated August 24, 2004 between Infinity Discovery, Inc. and Hydra Biosciences, Inc., together with Consent to Sublease dated September 16, 2004 by ARE-770/784/790 Memorial Drive LLC, Infinity Discovery, Inc. and Hydra Biosciences, Inc., as amended by First Amendment to Sublease dated October 17, 2005, together with Consent to Amendment to Sublease dated as of October 31, 2005 by ARE-770/784/790 Memorial Drive LLC and Second Amendment to Sublease dated as of January 9, 2006, together with Consent to Amendment to Sublease dated as of January 26, 2006 by ARE-770/784/790 Memorial Drive LLC, Infinity Discovery, Inc. and Hydra Biosciences, Inc.

Third Amendment to Sublease dated April 17, 2009 between Infinity Discovery, Inc. and Hydra Biosciences, Inc., together with Consent to Third Amendment to Sublease dated May 5, 2009 by ARE-770/784/790 Memorial Drive LLC, Infinity Discover, Inc. and Hydra Biosciences, Inc.

Offer Letter between Infinity Discovery, Inc. and Julian Adams dated as of August 19, 2003

Amendment to Offer Letter between Infinity Discovery, Inc. and Julian Adams dated as of October 25, 2007

Offer Letter between Infinity Discovery, Inc. and Adelene Perkins dated as of February 6, 2002

Amendment to Offer Letter between Infinity Discovery, Inc. and Adelene Perkins dated as of October 25, 2007

Pre-Merger Stock Incentive Plan

Incentive Stock Agreements entered into with each of the officers identified on the schedule attached to Exhibit 10.25 to the Company’s Current Report on Form 8-K filed on September 18, 2006

Nonstatutory Stock Option Agreements entered into with each of the officers identified on the schedule attached to Exhibit 10.27 to the Company’s Current Report on Form 8-K filed on September 18, 2006

2000 Stock Incentive Plan, as amended by Amendment No. 1 to 2000 Stock Incentive Plan; Amendment No. 2 to 2000 Stock Incentive Plan; Amendment No. 3 to 2000 Stock Incentive Plan; Amendment No. 4 to 2000 Stock Incentive Plan; and Amendment No. 5 to 2000 Stock Incentive Plan

2010 Stock Incentive Plan

Amendment No. 1 to 2010 Stock Incentive Plan

Amendment No. 2 to 2010 Stock Incentive Plan

Exhibit 10.2

EXECUTION VERSION

TERMINATION AND REVISED RELATIONSHIP AGREEMENT

This Termination and Revised Relationship Agreement (this “ Agreement ”) is entered into as of the 17 ^th day of July 2012 (the “ Effective Date ”) by and between Infinity Pharmaceuticals, Inc., a Delaware corporation having its principal office at 780 Memorial Drive, Cambridge, Massachusetts 02139 (“ Infinity ”), and Mundipharma International Corporation Limited, a Bermuda corporation having its principal office at Mundipharma House, 14 Par-la-Ville Road, P.O. Box HM 2332, Hamilton HM JX, Bermuda (“ MICL ”).

INTRODUCTION

1. Infinity and MICL are parties to the Strategic Alliance Agreement, dated as of the 19th day of November 2008 (the “ Strategic Alliance Effective Date ”), as amended December 10, 2010 (the “ Strategic Alliance Agreement ”).

2. Infinity and MICL desire to terminate the Strategic Alliance Agreement and to enter into a revised relationship on the terms set forth in this Agreement.

NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, Infinity and MICL agree as follows:

ARTICLE I

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article I:

Section 1.1 “ Affiliate ”. Affiliate shall mean any person, firm, trust, partnership, corporation, company or other entity or combination thereof, which directly or indirectly (i) controls a Person, (ii) is controlled by a Person, or (iii) is under common control with a Person. The terms “control” and “controlled” mean (x) ownership of fifty percent (50%) or more, including ownership by trusts with substantially the same beneficial interests, of the voting and equity rights of such person, firm, trust, partnership, corporation, company or other entity or combination thereof or (y) the power to direct the management of such person, firm, trust, partnership, corporation, company or other entity or combination thereof. “ Affiliate ” shall not include, in the case of MICL, The Purdue Frederick Company Inc., a New York corporation.

Section 1.2 “ ANDA ”. ANDA shall mean any of the following: (a) an Abbreviated New Drug Application filed with the FDA or any successor applications or procedures; (b) any counterpart of a U.S. Abbreviated New Drug Application or any successor applications or procedures that may be filed with the EMEA, MHLW or other Regulatory Authority outside of the United States, and (c) all supplements and amendments that may be filed with respect to the foregoing.

Section 1.3“ Bcl-2/Bcl-xL ”. Bcl-2/Bcl-xL shall mean Bcl-2 or Bcl-xL.

Section 1.4 “ Business Day ”. Business Day shall mean any day, other than a Saturday or a Sunday, on which the banks in New York, New York, USA are open for business.

Section 1.5 “ Commercialization” or “Commercialize ”. Commercialization or Commercialize shall mean any activities directed to obtaining pricing and/or reimbursement approvals, marketing, promoting, distributing, importing, offering to sell, and/or selling a product (including establishing the price for such product), after Regulatory Approval for such product has been obtained.

Section 1.6 “ Control ” or “ Controlled ”. Control or Controlled, with respect to any Know-How or Patent Right of a Party, shall mean the possession (whether by ownership, license (other than pursuant to a license granted under this Agreement) or otherwise) by such Party or its Affiliates of the ability to grant to the other Party access to and/or a license under such Know-How or Patent Right without violating the terms of any agreement with any Third Party existing as of the Effective Date or thereafter during the Term.

Section 1.7 “ Cover”, “Covering” or “Covered ”. Cover, Covering or Covered, with respect to a product, shall mean that, but for a license granted to a Person under a Valid Claim included in the Patent Rights under which such license is granted, the Development, Manufacture, Commercialization and/or other use of such product by such Person as provided hereunder would infringe such Valid Claim.

Section 1.8 “ Develop ” or “ Development ”. Develop or Development shall mean non-clinical (including pre-clinical) and clinical drug development activities and related research, including: (i) chemical lead series generation, (ii) medicinal chemistry, (iii) assay development, (iv) pharmacology studies, (v) absorption, distribution, metabolism, elimination (ADME) studies, (vi) toxicology studies, (vii) statistical analysis and report writing, (viii) test method development and stability testing, (ix) process development, (x) formulation development, (xi) delivery system development, (xii) molecular pathology and biomarker development, (xiii) quality assurance and quality control development, (xiv) compliance related monitoring and activities (including biometry, data management, drug safety, integrated analysis, and health and economic research), (xv) manufacture of drug supply (in both active pharmaceutical ingredient and finished product form) for use in both pre-clinical activities and clinical trials, (xvi) clinical trials for the purpose of obtaining or maintaining Regulatory Approval (including post-marketing and market expansion studies, (xvii) safety related studies and risk management programs, (xviii) support of investigator-initiated clinical trials, (xix) new product planning activities, and (xx) regulatory affairs activities related to all of the foregoing.

Section 1.9 “ Discovery Project ”. Discovery Project shall mean a drug discovery research project conducted by Infinity, alone or in collaboration with a Service Provider or other academic collaborator, at any time during the Prior Term, and shall include any compounds (i) that were conceived or identified by Infinity or its Existing Affiliates during the Prior Term, whether or not such compounds were synthesized, or to any degree characterized, and/or as were recorded in any Infinity research notebooks or other discovery or scientific documentation created during the Prior Term, (ii) regardless of the date of conception or identification, that were in any way studied or advanced by Infinity or its Existing Affiliates during the Prior Term, and (iii) covered by any issued or pending patent claims supported by data developed during the

Prior Term, but shall not include any such project directed to a product candidate that Interacts with the Hedgehog Pathway, FAAH, Hsp90, Bcl-2/Bcl-xL or PI3K (PI3K d , PI3K g or PI3K d / g ). Discovery Projects are set forth on Schedule 1.9 .

Section 1.10 “ EMEA ”. EMEA shall mean the European Medicines Agency, and any successor agency thereto.

Section 1.11 “ Executive Officers ”. Executive Officers shall mean MICL’s General Manager (or the officer or employee of MICL then serving in a substantially equivalent capacity) and Infinity’s Chief Executive Officer (or the officer or employee of Infinity then serving in a substantially equivalent capacity).

Section 1.12 “ Existing Affiliate ”. Existing Affiliate shall mean a Person which was an Affiliate of Infinity at any time during the Prior Term.

Section 1.13 “ FAAH ”. FAAH shall mean Fatty Acid Amide Hydrolase (also known as FAAH-1) or FAAH-2.

Section 1.14 “ FAAH Products ”. FAAH Products shall mean products and product candidates that (a) are Controlled by Infinity, MICL, Purdue or any of their respective Affiliates as of the Effective Date, (b) are in existence as of the Effective Date, and (c) Interact with FAAH.

Section 1.15 “ FAAH Termination Agreement ”. FAAH Termination Agreement shall mean the Termination and Revised Relationship Agreement between Infinity and Purdue dated as of the Effective Date.

Section 1.16 “ FAAH U.S. Research and Development Funding ”. FAAH U.S. Research and Development Funding shall mean the funding paid by Purdue to Infinity in accordance with Section 5.1 of the FUSA Agreement during the Prior Term, in the amount of $15,908,706.

Section 1.17 “ FAAH U.S. Strategic Alliance Agreement ” or “ FUSA Agreement ”. FAAH U.S. Strategic Alliance Agreement or FUSA Agreement shall mean the Strategic Alliance Agreement between Infinity and Purdue dated as of the Strategic Alliance Effective Date.

Section 1.18 “ FDA ”. FDA shall mean the United States Food and Drug Administration, or a successor agency thereto.

Section 1.19 “ Governmental Authority ”. Governmental Authority shall mean any multinational, federal, state, county, local, municipal or other entity, office, commission, bureau, agency, political subdivision, instrumentality, branch, department, authority, board, court, arbitral or other tribunal, official or officer, exercising executive, judicial, legislative, police, regulatory, administrative or taxing authority or functions of any nature pertaining to government.

Section 1.20 “ Hedgehog Pathway ”. Hedgehog Pathway shall mean all of the following members of the Hedgehog cell-signaling pathway: (i) all hedgehog ligands (Sonic, Indian, Desert) and transmembrane transport-like proteins, like Disp1 or Disp2, involved in the secretion

of the HH ligand, (ii) Smoothened (Smo), including alternatively spliced forms and Smo with activating mutations, (iii) all Gli transcription factors (Gli 1, 2, 3), (iv) mutated or unmutated Patched (Ptch) receptor 1 and 2, (v) Cdo, Cdon and Boc (brother of Cdo), (vi) Suppressor of Fused (SuFu), (vii) Cdc2l1 kinase, (viii) Hedgehog interacting protein (HHIP), and (ix) ARL13B.

Section 1.21 “ Hsp90 ”. Hsp90 shall mean Heat Shock Protein 90 (Hsp90) and/or co-chaperones of Heat Shock Protein 90 (e.g., Hip and Hop), but not client proteins of Heat Shock Protein 90 such as c-Kit and EGFR.

Section 1.22 “ IND ”. IND shall mean (a) (i) an Investigational New Drug Application, as defined in the U.S. Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder, that is required to be filed with the FDA before beginning clinical testing of a product in human subjects, or any successor application or procedure, and (ii) any counterpart of a U.S. Investigational New Drug Application that may be filed with the EMEA, MHLW or other Regulatory Authority outside of the United States, and (b) all supplements and amendments that may be filed with respect to the foregoing.

Section 1.23 “ Infinity Know-How ”. Infinity Know-How shall mean any Know-How Controlled by Infinity that is useful to Develop and Commercialize Products.

Section 1.24 “ Infinity Patent Rights ”. Infinity Patent Rights shall mean Patent Rights Controlled by Infinity Covering Infinity Know-How.

Section 1.25 “ Infinity Territory ”. Infinity Territory shall mean (a) from the Effective Date and for so long as the royalty under Section 4.1(a) is applicable to Net Sales of Products, all of the countries of the world; and (b) during such time as the royalty under Section 4.1(b) is applicable, the United States of America, its territories and possessions.

Section 1.26 “ Interact ”. Interact shall mean to interact directly with a specified Target. In the event a product or product candidate directly interacts with more than one Target, it shall be deemed to Interact with whichever such Target it interacts with most potently.

Section 1.27 “ Know-How ”. Know-How shall mean any tangible or intangible know-how, expertise, discoveries, inventions, information, data (including preclinical and clinical data generated with respect to the Products in the course of the Research Program) or materials, including ideas, concepts, formulas, methods, procedures, designs, technologies, compositions, plans, applications, preclinical and clinical data, technical data, samples, chemical compounds and biological materials and all derivatives, modifications and improvements thereof and Regulatory Approvals and filings therefor.

Section 1.28 “ Laws ”. Laws shall mean each provision of any then-current multinational, federal, national, state, county, local, municipal or foreign law, statute, ordinance, order, writ, code, rule or regulation, promulgated or issued by any Governmental Authority, as well as with respect to either Party any binding judgments, decrees, stipulations, injunctions, determinations, awards or agreements issued by or entered into by such Party with any Governmental Authority.

Section 1.29 “ Manufacture ”. Manufacture shall mean all activities related to the manufacturing of any product, including test method development and stability testing, formulation, process development, manufacturing scale-up, manufacturing for use in non-clinical and clinical studies, manufacturing for commercial sale, packaging, release of product, quality assurance/quality control development, quality control testing (including in-process release and stability testing) and release of product or any component or ingredient thereof, and regulatory activities related to all of the foregoing.

Section 1.30 “ MHLW ”. MHLW shall mean the Japanese Ministry of Health, Labor and Welfare, or a successor agency thereto.

Section 1.31 “ MICL Know-How ”. MICL Know-How shall mean, solely with respect to FAAH, (a) any Know-How that: (i) was conceived, reduced to practice or otherwise created by employees or consultants of MICL or its Affiliates based on and arising from exposure to Infinity Know-How, (ii) is an analog or a new use of a product or product candidate developed under the Research Program, and (iii) was created during the portion of the Prior Term during which MICL had Program Rights with respect to such product or product candidate; or (b) any information described in Section 2.2(b)(i).

Section 1.32 “ MICL Patent Rights ”. MICL Patent Rights shall mean Patent Rights Controlled by MICL Covering MICL Know-How.

Section 1.33 “ NDA ”. NDA shall mean an application submitted to a Regulatory Authority for marketing approval of a product (other than an ANDA), including (a) a New Drug Application, Product License Application or Biologics License Application filed with the FDA or any successor applications or procedures, (b) any counterpart of a U.S. New Drug Application, Product License Application or Biologics License Application or any successor applications or procedures that may be filed with the EMEA, MHLW or other Regulatory Authority outside of the United States, and (c) all supplements and amendments that may be filed with respect to the foregoing.

Section 1.34 “ Net Sales ”. Net Sales, with respect to a particular Product in a particular period, shall mean the gross amount invoiced by Infinity, its Affiliates and/or its Sublicensees on sales or other dispositions (excluding sales or dispositions for use in clinical trials or other scientific testing, in either case for which Infinity, its Affiliates and/or Sublicensees receive no revenue) of the Product to unrelated Third Parties during such period, less the following deductions (to the extent included in the gross amount invoiced or otherwise directly paid or incurred by Infinity, its Affiliates and/or its Sublicensees):

(a) trade, cash and quantity discounts actually allowed and taken directly with respect to such sales or other dispositions;

(b) tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly with respect to the delivery, sale or use of the Product and included and separately stated in the applicable invoice (excluding national, state or local taxes based on income);

(c) allowances for amounts repaid or credited by reason of rejections, defects, recalls or returns or because of reasonable and customary chargebacks, refunds, coupons, patient

co-pay savings cards, rebates (including related administration fees), wholesaler fee for service, reasonable amounts of physician samples, reasonable amounts of free products given to indigent patients, retroactive price reductions or any other items substantially similar in character and substance to the foregoing, with equitable adjustments to be made from time to time for any differences between these allowances and actual amounts;

(d) amounts previously included in Net Sales of Products that are written-off by Infinity as uncollectible in accordance with Infinity’s standard practices for writing off uncollectible amounts consistently applied; and

(e) freight, insurance and other transportation charges incurred in shipping a Product to Third Parties, included and separately stated in the applicable invoice.

There shall be no double-counting in determining the foregoing deductions.

Such amounts shall be determined from the books and records of Infinity, its Affiliates and/or its Sublicensees, maintained in accordance with applicable accounting principles (such as U.S. generally accepted accounting principles (“ U.S. GAAP ”) and/or International Financial Reporting Standards), consistently applied.

Section 1.35 “ Party ”. Party shall mean Infinity or MICL; “ Parties ” shall mean Infinity and MICL.

Section 1.36 “ Patent Rights ”. Patent Rights shall mean United States and non-U.S. patents, patent applications and/or provisional patent applications, utility models and utility model applications, design patents or registered industrial designs and design applications or applications for registration of industrial designs, and all substitutions, divisionals, continuations, continuation-in-part applications, continued prosecution applications, reissues, reexaminations and extensions thereof.

Section 1.37 “ Person ”. Person shall mean any individual, corporation, partnership, joint venture, limited liability company, trust, business association, organization, Governmental Authority, a division or operating group of any of the foregoing or other entity or organization, including any successors or assigns (by merger or otherwise) of any such entity.

Section 1.38 “ PI3K Products ”. PI3K Products shall mean products and product candidates that are Licensed Compounds or Products (each as defined in the Development and License Agreement between Intellikine, Inc. and Infinity dated as of July 7, 2010).

Section 1.39 “ Prior Confidentiality Agreement ”. Prior Confidentiality Agreement shall mean the Mutual Confidential Disclosure Agreement, dated August 13, 2008, between Infinity and an Affiliate of MICL.

Section 1.40 “ Prior Term ”. Prior Term shall mean the period of time beginning on the Strategic Alliance Effective Date and ending on the Effective Date.

Section 1.41 “ Product ”. Product shall mean (a) products and product candidates that (i) are Controlled by Infinity as of the Effective Date, (ii) are in existence as of the Effective Date,

and (iii) Interact with the Hedgehog Pathway, (b) FAAH Products, (c) PI3K Products, and (d) products and product candidates that (i) are Controlled by Infinity as of the Effective Date, and (ii) arise out of Discovery Projects.

Section 1.42 “ Program Right ”. Program Right shall mean (a) Infinity’s right to Develop, Manufacture and Commercialize Products pursuant to this Agreement; or (b) the rights that were granted to MICL to Commercialize (as defined in the Strategic Alliance Agreement) Products (as defined in the Strategic Alliance Agreement) during the Prior Term pursuant to the Strategic Alliance Agreement.

Section 1.43 “ Purdue ”. Purdue shall mean Purdue Pharmaceutical Products L.P., a Delaware limited partnership.

Section 1.44 “ Regulatory Approval ”. Regulatory Approval shall mean, with respect to a product, the approval of the applicable Regulatory Authority necessary for the marketing and sale of such product for a particular indication in a country, excluding separate pricing and/or reimbursement approvals that may be required and ANDAs. Regulatory Approval shall also include any “orphan drug” or similar designation.

Section 1.45 “ Regulatory Authority ”. Regulatory Authority shall mean a federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the testing, manufacture, use, storage, import, promotion, marketing or sale of a pharmaceutical product in a country or territory, including the FDA, EMEA and MHLW.

Section 1.46 “ Regulatory Exclusivity ”. Regulatory Exclusivity shall mean the ability to exclude Third Parties from Manufacturing or Commercializing a product that could compete with a Product in a country, either through data exclusivity rights, orphan drug designation, or such other rights conferred by a Regulatory Authority in such country other than through Patent Rights.

Section 1.47 “ Research and Development Funding ”. Research and Development Funding shall mean the funding paid by MICL to Infinity in accordance with Sections 2.2(d) and/or 5.1 of the Strategic Alliance Agreement during the Prior Term, in the amount of $244,547,850.

Section 1.48 “ Research Program ”. Research Program shall mean a program under the Strategic Alliance Agreement to Develop product candidates under Discovery Projects (as defined in the Strategic Alliance Agreement) and to Develop Products during the Prior Term.

Section 1.49 “ Royalty Term ”. Royalty Term, with respect to each Product in a particular country, shall mean the period of time commencing on the first commercial sale of such Product in such country and ending on the last to occur of (a) the date on which all Infinity Patent Rights and MICL Patent Rights containing a Valid Claim Covering the Manufacture, Commercialization or other use of such Product in the country of sale have expired, (b) the date on which all Infinity Patent Rights and MICL Patent Rights containing a Valid Claim Covering the Manufacture in the country of actual Manufacture of such Product have expired, and (c) the expiration of any Regulatory Exclusivity with respect to such Product in such country.

Section 1.50 “ SEC ”. SEC shall mean the United States Securities and Exchange Commission.

Section 1.51 “ Securities Purchase Agreement ”. Securities Purchase Agreement shall mean the Securities Purchase Agreement between Infinity, Purdue Pharma L.P., and, solely with respect to Sections 4 to 10 therein, Beacon Company and Rosebay Medical Company L.P., dated as of the Effective Date.

Section 1.52 “ Service Providers ”. Service Providers shall mean (a) with respect to either Party, contract employees, consultants and similar Persons who conduct activities on behalf of such Party, and (b) with respect to Infinity, the Persons in clause (a), plus academic or non-profit research institutions, hospitals, contract research organizations, contract manufacturing organizations, contract sales organizations, and similar Persons who conduct activities on behalf of Infinity.

Section 1.53 “ Sublicensee ”. Sublicensee shall mean a Third Party to whom Infinity grants a license or sublicense under the Infinity Know-How, Infinity Patent Rights, MICL Know-How or MICL Patent Rights in accordance with the terms of this Agreement.

Section 1.54 “ Target ”. Target shall mean a protein or its corresponding DNA or RNA sequence.

Section 1.55 “ Third Party ”. Third Party shall mean any Person other than Infinity or MICL and their respective Affiliates.

Section 1.56 “ Valid Claim ”. Valid Claim shall mean a claim of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

Section 1.57 Additional Definitions . Each of the following definitions is set forth in the section of this Agreement indicated below:


Definition		Section
“1974 Convention”		9.1
“Agreement”		Preamble
“Confidential Information”		5.1(a)
“Disclosing Party”		5.1(a)
“Effective Date”		Preamble
“Force Majeure Event”		9.7
“Indemnified Party”		7.1(c)
“Indemnifying Party”		7.1(c)
“Infinity”		Preamble
“Infinity Indemnified Parties”		7.1(a)
“Losses”		7.1(a)
“MICL”		Preamble
“MICL Indemnified Parties”		7.1(b)


Definition		Section
“Product Trademarks”		2.2(a)
“Recipient”		5.1(a)
“Releasees”		2.3
“Releasors”		2.3
“Rules”		9.2(b)
“Strategic Alliance Agreement”		Preamble
“Strategic Alliance Effective Date”		Preamble
“Term”		8.1
“U.S. Bankruptcy Code”		3.3
“U.S. GAAP”		1.29

ARTICLE II

TERMINATION OF STRATEGIC ALLIANCE AGREEMENT AND WAIVER OF RIGHTS

Section 2.1 Termination of Strategic Alliance Agreement . As of the Effective Date, (a) the Strategic Alliance Agreement is hereby terminated immediately and in its entirety (including those provisions stated to survive termination), (b) the Strategic Alliance Agreement shall have no further force or effect, and (c) all rights and obligations of Infinity, MICL, and/or any of their respective Affiliates, as applicable, under the Strategic Alliance Agreement shall cease and terminate immediately. The Parties agree and acknowledge that there are no Joint Patent Rights (as defined in the Strategic Alliance Agreement) and no Joint Know-How (as defined in the Strategic Alliance Agreement). For the sake of clarity, MICL’s rights and Infinity’s obligations pursuant to Section 4.5(a) of the Strategic Alliance Agreement are terminated in their entirety, notwithstanding MICL’s issuance to Infinity of that certain letter, dated July 3, 2012, wherein MICL notified Infinity that MICL was interested in negotiating an agreement (i.e., MICL was exercising its right of first negotiation) with respect to the PI3K Products described in such letter, in both oncology and non-oncology indications.

Section 2.2 Transfers .

(a) Product Trademarks . MICL hereby transfers and assigns to Infinity all right, title and interest in and to (i) any product name or related trademark that had been selected by Infinity with respect to any Product prior to the Effective Date, or selected by MICL or its Affiliates with respect to the FAAH Products (collectively, “ Product Trademarks ”) (together with all goodwill associated therewith) as set forth on Schedule 2.2(a) , and (ii) any Internet domain names incorporating any Product Trademark or any variation or part of any such Product Trademark as its URL address or any part of such address as set forth on Schedule 2.2(a) .

(b) Additional Materials . Promptly after the Effective Date, (i) MICL shall make available to Infinity or its designee, in a mutually-agreed upon format, material information (including Know-How) regarding the FAAH Products, including any safety database, (ii) MICL shall make its relevant scientific and technical personnel reasonably available to Infinity to answer any questions or provide instruction as reasonably requested by Infinity concerning such information, (iii) MICL shall transfer or assign any INDs related to the FAAH Products in the Infinity Territory to Infinity or its designee, (iv) Infinity, itself or through

its Affiliates, shall be solely responsible for pharmacovigilance with respect to the FAAH Products, (v) Infinity, itself or through its Affiliates, shall be solely responsible for Manufacturing the FAAH Products, and (vi) at Infinity’s request, MICL shall transfer or assign, or cause its Affiliates to transfer or assign, to Infinity or its designee, any existing agreements or other arrangements that MICL or its Affiliates have with any suppliers regarding the FAAH Products, and Infinity and/or its Affiliates shall be solely responsible for all obligations under and costs associated with such agreements or other arrangements regarding the supply of FAAH Products after the date of such transfer or assignment.

Section 2.3 Releases .

(a) Each Party, and each of its respective Affiliates, and each of their respective predecessors, successors, assigns, officers, directors, employees, trustees and attorneys (collectively, the “ Releasors ”) fully, finally and forever release, relinquish, acquit and discharge the other Party and each of its respective Affiliates, and each of their respective predecessors, successors, assigns, officers, directors, employees, trustees and attorneys (collectively, the “ Releasees ”), of and from, and covenant not to sue, not to assign to any other entity a right to sue and not to authorize any other entity to sue any Releasee for, any and all claims, actions, causes of action, suits, defenses, judgments, debts, offsets, accounts, covenants, contracts, agreements, torts, damages and any and all demands and liabilities whatsoever, including costs, expenses, and attorneys’ fees, of every name and nature, both at law and in equity, known or unknown, suspected or unsuspected, accrued or unaccrued, that arise out of or relate to the Strategic Alliance Agreement, the FUSA Agreement or any Products (as defined in the Strategic Alliance Agreement or the FUSA Agreement). This release shall not prevent or impair the right of a Party to bring proceedings pursuant to the terms of this Agreement to enforce this Agreement or to recover amounts owing to a Party pursuant to Section 4.4(b).

(b) Each Party waives to the fullest extent permitted by law the provisions and benefits of Section 1542 of the California Civil Code, which provides that:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT TO THE DEBTOR.”

(c) Each Party represents, warrants and covenants that it has not heretofore assigned or transferred to any person or entity any matters released by such Party in this Section 2.3, and such Party agrees to indemnify and hold harmless the other Party and its Releasees from and against all such released matters arising from any such alleged or actual assignment or transfer.

Section 2.4 shall not apply to correspondence between the Parties, any proceedings pursuant to Section 9.2, or public announcements in filings made under applicable Law, including filings with the SEC, with respect any proceedings pursuant to Section 9.2 or as required by Law.

ARTICLE III

GRANT OF LICENSES

Section 3.1 License Grant to Infinity . Subject to the terms and conditions of this Agreement, MICL, on behalf of itself and its Affiliates, hereby grants to Infinity during the Term an exclusive, sublicenseable, irrevocable license or sublicense, as applicable, under the MICL Know-How and MICL Patent Rights to Develop, Manufacture and Commercialize Products anywhere in the world. Infinity shall provide MICL with a copy of any license or sublicense agreement within five (5) Business Days after execution thereof. Each license or sublicense of Infinity’s licensed rights under this Section 3.1 granted by Infinity shall be consistent with all the terms and conditions of this Agreement, and shall not supersede Infinity’s obligations to pay royalties pursuant to Section 4.1, and Infinity shall guarantee the performance of its Affiliates and Sublicensees with respect to any license or sublicense granted pursuant to this Section 3.1.

Section 3.2 No Other Rights . Any rights of MICL or its Affiliates in any Know-How or intellectual property rights not expressly granted to Infinity under the provisions of this Agreement or the FAAH Termination Agreement shall be retained by MICL or its Affiliates. All licenses and other rights are or shall be granted only as expressly provided in this Agreement, and no other licenses or other rights are or shall be created or granted hereunder by implication, estoppel or otherwise.

Section 3.3 Section 365(n) . All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, as now or hereafter in effect (the “ U.S. Bankruptcy Code ”), licenses of rights to “intellectual property” as defined under Section 101(35A) of the U.S. Bankruptcy Code. Infinity shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code. MICL agrees that Infinity shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against MICL under the U.S. Bankruptcy Code, Infinity shall be entitled to a complete duplicate of or complete access to (as Infinity deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided that Infinity continues to fulfill its obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to Infinity (a) upon any such commencement of a bankruptcy proceeding upon written request therefor by Infinity, unless MICL elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under subsection (a) above, upon the rejection of this Agreement by or on behalf of MICL, upon written request therefor by Infinity. The foregoing is without prejudice to any rights that either Party may have arising under the U.S. Bankruptcy Code or other applicable Law.

Section 3.4 Rights of Reference . Any license granted pursuant to Section 3.1 shall include a right of reference under the applicable INDs, NDAs and Regulatory Approvals to the

extent necessary for Infinity, its Affiliates and Sublicensees to exercise such license rights. MICL hereby agrees that any right of reference granted to MICL pursuant to the Strategic Alliance Agreement is hereby terminated.

ARTICLE IV

FINANCIAL PROVISIONS

Section 4.1 Infinity Royalties to MICL .

(a) Research and Development Funding Recovery . Until such time as MICL has recovered one hundred percent (100%) of all Research and Development Funding pursuant to this Section 4.1(a) and Purdue has recovered one hundred percent (100%) of all FAAH U.S. Research and Development Funding pursuant to the FAAH Termination Agreement, Infinity shall pay to MICL a royalty of 3.756% on Net Sales of Products by Infinity, its Affiliates and Sublicensees in the Infinity Territory; provided that, if the Securities Purchase Agreement is terminated in accordance with Section 8.1 of the Securities Purchase Agreement, the royalty rate payable to MICL under this Section 4.1(a) shall be reduced from 3.756% to 2.817%.

(b) Post-Research and Development Funding Recovery . After MICL has recovered one hundred percent (100%) of all Research and Development Funding and Purdue has recovered one hundred percent (100%) of all FAAH U.S. Research and Development Funding, Infinity shall pay to MICL a royalty of one percent (1%) on Net Sales of Products (other than FAAH Products) by Infinity, its Affiliates and Sublicensees in the Infinity Territory.

Section 4.2 Duration of Royalty Payments; Royalty Reductions .

(a) Royalty Term . The royalties payable under Section 4.1(b) shall be paid on a country-by-country basis on each Product until the expiration of the applicable Royalty Term in such country. Upon the expiration of the Royalty Term applicable to any Product in any country, the licenses under Section 3.1 with respect to such Product in such country shall convert to non-exclusive, fully paid-up, non-royalty-bearing licenses.

(b) Regulatory Exclusivity . On a Product-by-Product and country-by-country basis, if the sole basis for the continuance of a Royalty Term is the existence of Regulatory Exclusivity, the applicable royalty rate under Section 4.1 shall be reduced by fifty percent (50%).

(c) Third Party Royalty Obligations . If Infinity (i) reasonably determines in good faith that, in order to avoid infringement of any patent not licensed hereunder, it is reasonably necessary to obtain a license from a Third Party in order to Manufacture or Commercialize a Product in a country in the Infinity Territory and to pay a royalty or other consideration under such license (including in connection with the settlement of a patent infringement claim), or (ii) shall be subject to a final court or other binding order or ruling requiring any payments, including the payment of a royalty to a Third Party patent holder in respect of future sales of any Product in a country in the Infinity Territory, then the amount of Infinity’s royalty payments under Section 4.1(b) with respect to Net Sales for such Product, as applicable, in such country shall be reduced by fifty percent (50%) of the amount paid by Infinity to such Third Party that is reasonably and appropriately allocable to, as applicable, such Product;

provided , however , that in no event will a deduction, or deductions, under this Section 4.2(c) reduce any royalty payment made by Infinity in respect of Net Sales of such Product pursuant to Section 4.1(b) by more than fifty percent (50%).

Section 4.3 Royalties Payable Only Once . Infinity’s obligation to pay royalties under Section 4.1 is imposed only once with respect to the same unit of Product, including by reason of such Product being Covered by more than one Valid Claim of Infinity Patent Rights or MICL Patent Rights.

Section 4.4 Royalty Reports and Accounting .

(a) Royalty Reports; Royalty Payments . Infinity shall deliver to MICL, within thirty (30) days after the end of each calendar quarter during the applicable Royalty Term, reasonably detailed written accountings of Net Sales of Products that are subject to royalty payments due to MICL for such calendar quarter. Such accountings shall be Confidential Information of Infinity unless otherwise excluded by Section 5.1(b). Such quarterly reports shall indicate (i) gross sales and Net Sales (including reasonable detail for deductions from gross sales to Net Sales) on a country-by-country and Product-by-Product basis, and (ii) the calculation of royalties from such gross sales and Net Sales. When Infinity delivers such accounting to MICL, Infinity shall also deliver all royalty payments due under Section 4.1 to MICL for the calendar quarter.

(b) Audits .

(i) Infinity shall keep, and shall require its Affiliates and Sublicensees to keep, complete and accurate records of the latest three (3) years relating to gross sales, Net Sales and all underlying revenue and expense data relating to the calculations of Net Sales and payments required by Section 4.1. For the sole purpose of verifying amounts payable to MICL, MICL shall have the right annually, at MICL’s expense, to retain an independent certified public accountant selected by MICL and reasonably acceptable to Infinity, to review such records in the location(s) where such records are maintained by Infinity, its Affiliates and Sublicensees upon reasonable notice and during regular business hours. Such representatives shall execute a suitable confidentiality agreement reasonably acceptable to Infinity prior to conducting such audit. Such representatives shall disclose to each of MICL and Infinity only their conclusions regarding the accuracy of royalty payments and of records related thereto. The right to audit any royalty report shall extend for three (3) years from the end of the calendar year in which the royalty report was delivered. Each royalty report shall be subject only to one such audit. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay MICL the amount of any underpayment revealed by such audit together with interest calculated in the manner provided in Section 4.7. If the underpayment is equal to or greater than five percent (5%) of the amount that was otherwise due, MICL shall be entitled to have Infinity reimburse MICL’s reasonable out-of-pocket costs of such review. MICL shall, within thirty (30) days after the Parties’ receipt of the audit report, return to Infinity any overpayment revealed by such audit.

(ii) Infinity shall keep complete and accurate records of its Research and Development Expenses (as defined in the Strategic Alliance Agreement) reimbursable by MICL in accordance with Section 5.1 of the Strategic Alliance Agreement. For the sole purpose of verifying the Research and Development Funding paid to Infinity pursuant to Section 5.1 of the Strategic Alliance Agreement, MICL shall have the right annually (after the completion of any annual comparison of Research and Development Funding to actual Research and Development Expenses), at MICL’s expense, to retain an independent certified public accountant selected by MICL and reasonably acceptable to Infinity, to review the quarterly reports and backup records in the location(s) where such records are maintained by Infinity or its Affiliates upon reasonable notice and during regular business hours. Such representatives shall execute a suitable confidentiality agreement reasonably acceptable to Infinity prior to conducting such audit. Such representatives shall disclose to each of MICL and Infinity only their conclusions regarding the accuracy of actual Research and Development Expenses and of records related thereto. The right to audit any Research and Development Expenses shall extend for three (3) years from the end of the calendar year in which the quarterly report relating to such expenses was delivered to MICL in accordance with Section 2.3(a) of the Strategic Alliance Agreement. Each quarterly report shall be subject only to one such audit under this Agreement or the Strategic Alliance Agreement. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay MICL the amount of any overpayment revealed by such audit together with interest calculated in the manner provided in Section 4.7. If the overpayment is equal to or greater than five percent (5%) of the amount that was otherwise due, MICL shall be entitled to have Infinity reimburse MICL’s reasonable out-of-pocket costs of such review. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay any such overpayment amount to MICL. MICL shall, within thirty (30) days after the Parties’ receipt of the audit report, pay to Infinity any underpayment revealed by such audit.

Section 4.5 Currency Exchange . All payments to MICL hereunder shall be made in US Dollars. For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than US Dollars), Infinity shall convert any amount expressed in a foreign currency into US Dollar equivalents, calculated using the applicable currency conversion rate as published in The Wall Street Journal , Eastern Edition , on the last Business Day of the applicable calendar quarter for the calendar quarter in which such sales were made.

Section 4.6 Tax Withholding . Any income or other taxes which Infinity is required by Law to pay or withhold on behalf of MICL with respect to any payments payable to MICL under this Agreement shall be deducted from the amount of such payments due, and paid or withheld, as appropriate, by Infinity on behalf of MICL. Any such tax required by applicable Law to be paid or withheld shall be an expense of, and borne solely by, MICL. Infinity shall furnish MICL with reasonable evidence of such payment or amount withheld, in electronic or written form, as soon as practicable after such payment is made or such amount is withheld. The Parties will reasonably cooperate in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable Law in connection with the making of any required tax payment or withholding payment, or in connection with any claim to a refund of or credit for any such payment.

Section 4.7 Late Payments . Without limiting any other rights or remedies available to a Party hereunder, if Infinity does not pay any amount due on or before the due date, Infinity shall pay to MICL interest on any such amounts from and after the date such payments are due under this Agreement at a rate per annum equal to the then current “prime rate” in effect published in The Wall Street Journal , Eastern Edition , plus three (3) percentage points or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent.

ARTICLE V

CONFIDENTIALITY

Section 5.1 Confidential Information .

(a) In connection with the performance of their respective obligations under this Agreement, each Party or its Affiliates (the “ Disclosing Party ”) may disclose certain confidential information to the other Party or its Affiliates (the “ Recipient ”) (such information, “ Confidential Information ”). During the Term and for a period of ten (10) years thereafter, the Recipient shall maintain all Confidential Information of the Disclosing Party in strict confidence and shall not use such Confidential Information for any purpose, except that the Recipient may disclose or permit the disclosure of any such Confidential Information to its directors, officers, employees, consultants, advisors and Service Providers who are obligated to maintain the confidential nature of such Confidential Information. In addition, the Recipient may use or disclose Confidential Information of the Disclosing Party (i) in exercising the Recipient’s rights and licenses granted hereunder (including exercising these rights to discuss with Third Parties sublicensing opportunities) or to fulfill its obligations and/or duties hereunder; provided , that such disclosure is made to a Person who is obligated to confidentiality and non-use obligations no less rigorous than those of this Section 5.1 and (ii) subject to Section 5.1(c), in prosecuting or defending litigation, complying with applicable Law and/or submitting information to tax or other Governmental Authorities. Confidential Information includes (y) all Confidential Information (as defined in the Prior Confidentiality Agreement) disclosed pursuant to the Prior Confidentiality Agreement, and (z) all Confidential Information (as defined in the Strategic Alliance Agreement) disclosed pursuant to the Strategic Alliance Agreement.

(b) The obligations of confidentiality and non-use set forth above shall not apply to the extent that the Recipient can demonstrate that the relevant Confidential Information of the Disclosing Party: (i) was publicly known prior to the time of its disclosure under this Agreement, the Prior Confidentiality Agreement or the Strategic Alliance Agreement, as applicable; (ii) became publicly known after the time of its disclosure under this Agreement, the Prior Confidentiality Agreement or the Strategic Alliance Agreement, as applicable, in any case other than through acts or omissions of the Recipient, its Affiliates, potential sublicensees or sublicensees in violation of this Agreement, the Prior Confidentiality Agreement or the Strategic Alliance Agreement, as applicable; (iii) is or was disclosed to the Recipient at any time, whether prior to or after the time of its disclosure under this Agreement, the Prior Confidentiality Agreement or the Strategic Alliance Agreement, as applicable, in any case by a Third Party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to such Confidential Information; (iv) is independently developed by

the Recipient without access to such Confidential Information as evidenced by written records; or (v) was known by Recipient at the time of receipt from Disclosing Party as documented by Recipient’s records.

(c) In addition, the Recipient may disclose Confidential Information of the Disclosing Party to the extent necessary to comply with applicable Laws or a court or administrative order or the order of an arbitrator; provided , that the Recipient provides to the Disclosing Party prior written notice of such disclosure, to the extent reasonably possible, and that the Recipient takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, to the extent possible, to minimize the extent of such disclosure.

(d) Notwithstanding the obligations in Section 5.1(a), a Party may disclose Confidential Information of the other Party, if such disclosure:

(i) is made to Governmental Authorities or other Regulatory Authorities in order to obtain Patent Rights or to gain or maintain approval (A) to conduct clinical trials with respect to products as provided hereunder or (B) to market products as provided hereunder, but such disclosure may be only to the extent reasonably necessary to obtain such Patent Rights or authorizations;

(ii) is made to its Affiliates, Sublicensees, agents, consultants, or other Third Parties (including Service Providers) for the Development, Manufacture or Commercialization of products as provided hereunder or under the FAAH Termination Agreement, or in connection with an assignment of this Agreement or under the FAAH Termination Agreement, a licensing transaction related to products under this Agreement or under the FAAH Termination Agreement or a loan, financing or investment or acquisition, merger, consolidation or similar transaction (or for such Persons to determine their interest in performing such activities), in each case on the condition that any Third Parties to whom such disclosures are made agree to be bound by confidentiality and non-use obligations no less rigorous than those contained in this Agreement; or

(iii) consists entirely of Confidential Information previously approved by the Disclosing Party for disclosure by the Recipient.

Section 5.2 Publicity; Attribution; Terms of this Agreement; Non-Use of Names .

(a) Except as required by judicial order or applicable Law, or in any proceedings pursuant to Section 9.2, or as set forth below, neither Party shall make any public announcement concerning this Agreement or the Strategic Alliance Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. The Party preparing any such public announcement shall provide the other Party with a draft thereof at least three (3) Business Days prior to the date on which such Party would like to make the public announcement. Notwithstanding the foregoing, Infinity may issue a press release, in the form attached as Schedule A , within one (1) Business Day after the Effective Date, in connection with any disclosures required by applicable Law, to announce the execution of this Agreement and describe the material financial and operational terms of this Agreement. Except as permitted in this Section 5.2, neither Party shall use the name, trademark, trade name or logo

of the other Party or its employees in any publicity or news release relating to this Agreement or the Strategic Alliance Agreement or their subject matter, without the prior express written permission of the other Party.

(b) Notwithstanding the terms of this Article V , either Party shall be permitted to disclose the existence and terms of this Agreement or the Strategic Alliance Agreement to the extent required, in the reasonable opinion of such Party’s legal counsel, to comply with applicable Laws, including the rules and regulations promulgated by the SEC or any other Governmental Authority. Notwithstanding the foregoing, before disclosing this Agreement or the Strategic Alliance Agreement or any of the terms hereof or thereof pursuant to this Section 5.2(b), the Parties will consult with one another on the terms of this Agreement or the Strategic Alliance Agreement for which confidential treatment will be sought in making any such disclosure. If a Party wishes to disclose this Agreement or the Strategic Alliance Agreement or any of the terms hereof or thereof in accordance with this Section 5.2(b), such Party agrees, at its own expense, to seek confidential treatment of the portions of this Agreement, the Strategic Alliance Agreement or such terms as may be reasonably requested by the other Party; provided , that the disclosing Party shall always be entitled to comply with legal requirements, including the requirements of the SEC.

(c) Either Party may also disclose the existence and terms of this Agreement or the Strategic Alliance Agreement in confidence to its attorneys and advisors, and to potential acquirors (and their respective professional advisors), in connection with a potential merger, acquisition or reorganization and to existing and potential investors or lenders of such Party, as a part of their due diligence investigations, or to existing and potential Sublicensees or to permitted assignees, in each case under an agreement to keep the terms of this Agreement or the Strategic Alliance Agreement, as applicable, confidential under terms of confidentiality and non-use substantially no less rigorous than the terms contained in this Agreement and to use such information solely for the purpose permitted pursuant to this Section 5.2(c).

(d) For purposes of clarity, either Party may issue a press release or public announcement or make such other disclosure if the contents of such press release, public announcement or disclosure has previously been made public other than through a breach of this Agreement or the Strategic Alliance Agreement by the issuing Party or its Affiliates.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES; COVENANTS

Section 6.1 Organization . Infinity represents and warrants to MICL that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. MICL represents and warrants to Infinity that it is a corporation duly organized, validly existing and in good standing under the laws of Bermuda.

Section 6.2 Authority . Infinity and MICL each represents and warrants to the other Party that it has full corporate right, power and authority to enter into this Agreement and to perform its obligations under this Agreement as of the Effective Date.

Section 6.3 Consents . Infinity and MICL each represents and warrants to the other Party that all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained, except where the failure to obtain any of the foregoing would not have a material adverse impact on the ability of such Party to meet its obligations hereunder.

Section 6.4 No Conflict . Infinity and MICL each represents and warrants to the other Party that the execution and delivery of this Agreement, and MICL represents and warrants to Infinity that the licenses granted pursuant to this Agreement, (a) do not and will not conflict with or violate any requirement of applicable Law existing as of the Effective Date, (b) do not and will not conflict with or violate the certificate of incorporation, by-laws or other organizational documents of the representing Party, and (c) do not and will not conflict with, violate, breach or constitute a default under any contractual obligations of the representing Party or any of its Affiliates existing as of the Effective Date.

Section 6.5 Enforceability; Rights . Infinity and MICL each represents and warrants to the other Party that this Agreement is a legal and valid obligation binding upon it and is enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies. Infinity and MICL each further represents and warrants to the other Party that neither the representing Party nor any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement that will result in any other Person obtaining any interest in, or that would give to any other Person any right to assert any claim in or with respect to, any of the representing Party’s rights under this Agreement.

Section 6.6 Compliance with Law . Each Party shall, and shall ensure that its Affiliates and Sublicensees shall, comply with all relevant Laws in exercising their rights and fulfilling their obligations under this Agreement.

Section 6.7 PI3K Matters . Infinity hereby represents and warrants to MICL as of the Effective Date that Infinity has not provided to, exchanged with or received from any Third Party any term sheet setting forth the terms upon which Infinity or such Third Party proposes or may agree to license, sublicense and/or sell all or a portion of Infinity’s Program Rights with respect to the PI3K Products; provided , however , that the foregoing representation and warranty shall not apply to contact between Infinity and Service Providers with respect to services to be performed on behalf of Infinity.

Section 6.8 Discovery Projects . Infinity represents and warrants to MICL that all of the Discovery Projects are set forth on Schedule 1.9 .

Section 6.9 MICL Know-How . MICL hereby represents and warrants to Infinity that there is no Know-How (other than the MICL Know-How) that (i) was conceived, reduced to practice or otherwise created by employees or consultants of MICL or its Affiliates based on and arising from exposure to Infinity Know-How, (ii) is an analog or a new use of a product or

product candidate developed under the Research Program, and (iii) was created during the portion of the Prior Term during which MICL had Program Rights with respect to such product or product candidate.

Section 6.10 No Warranties . EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATIONS OR WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.

ARTICLE VII

INDEMNIFICATION, LIMITATION ON LIABILITY AND INSURANCE

Section 7.1 Indemnification .

(a) MICL . MICL shall indemnify and hold harmless Infinity and its Affiliates and their respective directors, officers, employees and agents (the “ Infinity Indemnified Parties ”) from and against any losses, costs, damages, fees or expenses (“ Losses ”) arising out of (i) any Third Party claims resulting from the breach by MICL of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (ii) any Third Party claims resulting from any negligent act or omission or willful misconduct of any MICL Indemnified Party in performing MICL’s obligations or exercising MICL’s rights under this Agreement or the Strategic Alliance Agreement, or (iii) any Third Party claim of personal injury or other product liability resulting from Products Developed, Manufactured or Commercialized by MICL or its Affiliates or sublicensees. Notwithstanding the foregoing, MICL shall not be responsible for the indemnification of any Infinity Indemnified Party to the extent that the Losses of such Infinity Indemnified Party were caused by: (A) the negligence or willful misconduct of such Infinity Indemnified Party, or (B) any breach by Infinity of its representations, warranties, covenants or obligations pursuant to this Agreement.

(b) Infinity . Infinity shall indemnify and hold harmless MICL and its Affiliates and their respective directors, officers, employees and agents (the “ MICL Indemnified Parties ”) harmless from and against any Losses arising out of (i) any Third Party claims resulting from the breach by Infinity of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (ii) any Third Party claims resulting from any negligent act or omission or willful misconduct of any Infinity Indemnified Parties or any Sublicensee or Service Provider of Infinity, in performing Infinity’s obligations or exercising Infinity’s rights under this Agreement or the Strategic Alliance Agreement, or (iii) any Third Party claim of personal injury or other product liability resulting from Products Developed, Manufactured or Commercialized by Infinity or its Affiliates or Sublicensees. Notwithstanding the foregoing, Infinity shall not be responsible for the indemnification of any MICL Indemnified Party: (A) to the extent that the Losses of such MICL Indemnified Party were caused by the negligence or willful misconduct of such MICL Indemnified Party, or (B) to the extent that the Losses of such MICL Indemnified Party were caused by any breach by MICL of its representations, warranties, covenants or obligations pursuant to this Agreement.

(c) Procedure . A Person entitled to indemnification under this Section 7.1 (an “ Indemnified Party ”) shall give prompt written notification to the Party from whom indemnification is sought (the “ Indemnifying Party ”) of the commencement of any action, suit or proceeding relating to a Third Party claim for which indemnification may be sought or, if earlier, upon the assertion of any such claim by a Third Party (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided in this subsection shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually prejudiced as a result of such failure to give notice). Within thirty (30) days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense. The Party not controlling such defense may participate therein at its own expense; provided that if the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes, based on advice from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such action, suit, proceeding or claim, the Indemnifying Party shall be responsible for the reasonable fees and expenses of counsel to the Indemnified Party solely in connection therewith; provided further , however , that in no event shall the Indemnifying Party be responsible for the fees and expenses of more than one counsel in any one jurisdiction for all Indemnified Parties. The Party controlling such defense shall keep the other Party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider recommendations made by the other Party with respect thereto. The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. The Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto or that imposes any liability or obligation on the Indemnified Party without the prior written consent of the Indemnified Party.

(d) Allocation . In the event a claim is based partially on an indemnified claim and partially on a non-indemnified claim or based partially on a claim indemnified by one Party and partially on a claim indemnified by the other Party, any payments in connection with such claims shall be apportioned between the Parties in accordance with the degree of cause attributable to each Party.

(e) Mitigation of Damages . Nothing in this Article VII will act to negate any obligation under common law of either Party to mitigate damages with respect to any Third Party claim for which such Party is seeking indemnification from the other Party hereunder.

Section 7.2 Limitation on Liability . EXCEPT WITH RESPECT TO A BREACH OF ARTICLE V AND EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER SECTION 7.1, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, MULTIPLE OR PUNITIVE DAMAGES, COSTS OR EXPENSES (INCLUDING LOST PROFITS, LOST REVENUES AND/OR LOST SAVINGS), ARISING OUT OF THIS AGREEMENT OR RELATING TO ANY BREACH OF THIS AGREEMENT,

EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, COSTS OR EXPENSES.

Section 7.3 Insurance . Each Party shall use reasonable efforts to maintain insurance, including product liability insurance, with respect to its activities hereunder, in an amount and coverage reasonably appropriate for a company comparable to such Party. Either Party may satisfy its obligations under this Section 7.3 through self-insurance to the same extent. The foregoing coverage shall continue during the Term and for a period of six (6) years thereafter.

ARTICLE VIII

TERM; SURVIVAL

Section 8.1 Term . This Agreement shall become effective as of the Effective Date and shall remain in full force and effect until the Parties have no further obligations to each other hereunder (the “ Term ”).

ARTICLE IX

MISCELLANEOUS PROVISIONS

Section 9.1 Governing Law . This Agreement, including the interpretations, performance, enforcement, breach or termination thereof and any remedies relating thereto will be construed and enforced in accordance with and governed by the internal Laws of the State of New York, without regard to the conflicts of laws provisions thereof. The provisions of the United Nations Convention on Contracts for the International Sale of Goods, the 1974 Convention on the Limitation Period in the International Sale of Goods (the “ 1974 Convention ”), and the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, shall not apply to this Agreement or any subject matter hereof.

Section 9.2 Consent to Jurisdiction . Infinity and MICL irrevocably submit to the personal non-exclusive jurisdiction of any state or federal court of competent jurisdiction in New York County, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Infinity and MICL further agree that service of any process, summons, notice or document hand delivered or sent by registered mail to such Party’s respective address set forth in Section 9.6 will be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Infinity and MICL irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any state or federal court of competent jurisdiction in New York County, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

transfer this Agreement or its rights and obligations hereunder, in whole or in part, without Infinity’s consent to (i) an Affiliate of MICL; provided , that, such assignment by MICL will not relieve MICL of its obligations to Infinity under this Agreement, (ii) any assignee of all or substantially all of MICL’s business, or (iii) the successor of the relevant portion of MICL’s business by reason of merger, consolidation, sale of all or substantially all of its assets or any similar transaction, and (b) Infinity may assign or transfer this Agreement or its rights and obligations hereunder, in whole or in part, without the consent of MICL to (i) an Affiliate of Infinity, provided such assignment by Infinity will not relieve Infinity of its obligations to MICL under this Agreement, (ii) any assignee of all or substantially all of Infinity’s business, or (iii) the successor of the relevant portion of Infinity’s business by reason of merger, consolidation, sale of all or substantially all of its assets or any similar transaction. Any permitted successor or assignee of rights and/or obligations hereunder will, in a writing to the other Party, expressly assume performance of such rights and/or obligations. An assignment or transfer by a Party pursuant to this Section 9.3 will be binding upon and inure to the benefit of the Parties and their successors or assigns. No assignment or transfer will relieve either Party of its responsibility for the performance of any obligation prior to such assignment or transfer. No such assignment or transfer will be valid or effective unless performed in accordance with this Section 9.3. Each Party agrees that, notwithstanding any provisions of this Agreement to the contrary, in the event that this Agreement is assigned by either Party in connection with the sale or transfer of all or substantially all of the business of such Party or in connection with a merger, consolidation or similar transaction, the non-assigning Party shall not be provided with rights or access to Know-How or intellectual property rights of such assignee or the acquirer of such Party.

Section 9.4 Entire Agreement; Amendments . This Agreement constitutes the entire agreement between Infinity and MICL with respect to the subject matter hereof, and supersedes all previous arrangements with respect to the subject matter hereof, whether written or oral, including the Prior Confidentiality Agreement and the Strategic Alliance Agreement. This Agreement may not be amended, changed, supplemented or otherwise modified except by an instrument in writing signed by each of the Parties.

Section 9.5 No Third Party Beneficiaries . This Agreement will be binding upon and inure solely to the benefit of the Parties and their successors and permitted assigns and no provision of this Agreement, express or implied, is intended to or will be deemed to confer upon Third Parties any right, benefit, remedy, claim, liability, reimbursement, claim of action or other right of any nature whatsoever under or by reason of this Agreement other than the Parties and, to the extent provided in Section 7.1, the Indemnified Parties. Without limitation, this Agreement will not be construed so as to grant employees of either Party in any country any rights against the other Party pursuant to the Laws of such country.

Section 9.6 Notices . All communications, notices, instructions and consents provided for herein or in connection herewith will be in writing and be sent to the address below and will be (a) given in person, (b) sent by registered or certified mail, return receipt requested, postage prepaid, (c) sent by means of telex, facsimile or other means of wire transmission (with request for assurance of receipt in a manner typical with respect to communications of that type), or (d) sent by a reputable nationwide overnight courier service. Any such communication, notice, instruction or consent will be deemed to have been delivered: (w) on receipt if given in person; (x) three (3) Business Days after it is sent by registered or certified mail, return receipt requested,

postage prepaid; (y) on the date of transmission if sent by telex, facsimile or other means of wire transmission (if such transmission is on a Business Day, otherwise on the next Business Day following such transmission); or (z) one (1) Business Day after it is sent via a reputable nationwide overnight courier service.

Notices to Infinity shall be addressed to:

Infinity Pharmaceuticals, Inc

780 Memorial Drive

Cambridge, Massachusetts 02139

USA

Telefacsimile: +1-617-453-1001

Attention: CEO

with copies to:

Infinity Pharmaceuticals, Inc

780 Memorial Drive

Cambridge, Massachusetts 02139

USA

Telefacsimile: +1-617-453-1001

Attention: General Counsel

and

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

USA

Telefacsimile: +1-617-526-5000

Attention: Steven D. Singer, Esq.

Notices to MICL shall be addressed to:

Mundipharma International Corporation Limited

Mundipharma House, 14 Par-la-Ville Road

P.O. Box HM 2332, Hamilton HM JX

Bermuda

Telefacsimile: (441) 292-1472

Attention: Douglas Docherty, General Manager

with a copy to:

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

USA

Telefacsimile: (212) 489-7130

Attention: Stuart D. Baker

provided , however , that if either Party will have designated a different address by notice to the other Party in accordance with this Section 9.6, then to the last address so designated.

Section 9.7 Force Majeure . Each Party will be excused from the performance of its obligations under this Agreement to the extent that such performance is prevented by a Force Majeure Event and the non-performing Party promptly provides written notice to the other Party of such inability and of the period for which such inability is expected to continue. Such excused performance will be continued so long as the condition constituting a Force Majeure Event continues and the non-performing Party takes reasonable efforts to remove the condition. For purposes of this Agreement, a “ Force Majeure Event ” means a condition caused by occurrences beyond the reasonable control of the Party affected, including an act of God, an act, pronouncement, war, an act of war, terrorism, insurrection, riot, civil commotion, epidemic, failure or default of public utilities or common carriers, labor strike, lockout, labor disturbance, embargo, fire, earthquake, flood, storm or like catastrophe. Notwithstanding the foregoing, nothing in this Section 9.7 will excuse or suspend the obligation of either Party to make any payment due under this Agreement.

Section 9.8 Relationship of the Parties; Independent Contractors . Except as set forth herein, neither Party will have any responsibility for the hiring, termination or compensation of the other Party’s employees or for any employee benefits of such employee. No employee or representative of a Party will have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever, or to create or impose any contractual or other obligation or liability on the other Party without said other Party’s approval or as provided in this Agreement. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, each Party’s legal relationship to the other Party under this Agreement will be that of independent contractor. This Agreement is not a partnership agreement and nothing in this Agreement will be construed to establish a relationship of partners or joint venturers between the Parties and it is expressly agreed that the relationship between MICL and Infinity shall not constitute a partnership, joint venture, or agency. Neither MICL nor Infinity shall have the authority to make any statements, representations, or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

Section 9.9 No Strict Construction . This Agreement shall not be strictly construed against either Party.

Section 9.10 Headings . The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.

Section 9.11 No Implied Waivers; Rights Cumulative . Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver will be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver, delay or the failure of any Party to enforce or exercise any term, condition or part of this Agreement at any time or in any one or more instances will not be deemed to be or construed as a waiver of the same or any other term, condition or part in any other situation, nor will it forfeit any rights, power or privilege to future enforcement thereof. No single or partial exercise of any right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of that Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. Except as expressly set forth in this Agreement, all rights and remedies available to a Party, whether under this Agreement or afforded by Law or otherwise, will be cumulative and not in the alternative to any other rights or remedies that may be available to such Party.

Section 9.12 Severability . Each of the provisions contained in this Agreement will be severable, and the unenforceability of one will not affect the enforceability of any others or of the remainder of this Agreement. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is invalid, illegal or unenforceable in any respect for any reason, the Parties will negotiate in good faith with a view to the substitution therefor of a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision; provided , however , that the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein will not be in any way impaired thereby, it being intended that all of the rights and privileges of the Parties hereto will be enforceable to the fullest extent permitted by Law.

Section 9.13 Execution in Counterparts; Facsimile Signatures . This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument even if both Parties have not executed the same counterpart. Signatures provided by facsimile transmission or in Adobe™ Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.

Section 9.14 Expenses . Each Party will bear its own costs and expenses in connection with the negotiation and preparation of this Agreement and with respect to the transactions contemplated by this Agreement, including fees and disbursements of counsel, financial advisors and accountants.

Section 9.15 Interpretation . The definitions of the terms herein apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun

will include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation.” Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any Laws herein will be construed as referring to such Laws as from time to time enacted, repealed or amended, (c) any reference herein to any Person will be construed to include the Person’s successors and assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) any reference herein to the words “mutually agree” or “mutual written agreement” will not impose any obligation on either Party to agree to any terms relating thereto or to engage in discussions relating to such terms except as such Party may determine in such Party’s sole discretion, except as expressly provided in this Agreement, (f) as applied to a Party, the word “will” shall be construed to have the same meaning and effect as the word “shall,” and (g) all references herein without a reference to any other agreement to Articles, Sections, Exhibits or Schedules will be construed to refer to Articles, Sections, Exhibits and Schedules of this Agreement.

Section 9.16 Performance by Affiliates . Any obligation of Infinity under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Infinity’s sole and exclusive option, either by Infinity directly or by any Affiliate of Infinity that Infinity causes to satisfy, meet or fulfill such obligation, in whole or in part. Any obligation of MICL under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at MICL’s sole and exclusive option, either by MICL directly or by any Affiliate of MICL that MICL causes to satisfy, meet or fulfill such obligation, in whole or in part. With respect to any particular action, the use of the words “Infinity will” also means “Infinity will cause” the particular action to be performed, and the use of the words “MICL will” also means “MICL will cause” the particular action to be performed. Each of the Parties guarantees the performance of all actions, agreements and obligations to be performed by any Affiliates of such Party under the terms and conditions of this Agreement.

Section 9.17 Further Assurances and Actions . Each Party, upon the request of the other Party, without further consideration, will do, execute, acknowledge, and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney, instruments and assurances as may be reasonably necessary to effect complete consummation of the transactions contemplated by this Agreement, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. The Parties agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Parties have executed this Termination and Revised Relationship Agreement as of the Effective Date.


INFINITY PHARMACEUTICALS, INC.

By:		/s/ Adelene Q. Perkins
Name:		Adelene Q. Perkins
Title:		President and Chief Executive Officer


MUNDIPHARMA INTERNATIONAL CORPORATION LIMITED

By:		/s/ Douglas Docherty
		Douglas Docherty
		General Manager

[Execution Page]

Schedule A

Press Release

[attached]

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LOGO

FOR RELEASE ON WEDNESDAY, JULY 18, 2012, AT 6:30 A.M. ET

Contact:

Infinity Pharmaceuticals, Inc.

Jaren Irene Madden, 617-453-1336

Jaren.Madden@infi.com

http://www.infi.com

Media:

Liz Falcone, 617-671-6727

Liz.Falcone@infi.com

INFINITY REGAINS WORLDWIDE RIGHTS TO PI3K, FAAH AND EARLY DISCOVERY PROGRAMS

– Infinity, Purdue and Mundipharma Conclude Strategic Alliance Restructuring –

– Purdue Pharma L.P. Makes $27.5 Million Equity Investment; Infinity Has Cash Runway Through Key Data Inflection Points for IPI-145 and Retaspimycin HCl –

– Encouraging Early Data of IPI-145 in Patients with Hematologic Malignancies Informs Trial Expansion –

Cambridge, Mass. – July 18, 2012 – Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) today announced it has restructured its strategic alliance with Mundipharma International Corporation Limited and Purdue Pharmaceutical Products L.P. by mutual agreement. With this restructuring, Infinity regains worldwide rights for its phosphoinositide-3-kinase (PI3K) program, its fatty acid amide hydrolase (FAAH) program and its early discovery programs. IPI-145, the company’s potent, oral inhibitor of PI3K-delta and -gamma, is currently progressing in a Phase 1 trial in patients with advanced hematologic malignancies.

“Regaining worldwide rights to all of our programs, particularly our PI3K program, is an important, value creating development for Infinity,” said Adelene Q. Perkins, president and chief executive officer of Infinity. “Our strategic alliance with Mundipharma and Purdue has been key in building the company, and we are pleased that they will now participate in the value of our PI3K program as a more significant Infinity equity holder, together with our other investors.”

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Infinity today announced the expansion of its Phase 1, open-label, dose-escalation trial of IPI-145 in patients with advanced hematologic malignancies. This expansion cohort will evaluate the safety, pharmacokinetics and efficacy of IPI-145 administered at 25 mg twice daily (BID) in patients with chronic lymphocytic leukemia, indolent non-Hodgkin’s lymphoma or mantle cell lymphoma. There have been confirmed investigator assessments of clinical response at the lowest dose levels, including 15 mg BID and less. To date, IPI-145 has been well tolerated and dose-escalation remains ongoing. The maximum tolerated dose (MTD) of IPI-145 has not yet been determined, and additional expansion cohorts are planned once the MTD is reached. Infinity expects to present data from this trial at a medical meeting in the second half of 2012.

In addition, the company plans to initiate a Phase 2 trial of IPI-145 in patients with asthma as well as a Phase 2 trial in patients with rheumatoid arthritis in the second half of 2012.

Transaction Terms

Infinity also entered into a stock purchase agreement with Purdue Pharma L.P. (PPLP) under which Infinity will issue and sell 1,896,552 shares of its common stock, at a price of $14.50 per share, for aggregate proceeds to Infinity of $27.5 million. Infinity will also issue 3,520,013 shares of Infinity common stock, at the same price per share, to repay the principal and accrued interest outstanding under the $50 million line of credit made available by PPLP. These equity purchases are subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction of other customary closing conditions. Upon completion of these equity purchases, PPLP, together with certain associated entities, would hold approximately 28 percent on a combined basis of Infinity’s fully diluted common stock outstanding. In addition, PPLP and the associated entities have agreed to vote any shares held by them in accordance with the voting recommendations put forth by Infinity’s Board of Directors, subject to certain exceptions for shares held by the associated entities prior to entry into the stock purchase agreement with respect to votes on major corporate transactions and charter amendments. Further, Mundipharma’s Board observation rights have terminated.

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Additional Pipeline Update: Retaspimycin HCl

Infinity also announced today that its Phase 2, randomized, double-blind, placebo-controlled trial of retaspimycin hydrochloride (HCl) in combination with docetaxel in patients with non-small cell lung cancer (NSCLC) is enrolling ahead of schedule. Infinity now anticipates completing enrollment in this trial this Fall and expects to report data from the trial in the first half of 2013. Retaspimycin HCl is an intravenously administered, potent and selective heat shock protein 90 (Hsp90) inhibitor.

Financial Guidance

In the absence of additional funding or business development activities and based on Infinity’s current operating plans, the company expects that its current cash and investments, together with proceeds from the planned equity investment of $27.5 million by PPLP, are sufficient to fund its planned operations into the second half of 2013, after data from the current trials of IPI-145 in patients with advanced hematologic malignancies and of retaspimycin hydrochloride plus docetaxel in patients with NSCLC have been obtained. The company expects to provide updated 2012 financial guidance when it reports its second quarter 2012 financial results, currently planned for August 7, 2012.

Conference Call Information

Infinity will host a conference call today, Wednesday, July 18, 2012, at 8:30 a.m. ET to discuss the agreement and provide an update on it PI3K program. A live webcast of the conference call can be accessed in the “investors/media” section of Infinity’s website at www.infi.com. To participate in the conference call, please dial 1-877-316-5293 (domestic) or 1-631-291-4526 (international) five minutes prior to start time. An archived version of the webcast will be available on Infinity’s website for 30 days.

About Infinity Pharmaceuticals, Inc.

Infinity is an innovative drug discovery and development company seeking to discover, develop and deliver to patients best-in-class medicines for diseases with significant unmet need. Infinity combines proven scientific expertise with a passion for developing novel small molecule drugs that target emerging disease pathways. Infinity’s programs focused on the inhibition of the heat shock protein 90, phosphoinositide-3-kinase and fatty acid amide hydrolase are evidence of its innovative approach to drug discovery and development. For more information on Infinity, please refer to the company’s website at www.infi.com .

Forward Looking Statements

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of IPI-145 in patients with hematologic malignancies in the second half of 2012 and be able to expand this study in additional patient populations following identification of the maximum tolerated dose, will begin Phase 2 development of IPI-145 in asthma and rheumatoid arthritis in the second half of 2012, will complete enrollment of the clinical trial evaluating retaspimycin hydrochloride and docetaxel this Fall and to report data therefrom in the first half of 2013, has cash runway into the second half of 2013 and will provide updated financial guidance during its second quarter financial results call planned for August 7, 2012, and that we will be able to complete the transactions contemplated in the securities purchase agreement with PPLP and the associated entities. These forward looking statements also include those articulating our belief that having global development commercialization rights is a key strategic opportunity to create shareholder value, and that we expect to create such value in the future. Such statements are subject to numerous factors, risks and uncertainties that may cause actual events or results to differ materially from the company’s current expectations. For example, there can be no guarantee that any product candidate Infinity is developing will successfully complete necessary preclinical and clinical development phases, that development of any of Infinity’s product candidates will continue, or that positive data seen in any clinical trial will be replicated in a larger patient population or in subsequent trials. Further, there can be no guarantee that any positive developments in Infinity’s product portfolio will result in stock price appreciation. Management’s expectations could also be affected by risks and uncertainties relating to: Infinity’s results of clinical trials and preclinical studies, including subsequent analysis of existing data and new data received from ongoing and future studies; the content and timing of decisions made by the U.S. Food and Drug Administration, the U.S. Federal Trade Commission and other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies; Infinity’s ability to enroll patients in its clinical trials; unplanned cash requirements and expenditures, including in connection with business development activities; development of agents by Infinity’s competitors for diseases in which Infinity is currently developing its product candidates; and Infinity’s ability to obtain, maintain and enforce patent and other intellectual property protection for any product candidates it is developing. These and other risks which may impact management’s expectations are described in greater detail under the caption “Risk Factors” included in Infinity’s quarterly report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on May 8, 2012. Any forward-looking statements contained in this press release speak only as of the date hereof, and Infinity expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

###

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Exhibit 10.3

EXECUTION VERSION

TERMINATION AND REVISED RELATIONSHIP AGREEMENT

This Termination and Revised Relationship Agreement (this “ Agreement ”) is entered into as of the 17 ^th day of July 2012 (the “ Effective Date ”) by and between Infinity Pharmaceuticals, Inc., a Delaware corporation having its principal office at 780 Memorial Drive, Cambridge, Massachusetts 02139 (“ Infinity ”), and Purdue Pharmaceutical Products L.P., a Delaware limited partnership (“ Purdue ”).

INTRODUCTION

1. Infinity and Purdue are parties to the Strategic Alliance Agreement, dated as of the 19th day of November 2008 (the “ Strategic Alliance Effective Date ”, such agreement, the “ Strategic Alliance Agreement ”).

2. Infinity and Purdue desire to terminate the Strategic Alliance Agreement and to enter into a revised relationship on the terms set forth in this Agreement.

ARTICLE I

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article I:

Section 1.1 “ Affiliate ”. Affiliate shall mean any person, firm, trust, partnership, corporation, company or other entity or combination thereof, which directly or indirectly (i) controls a Person, (ii) is controlled by a Person, or (iii) is under common control with a Person. The terms “control” and “controlled” mean (x) ownership of fifty percent (50%) or more, including ownership by trusts with substantially the same beneficial interests, of the voting and equity rights of such person, firm, trust, partnership, corporation, company or other entity or combination thereof or (y) the power to direct the management of such person, firm, trust, partnership, corporation, company or other entity or combination thereof. “ Affiliate ” shall not include, in the case of Purdue, The Purdue Frederick Company Inc., a New York corporation.

Section 1.2 “ ANDA ”. ANDA shall mean any of the following: (a) an Abbreviated New Drug Application filed with the FDA or any successor applications or procedures; and (b) all supplements and amendments that may be filed with respect to the foregoing.

Section 1.3 “ Bcl-2/Bcl-xL ”. Bcl-2/Bcl-xL shall mean Bcl-2 or Bcl-xL.

Section 1.4 “ Business Day ”. Business Day shall mean any day, other than a Saturday or a Sunday, on which the banks in New York, New York, USA are open for business.

Section 1.10 “ Ex-U.S. Research and Development Funding ”. Ex-U.S. Research and Development Funding shall mean the funding paid by MICL to Infinity in accordance with Sections 2.2(d) and/or 5.1 of the FAAH Ex-U.S. Strategic Alliance Agreement during the Prior Term, in the amount of $244,547,850.

Section 1.11 “ Executive Officers ”. Executive Officers shall mean Purdue’s Chief Executive Officer or President (or the officer or employee of Purdue then serving in a substantially equivalent capacity) and Infinity’s Chief Executive Officer (or the officer or employee of Infinity then serving in a substantially equivalent capacity).

Section 1.12 “ Existing Affiliate ”. Existing Affiliate shall mean a Person which was an Affiliate of Infinity at any time during the Prior Term.

Section 1.13 “ FAAH ”. FAAH shall mean Fatty Acid Amide Hydrolase (also known as FAAH-1) or FAAH-2.

Section 1.14 “ FAAH Ex-U.S. Strategic Alliance Agreement ”. FAAH Ex-U.S. Strategic Alliance Agreement shall mean the Strategic Alliance Agreement between Infinity and MICL dated as of the Strategic Alliance Effective Date, as amended December 10, 2010.

Section 1.15 “ FAAH Ex-U.S. Termination Agreement ”. FAAH Ex-U.S. Termination Agreement shall mean the Termination and Revised Relationship Agreement between Infinity and MICL dated as of the Effective Date.

Section 1.16 “ FAAH Products ”. FAAH Products shall mean products and product candidates that (a) are Controlled by Infinity, MICL, Purdue or any of their respective Affiliates as of the Effective Date, (b) are in existence as of the Effective Date, and (c) Interact with FAAH.

Section 1.17 “ FDA ”. FDA shall mean the United States Food and Drug Administration, or a successor agency thereto.

Section 1.18 “ Governmental Authority ”. Governmental Authority shall mean any multinational, federal, state, county, local, municipal or other entity, office, commission, bureau, agency, political subdivision, instrumentality, branch, department, authority, board, court, arbitral or other tribunal, official or officer, exercising executive, judicial, legislative, police, regulatory, administrative or taxing authority or functions of any nature pertaining to government.

Section 1.19 “ Hedgehog Pathway ”. Hedgehog Pathway shall mean all of the following members of the Hedgehog cell-signaling pathway: (i) all hedgehog ligands (Sonic, Indian, Desert) and transmembrane transport-like proteins, like Disp1 or Disp2, involved in the secretion of the HH ligand, (ii) Smoothened (Smo), including alternatively spliced forms and Smo with activating mutations, (iii) all Gli transcription factors (Gli 1, 2, 3), (iv) mutated or unmutated Patched (Ptch) receptor 1 and 2, (v) Cdo, Cdon and Boc (brother of Cdo), (vi) Suppressor of Fused (SuFu), (vii) Cdc2l1 kinase, (viii) Hedgehog interacting protein (HHIP), and (ix) ARL13B.

Section 1.20 “ Hsp90 ”. Hsp90 shall mean Heat Shock Protein 90 (Hsp90) and/or co-chaperones of Heat Shock Protein 90 (e.g., Hip and Hop), but not client proteins of Heat Shock Protein 90 such as c-Kit and EGFR.

Section 1.21 “ IND ”. IND shall mean (a) an Investigational New Drug Application, as defined in the U.S. Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder, that is required to be filed with the FDA before beginning clinical testing of a product in human subjects, or any successor application or procedure, and (b) all supplements and amendments that may be filed with respect to the foregoing.

Section 1.22 “ Infinity Know-How ”. Infinity Know-How shall mean any Know-How Controlled by Infinity that is useful to Develop and Commercialize Products.

Section 1.23 “ Infinity Patent Rights ”. Infinity Patent Rights shall mean Patent Rights Controlled by Infinity Covering Infinity Know-How.

Section 1.24 “ Interact ”. Interact shall mean to interact directly with a specified Target. In the event a product or product candidate directly interacts with more than one Target, it shall be deemed to Interact with whichever such Target it interacts with most potently.

Section 1.25 “ Know-How ”. Know-How shall mean any tangible or intangible know-how, expertise, discoveries, inventions, information, data (including preclinical and clinical data generated with respect to the FAAH Products in the course of the Research Program) or materials, including ideas, concepts, formulas, methods, procedures, designs, technologies, compositions, plans, applications, preclinical and clinical data, technical data, samples, chemical compounds and biological materials and all derivatives, modifications and improvements thereof and Regulatory Approvals and filings therefor.

Section 1.26 “ Laws ”. Laws shall mean each provision of any then-current multinational, federal, national, state, county, local, municipal or foreign law, statute, ordinance, order, writ, code, rule or regulation, promulgated or issued by any Governmental Authority, as well as with respect to either Party any binding judgments, decrees, stipulations, injunctions, determinations, awards or agreements issued by or entered into by such Party with any Governmental Authority.

Section 1.27 “ Manufacture ”. Manufacture shall mean all activities related to the manufacturing of any product, including test method development and stability testing, formulation, process development, manufacturing scale-up, manufacturing for use in non-clinical and clinical studies, manufacturing for commercial sale, packaging, release of product, quality assurance/quality control development, quality control testing (including in-process release and stability testing) and release of product or any component or ingredient thereof, and regulatory activities related to all of the foregoing.

Section 1.28 “ MICL ”. MICL shall mean Mundipharma International Corporation Limited, a Bermuda corporation, or any successor thereof.

Section 1.29 “ Net Sales ”. Net Sales, with respect to a particular Product in a particular period, shall mean the gross amount invoiced by Infinity, its Affiliates and/or its Sublicensees on

sales or other dispositions (excluding sales or dispositions for use in clinical trials or other scientific testing, in either case for which Infinity, its Affiliates and/or Sublicensees receive no revenue) of the Product to unrelated Third Parties during such period, less the following deductions (to the extent included in the gross amount invoiced or otherwise directly paid or incurred by Infinity, its Affiliates and/or its Sublicensees):

(a) trade, cash and quantity discounts actually allowed and taken directly with respect to such sales or other dispositions;

(c) allowances for amounts repaid or credited by reason of rejections, defects, recalls or returns or because of reasonable and customary chargebacks, refunds, coupons, patient co-pay savings cards, rebates (including related administration fees), wholesaler fee for service, reasonable amounts of physician samples, reasonable amounts of free products given to indigent patients, retroactive price reductions or any other items substantially similar in character and substance to the foregoing, with equitable adjustments to be made from time to time for any differences between these allowances and actual amounts;

(e) freight, insurance and other transportation charges incurred in shipping a Product to Third Parties, included and separately stated in the applicable invoice.

There shall be no double-counting in determining the foregoing deductions.

Section 1.30 “ Party ”. Party shall mean Infinity or Purdue; “ Parties ” shall mean Infinity and Purdue.

Section 1.31 “ Patent Rights ”. Patent Rights shall mean United States and non-U.S. patents, patent applications and/or provisional patent applications, utility models and utility model applications, design patents or registered industrial designs and design applications or applications for registration of industrial designs, and all substitutions, divisionals, continuations, continuation-in-part applications, continued prosecution applications, reissues, reexaminations and extensions thereof.

Section 1.32 “ Person ”. Person shall mean any individual, corporation, partnership, joint venture, limited liability company, trust, business association, organization, Governmental

Authority, a division or operating group of any of the foregoing or other entity or organization, including any successors or assigns (by merger or otherwise) of any such entity.

Section 1.33 “ PI3K Products ”. PI3K Products shall mean products and product candidates that are Licensed Compounds or Products (each as defined in the Development and License Agreement between Intellikine, Inc. and Infinity dated as of July 7, 2010).

Section 1.34 “ Prior Confidentiality Agreement ”. Prior Confidentiality Agreement shall mean the Mutual Confidential Disclosure Agreement, dated August 13, 2008, between Infinity and an Affiliate of Purdue.

Section 1.35 “ Prior Term ”. Prior Term shall mean the period of time beginning on the Strategic Alliance Effective Date and ending on the Effective Date.

Section 1.36 “ Product ”. Product shall mean (a) products and product candidates that (i) are Controlled by Infinity as of the Effective Date, (ii) are in existence as of the Effective Date and (iii) Interact with the Hedgehog Pathway, (b) FAAH Products, (c) PI3K Products, and (d) products and product candidates that (i) are Controlled by Infinity as of the Effective Date, and (ii) arise out of Discovery Projects.

Section 1.37 “ Program Right ”. Program Right shall mean (a) Infinity’s right to Develop, Manufacture and Commercialize Products pursuant to this Agreement; or (b) the rights that were granted to Purdue to Commercialize (as defined in the Strategic Alliance Agreement) FAAH Products (as defined in the Strategic Alliance Agreement) during the Prior Term pursuant to the Strategic Alliance Agreement.

Section 1.38 “ Purdue Know-How ”. Purdue Know-How shall mean (a) any Know-How that: (i) was conceived, reduced to practice or otherwise created by employees or consultants of Purdue or its Affiliates based on and arising from exposure to Infinity Know-How, (ii) is an analog or a new use of a product or product candidate developed under the Research Program, and (iii) was created during the portion of the Prior Term during which Purdue had Program Rights with respect to such product or product candidate; or (b) any information described in Section 2.2(b)(i).

Section 1.39 “ Purdue Patent Rights ”. Purdue Patent Rights shall mean Patent Rights Controlled by Purdue Covering Purdue Know-How.

Section 1.40 “ Regulatory Approval ”. Regulatory Approval shall mean, with respect to a product, the approval of the applicable Regulatory Authority necessary for the marketing and sale of such product for a particular indication in a country, excluding separate pricing and/or reimbursement approvals that may be required and ANDAs. Regulatory Approval shall also include any “orphan drug” or similar designation.

Section 1.41 “ Regulatory Authority ”. Regulatory Authority shall mean a federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the testing, manufacture, use, storage, import, promotion, marketing or sale of a pharmaceutical product in a country or territory, including the FDA.

Section 1.42 “ Regulatory Exclusivity ”. Regulatory Exclusivity shall mean the ability to exclude Third Parties from Manufacturing or Commercializing a product that could compete with a Product in a country, either through data exclusivity rights, orphan drug designation, or such other rights conferred by a Regulatory Authority in such country other than through Patent Rights.

Section 1.43 “ Research and Development Funding ”. Research and Development Funding shall mean the funding paid by Purdue to Infinity in accordance with Section 5.1 of the Strategic Alliance Agreement during the Prior Term, in the amount of $15,908,706.

Section 1.44 “ Research Program ”. Research Program shall mean a program under the Strategic Alliance Agreement to Develop FAAH Products during the Prior Term.

Section 1.45 “ Royalty Term ”. Royalty Term, with respect to each Product in a particular country, shall mean the period of time commencing on the first commercial sale of such Product in such country and ending on the last to occur of (a) the date on which all Infinity Patent Rights and Purdue Patent Rights containing a Valid Claim Covering the Manufacture, Commercialization or other use of such Product in the country of sale have expired, (b) the date on which all Infinity Patent Rights and Purdue Patent Rights containing a Valid Claim Covering the Manufacture in the country of actual Manufacture of such Product have expired, and (c) the expiration of any Regulatory Exclusivity with respect to such Product in such country.

Section 1.46 “ SEC ”. SEC shall mean the United States Securities and Exchange Commission.

Section 1.47 “ Securities Purchase Agreement ”. Securities Purchase Agreement shall mean the Securities Purchase Agreement between Infinity, Purdue Pharma L.P., and, solely with respect to Sections 4 to 10 therein, Beacon Company and Rosebay Medical Company L.P., dated as of the Effective Date.

Section 1.48 “ Service Providers ”. Service Providers shall mean (a) with respect to either Party, contract employees, consultants and similar Persons who conduct activities on behalf of such Party, and (b) with respect to Infinity, the Persons in clause (a), plus academic or non-profit research institutions, hospitals, contract research organizations, contract manufacturing organizations, contract sales organizations, and similar Persons who conduct activities on behalf of Infinity.

Section 1.49 “ Sublicensee ”. Sublicensee shall mean a Third Party to whom Infinity grants a license or sublicense under the Infinity Know-How, Infinity Patent Rights, Purdue Know-How or Purdue Patent Rights in accordance with the terms of this Agreement.

Section 1.50 “ Target ”. Target shall mean a protein or its corresponding DNA or RNA sequence.

Section 1.51 “ Territory ”. Territory shall mean (a) from the Effective Date and for so long as the royalty under Section 4.1(a) is applicable to Net Sales of Products, all countries of the world; and (b) during such time as the royalty under Section 4.1(b) is applicable, the United States of America, its territories and possessions.

Section 1.52 “ Third Party ”. Third Party shall mean any Person other than Infinity or Purdue and their respective Affiliates.

Section 1.53 “ Valid Claim ”. Valid Claim shall mean a claim of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

Section 1.54 Additional Definitions . Each of the following definitions is set forth in the section of this Agreement indicated below:


Definition		Section
“1974 Convention”		9.1
“Agreement”		Preamble
“Confidential Information”		5.1(a)
“Disclosing Party”		5.1(a)
“Effective Date”		Preamble
“Force Majeure Event”		9.7
“Indemnified Party”		7.1(c)
“Indemnifying Party”		7.1(c)
“Infinity”		Preamble
“Infinity Indemnified Parties”		7.1(a)
“Losses”		7.1(a)
“Product Trademarks”		2.2(c)
“Purdue”		Preamble
“Purdue Indemnified Parties”		7.1(b)
“Recipient”		5.1(a)
“Releasees”		2.3
“Releasors”		2.3
“Rules”		9.2(b)
“Strategic Alliance Agreement”		Preamble
“Strategic Alliance Effective Date”		Preamble
“Term”		8.1
“U.S. Bankruptcy Code”		3.3
“U.S. GAAP”		1.24

ARTICLE II

TERMINATION OF STRATEGIC ALLIANCE AGREEMENT AND WAIVER OF RIGHTS

cease and terminate immediately. The Parties agree and acknowledge that there are no Joint Patent Rights (as defined in the Strategic Alliance Agreement) and no Joint Know-How (as defined in the Strategic Alliance Agreement).

Section 2.2 Transfers .

(a) Data Ownership . Purdue hereby transfers and assigns to Infinity all right, title and interest in and to Regulatory Approvals and regulatory documentation and other technical and other information or materials in Purdue’s or its Affiliates’ Control that are necessary or useful for the Development, Manufacture and Commercialization of FAAH Products, including all raw materials, work-in-progress and finished goods inventory of FAAH Products or any components thereof, in the possession or control of Purdue, its Affiliates or any of their Service Providers as of the Effective Date. Purdue shall put Infinity in possession of all such documentation, information and materials promptly after Infinity’s request therefor.

(b) Additional Materials . Promptly after the Effective Date, (i) Purdue shall make available to Infinity or its designee, in a mutually-agreed upon format, material information (including Know-How) regarding the FAAH Products, including any safety database, (ii) Purdue shall make its relevant scientific and technical personnel reasonably available to Infinity to answer any questions or provide instruction as reasonably requested by Infinity concerning such information, (iii) Purdue shall transfer or assign any INDs related to the FAAH Products in the Territory to Infinity or its designee, (iv) Infinity, itself or through its Affiliates, shall be solely responsible for pharmacovigilance with respect to the FAAH Products, (v) Infinity, itself or through its Affiliates, shall be solely responsible for Manufacturing the FAAH Products, and (vi) at Infinity’s request, Purdue shall transfer or assign, or cause its Affiliates to transfer or assign, to Infinity or its designee, any existing agreements or other arrangements that Purdue or its Affiliates have with any suppliers regarding the FAAH Products, and Infinity and/or its Affiliates shall be solely responsible for all obligations under and costs associated with such agreements or other arrangements regarding the supply of FAAH Products after the date of such transfer or assignment.

(c) Product Trademarks . Purdue hereby transfers and assigns to Infinity all right, title and interest in and to (i) any product name or related trademark that had been selected by Purdue or its Affiliates with respect to the FAAH Products (collectively, “ Product Trademarks ”) (together with all goodwill associated therewith) as set forth on Schedule 2.2(c) , and (ii) any Internet domain names incorporating any Product Trademark or any variation or part of any such Product Trademark as its URL address or any part of such address as set forth on Schedule 2.2(c) .

Section 2.3 Releases.

entity a right to sue and not to authorize any other entity to sue any Releasee for, any and all claims, actions, causes of action, suits, defenses, judgments, debts, offsets, accounts, covenants, contracts, agreements, torts, damages and any and all demands and liabilities whatsoever, including costs, expenses, and attorneys’ fees, of every name and nature, both at law and in equity, known or unknown, suspected or unsuspected, accrued or unaccrued, that arise out of or relate to the Strategic Alliance Agreement, the FAAH Ex-U.S. Strategic Alliance Agreement or any FAAH Products or Products (each as defined in the Strategic Alliance Agreement or the FAAH Ex-U.S. Strategic Alliance Agreement). This release shall not prevent or impair the right of a Party to bring proceedings pursuant to the terms of this Agreement to enforce this Agreement or to recover amounts owing to a Party pursuant to Section 4.4(b).

(b) Each Party waives to the fullest extent permitted by law the provisions and benefits of Section 1542 of the California Civil Code, which provides that:

Section 2.4 Non-disparagement . Neither Party shall, itself or through its Affiliates or any of its or their respective officers, directors, employees, trustees and attorneys, make, or encourage any other Person to make, any statement (whether written, oral or electronic) that disparages the other Party or any of the other Party’s Affiliates or its or their respective predecessors, successors, assigns, officers, directors, employees, trustees and attorneys. This Section 2.4 shall not apply to correspondence between the Parties, any proceedings pursuant to Section 9.2, or public announcements in filings made under applicable Law, including filings with the SEC, with respect any proceedings pursuant to Section 9.2 or as required by Law.

ARTICLE III

GRANT OF LICENSES

Section 3.1 License Grant to Infinity . Subject to the terms and conditions of this Agreement, Purdue, on behalf of itself and its Affiliates, hereby grants to Infinity during the Term an exclusive, sublicenseable, irrevocable license or sublicense, as applicable, under the Purdue Know-How and Purdue Patent Rights to Develop, Manufacture and Commercialize FAAH Products anywhere in the world. Infinity shall provide Purdue with a copy of any license or sublicense agreement within five (5) Business Days after execution thereof. Each license or sublicense of Infinity’s licensed rights under this Section 3.1 granted by Infinity shall be consistent with all the terms and conditions of this Agreement, and shall not supersede Infinity’s

obligations to pay royalties pursuant to Section 4.1, and Infinity shall guarantee the performance of its Affiliates and Sublicensees with respect to any license or sublicense granted pursuant to this Section 3.1.

Section 3.2 No Other Rights . Any rights of Purdue or its Affiliates in any Know-How or intellectual property rights not expressly granted to Infinity under the provisions of this Agreement or the FAAH Ex-U.S. Termination Agreement shall be retained by Purdue or its Affiliates. All licenses and other rights are or shall be granted only as expressly provided in this Agreement, and no other licenses or other rights are or shall be created or granted hereunder by implication, estoppel or otherwise.

Section 3.3 Section 365(n) . All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, as now or hereafter in effect (the “ U.S. Bankruptcy Code ”), licenses of rights to “intellectual property” as defined under Section 101(35A) of the U.S. Bankruptcy Code. Infinity shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code. Purdue agrees that Infinity shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against Purdue under the U.S. Bankruptcy Code, Infinity shall be entitled to a complete duplicate of or complete access to (as Infinity deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided that Infinity continues to fulfill its obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to Infinity (a) upon any such commencement of a bankruptcy proceeding upon written request therefor by Infinity, unless Purdue elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under subsection (a) above, upon the rejection of this Agreement by or on behalf of Purdue, upon written request therefor by Infinity. The foregoing is without prejudice to any rights that either Party may have arising under the U.S. Bankruptcy Code or other applicable Law.

Section 3.4 Rights of Reference . Any license granted pursuant to Section 3.1 shall include a right of reference under the applicable INDs to the extent necessary for Infinity, its Affiliates and Sublicensees to exercise such license rights. Purdue hereby agrees that any right of reference granted to Purdue pursuant to the Strategic Alliance Agreement is hereby terminated.

ARTICLE IV

FINANCIAL PROVISIONS

Section 4.1 Infinity Royalties to Purdue .

(a) Research and Development Funding Recovery . Until such time as Purdue has recovered one hundred percent (100%) of all Research and Development Funding pursuant to this Section 4.1(a) and MICL has recovered one hundred percent (100%) of all Ex-U.S. Research and Development Funding pursuant to the FAAH Ex-U.S. Termination Agreement, Infinity shall pay to Purdue a royalty of 0.244% on Net Sales of Products by Infinity, its

Affiliates and Sublicensees in the Territory; provided that, if the Securities Purchase Agreement is terminated in accordance with Section 8.1 of the Securities Purchase Agreement, the royalty rate payable to Purdue under this Section 4.1(a) shall be reduced from 0.244% to 0.183%.

(b) Post-Research and Development Funding Recovery . After Purdue has recovered one hundred percent (100%) of all Research and Development Funding and MICL has recovered one hundred percent (100%) of all Ex-U.S. Research and Development Funding, Infinity shall pay to Purdue a royalty of one percent (1%) on Net Sales of FAAH Products by Infinity, its Affiliates and Sublicensees in the Territory.

Section 4.2 Duration of Royalty Payments; Royalty Reductions .

Section 4.4 Royalty Reports and Accounting .

(a) Royalty Reports; Royalty Payments . Infinity shall deliver to Purdue, within thirty (30) days after the end of each calendar quarter during the applicable Royalty Term, reasonably detailed written accountings of Net Sales of Products that are subject to royalty payments due to Purdue for such calendar quarter. Such accountings shall be Confidential

Information of Infinity unless otherwise excluded by Section 5.1(b). Such quarterly reports shall indicate (i) gross sales and Net Sales (including reasonable detail for deductions from gross sales to Net Sales) on a country-by-country and Product-by-Product basis, and (ii) the calculation of royalties from such gross sales and Net Sales. When Infinity delivers such accounting to Purdue, Infinity shall also deliver all royalty payments due under Section 4.1 to Purdue for the calendar quarter.

(b) Audits .

(i) Infinity shall keep, and shall require its Affiliates and Sublicensees to keep, complete and accurate records of the latest three (3) years relating to gross sales, Net Sales and all underlying revenue and expense data relating to the calculations of Net Sales and payments required by Section 4.1. For the sole purpose of verifying amounts payable to Purdue, Purdue shall have the right annually, at Purdue’s expense, to retain an independent certified public accountant selected by Purdue and reasonably acceptable to Infinity, to review such records in the location(s) where such records are maintained by Infinity, its Affiliates and Sublicensees upon reasonable notice and during regular business hours. Such representatives shall execute a suitable confidentiality agreement reasonably acceptable to Infinity prior to conducting such audit. Such representatives shall disclose to each of Purdue and Infinity only their conclusions regarding the accuracy of royalty payments and of records related thereto. The right to audit any royalty report shall extend for three (3) years from the end of the calendar year in which the royalty report was delivered. Each royalty report shall be subject only to one such audit. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay Purdue the amount of any underpayment revealed by such audit together with interest calculated in the manner provided in Section 4.7. If the underpayment is equal to or greater than five percent (5%) of the amount that was otherwise due, Purdue shall be entitled to have Infinity reimburse Purdue’s reasonable out-of-pocket costs of such review. Purdue shall, within thirty (30) days after the Parties’ receipt of the audit report, return to Infinity any overpayment revealed by such audit.

(ii) Infinity shall keep complete and accurate records of its Research and Development Expenses (as defined in the Strategic Alliance Agreement) reimbursable by Purdue in accordance with Section 5.1 of the Strategic Alliance Agreement. For the sole purpose of verifying the Research and Development Funding paid to Infinity pursuant to Section 5.1 of the Strategic Alliance Agreement, Purdue shall have the right annually (after the completion of any annual comparison of Research and Development Funding to actual Research and Development Expenses), at Purdue’s expense, to retain an independent certified public accountant selected by Purdue and reasonably acceptable to Infinity, to review the quarterly reports and backup records in the location(s) where such records are maintained by Infinity or its Affiliates upon reasonable notice and during regular business hours. Such representatives shall execute a suitable confidentiality agreement reasonably acceptable to Infinity prior to conducting such audit. Such representatives shall disclose to each of Purdue and Infinity only their conclusions regarding the accuracy of actual Research and Development Expenses and of records related thereto. The right to audit any Research and Development Expenses shall extend for three (3) years from the end of the calendar year in which the quarterly report relating

to such expenses was delivered to Purdue in accordance with Section 2.3(a) of the Strategic Alliance Agreement. Each quarterly report shall be subject only to one such audit under this Agreement or the Strategic Alliance Agreement. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay Purdue the amount of any overpayment revealed by such audit together with interest calculated in the manner provided in Section 4.7. If the overpayment is equal to or greater than five percent (5%) of the amount that was otherwise due, Purdue shall be entitled to have Infinity reimburse Purdue’s reasonable out-of-pocket costs of such review. Infinity shall, within thirty (30) days after the Parties’ receipt of the audit report, pay any such overpayment amount to Purdue. Purdue shall, within thirty (30) days after the Parties’ receipt of the audit report, pay to Infinity any underpayment revealed by such audit.

Section 4.5 Currency Exchange . All payments to Purdue hereunder shall be made in US Dollars. For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than US Dollars), Infinity shall convert any amount expressed in a foreign currency into US Dollar equivalents, calculated using the applicable currency conversion rate as published in The Wall Street Journal , Eastern Edition , on the last Business Day of the applicable calendar quarter for the calendar quarter in which such sales were made.

Section 4.6 Tax Withholding . Any income or other taxes which Infinity is required by Law to pay or withhold on behalf of Purdue with respect to any payments payable to Purdue under this Agreement shall be deducted from the amount of such payments due, and paid or withheld, as appropriate, by Infinity on behalf of Purdue. Any such tax required by applicable Law to be paid or withheld shall be an expense of, and borne solely by, Purdue. Infinity shall furnish Purdue with reasonable evidence of such payment or amount withheld, in electronic or written form, as soon as practicable after such payment is made or such amount is withheld. The Parties will reasonably cooperate in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable Law in connection with the making of any required tax payment or withholding payment, or in connection with any claim to a refund of or credit for any such payment.

Section 4.7 Late Payments . Without limiting any other rights or remedies available to a Party hereunder, if Infinity does not pay any amount due on or before the due date, Infinity shall pay to Purdue interest on any such amounts from and after the date such payments are due under this Agreement at a rate per annum equal to the then current “prime rate” in effect published in The Wall Street Journal , Eastern Edition , plus three (3) percentage points or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent.

ARTICLE V

CONFIDENTIALITY

Section 5.1 Confidential Information .

that the Recipient takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, to the extent possible, to minimize the extent of such disclosure.

(d) Notwithstanding the obligations in Section 5.1(a), a Party may disclose Confidential Information of the other Party, if such disclosure:

(ii) is made to its Affiliates, Sublicensees, agents, consultants, or other Third Parties (including Service Providers) for the Development, Manufacture or Commercialization of products as provided hereunder or under the FAAH Ex-U.S. Termination Agreement, or in connection with an assignment of this Agreement or under the FAAH Ex-U.S. Termination Agreement, a licensing transaction related to products under this Agreement or under the FAAH Ex-U.S. Termination Agreement or a loan, financing or investment or acquisition, merger, consolidation or similar transaction (or for such Persons to determine their interest in performing such activities), in each case on the condition that any Third Parties to whom such disclosures are made agree to be bound by confidentiality and non-use obligations no less rigorous than those contained in this Agreement; or

(iii) consists entirely of Confidential Information previously approved by the Disclosing Party for disclosure by the Recipient.

Section 5.2 Publicity; Attribution; Terms of this Agreement; Non-Use of Names .

applicable Laws, including the rules and regulations promulgated by the SEC or any other Governmental Authority. Notwithstanding the foregoing, before disclosing this Agreement or the Strategic Alliance Agreement or any of the terms hereof or thereof pursuant to this Section 5.2(b), the Parties will consult with one another on the terms of this Agreement or the Strategic Alliance Agreement for which confidential treatment will be sought in making any such disclosure. If a Party wishes to disclose this Agreement or the Strategic Alliance Agreement or any of the terms hereof or thereof in accordance with this Section 5.2(b), such Party agrees, at its own expense, to seek confidential treatment of the portions of this Agreement, the Strategic Alliance Agreement or such terms as may be reasonably requested by the other Party; provided , that the disclosing Party shall always be entitled to comply with legal requirements, including the requirements of the SEC.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES; COVENANTS

Section 6.1 Organization . Infinity represents and warrants to Purdue that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Purdue represents and warrants to Infinity that it is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware.

Section 6.2 Authority . Infinity and Purdue each represents and warrants to the other Party that it has full corporate right, power and authority to enter into this Agreement and to perform its obligations under this Agreement as of the Effective Date.

Section 6.3 Consents . Infinity and Purdue each represents and warrants to the other Party that all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained, except where the failure to obtain any of the foregoing would not have a material adverse impact on the ability of such Party to meet its obligations hereunder.

Section 6.4 No Conflict . Infinity and Purdue each represents and warrants to the other Party that the execution and delivery of this Agreement, and Purdue represents and warrants to Infinity that the licenses granted pursuant to this Agreement, (a) do not and will not conflict with or violate any requirement of applicable Law existing as of the Effective Date, (b) do not and will not conflict with or violate the certificate of incorporation, by-laws or other organizational documents of the representing Party, and (c) do not and will not conflict with, violate, breach or constitute a default under any contractual obligations of the representing Party or any of its Affiliates existing as of the Effective Date.

Section 6.5 Enforceability; Rights . Infinity and Purdue each represents and warrants to the other Party that this Agreement is a legal and valid obligation binding upon it and is enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies. Infinity and Purdue each further represents and warrants to the other Party that neither the representing Party nor any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement that will result in any other Person obtaining any interest in, or that would give to any other Person any right to assert any claim in or with respect to, any of the representing Party’s rights under this Agreement.

Section 6.7 Discovery Projects . Infinity represents and warrants to Purdue that all of the Discovery Projects are set forth on Schedule 1.9 .

Section 6.8 No Warranties . EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATIONS OR WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.

ARTICLE VII

INDEMNIFICATION, LIMITATION ON LIABILITY AND INSURANCE

Section 7.1 Indemnification .

(a) Purdue . Purdue shall indemnify and hold harmless Infinity and its Affiliates and their respective directors, officers, employees and agents (the “ Infinity Indemnified Parties ”) from and against any losses, costs, damages, fees or expenses (“ Losses ”) arising out of (i) any Third Party claims resulting from the breach by Purdue of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (ii) any Third Party claims resulting from any negligent act or omission or willful misconduct of any Purdue Indemnified Party in performing Purdue’s obligations or exercising Purdue’s rights under this

Agreement or the Strategic Alliance Agreement, or (iii) any Third Party claim of personal injury or other product liability resulting from FAAH Products Developed, Manufactured or Commercialized by Purdue or its Affiliates or sublicensees. Notwithstanding the foregoing, Purdue shall not be responsible for the indemnification of any Infinity Indemnified Party to the extent that the Losses of such Infinity Indemnified Party were caused by: (A) the negligence or willful misconduct of such Infinity Indemnified Party, or (B) any breach by Infinity of its representations, warranties, covenants or obligations pursuant to this Agreement.

(b) Infinity . Infinity shall indemnify and hold harmless Purdue and its Affiliates and their respective directors, officers, employees and agents (the “ Purdue Indemnified Parties ”) harmless from and against any Losses arising out of (i) any Third Party claims resulting from the breach by Infinity of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (ii) any Third Party claims resulting from any negligent act or omission or willful misconduct of any Infinity Indemnified Parties or any Sublicensee or Service Provider of Infinity, in performing Infinity’s obligations or exercising Infinity’s rights under this Agreement or the Strategic Alliance Agreement, or (iii) any Third Party claim of personal injury or other product liability resulting from FAAH Products Developed, Manufactured or Commercialized by Infinity or its Affiliates or Sublicensees. Notwithstanding the foregoing, Infinity shall not be responsible for the indemnification of any Purdue Indemnified Party: (A) to the extent that the Losses of such Purdue Indemnified Party were caused by the negligence or willful misconduct of such Purdue Indemnified Party, or (B) to the extent that the Losses of such Purdue Indemnified Party were caused by any breach by Purdue of its representations, warranties, covenants or obligations pursuant to this Agreement.

agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. The Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto or that imposes any liability or obligation on the Indemnified Party without the prior written consent of the Indemnified Party.

ARTICLE VIII

TERM; SURVIVAL

ARTICLE IX

MISCELLANEOUS PROVISIONS

New York, without regard to the conflicts of laws provisions thereof. The provisions of the United Nations Convention on Contracts for the International Sale of Goods, the 1974 Convention on the Limitation Period in the International Sale of Goods (the “ 1974 Convention ”), and the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, shall not apply to this Agreement or any subject matter hereof.

Section 9.2 Consent to Jurisdiction . Infinity and Purdue irrevocably submit to the personal non-exclusive jurisdiction of any state or federal court of competent jurisdiction in New York County, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Infinity and Purdue further agree that service of any process, summons, notice or document hand delivered or sent by registered mail to such Party’s respective address set forth in Section 9.6 will be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Infinity and Purdue irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any state or federal court of competent jurisdiction in New York County, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 9.3 Assignment . This Agreement (including any rights or obligations hereunder) may not be assigned or otherwise transferred by either Party, in whole or in part, without the express prior written consent of the other Party, except that (a) Purdue may assign or transfer this Agreement or its rights and obligations hereunder, in whole or in part, without Infinity’s consent to (i) an Affiliate of Purdue; provided , that, such assignment by Purdue will not relieve Purdue of its obligations to Infinity under this Agreement, (ii) any assignee of all or substantially all of Purdue’s business, or (iii) the successor of the relevant portion of Purdue’s business by reason of merger, consolidation, sale of all or substantially all of its assets or any similar transaction, and (b) Infinity may assign or transfer this Agreement or its rights and obligations hereunder, in whole or in part, without the consent of Purdue to (i) an Affiliate of Infinity, provided such assignment by Infinity will not relieve Infinity of its obligations to Purdue under this Agreement, (ii) any assignee of all or substantially all of Infinity’s business, or (iii) the successor of the relevant portion of Infinity’s business by reason of merger, consolidation, sale of all or substantially all of its assets or any similar transaction. Any permitted successor or assignee of rights and/or obligations hereunder will, in a writing to the other Party, expressly assume performance of such rights and/or obligations. An assignment or transfer by a Party pursuant to this Section 9.3 will be binding upon and inure to the benefit of the Parties and their successors or assigns. No assignment or transfer will relieve either Party of its responsibility for the performance of any obligation prior to such assignment or transfer. No such assignment or transfer will be valid or effective unless performed in accordance with this Section 9.3. Each Party agrees that, notwithstanding any provisions of this Agreement to the contrary, in the event that this Agreement is assigned by either Party in connection with the sale or transfer of all or substantially all of the business of such Party or in connection with a merger, consolidation or similar transaction, the non-assigning Party shall not be provided with rights or access to Know-How or intellectual property rights of such assignee or the acquirer of such Party.

Section 9.4 Entire Agreement; Amendments . This Agreement constitutes the entire agreement between Infinity and Purdue with respect to the subject matter hereof, and supersedes all previous arrangements with respect to the subject matter hereof, whether written or oral, including the Prior Confidentiality Agreement and the Strategic Alliance Agreement. This Agreement may not be amended, changed, supplemented or otherwise modified except by an instrument in writing signed by each of the Parties.

Notices to Infinity shall be addressed to:

Infinity Pharmaceuticals, Inc

780 Memorial Drive

Cambridge, Massachusetts 02139

USA

Telefacsimile: +1-617-453-1001

Attention: CEO

with copies to:

Infinity Pharmaceuticals, Inc

780 Memorial Drive

Cambridge, Massachusetts 02139

USA

Telefacsimile: +1-617-453-1001

Attention: General Counsel

and

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

USA

Telefacsimile: +1-617-526-5000

Attention: Steven D. Singer, Esq.

Notices to Purdue shall be addressed to:

Purdue Pharmaceutical Products L.P.

One Stamford Forum

201 Tresser Blvd.

Stamford, CT 06901-3431

USA

Telefacsimile: (203) 588-6204

Attention: John Stewart

with a copy to:

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

USA

Telefacsimile: (212) 489-7130

Attention: Stuart D. Baker

provided , however , that if either Party will have designated a different address by notice to the other Party in accordance with this Section 9.6, then to the last address so designated.

Section 9.8 Relationship of the Parties; Independent Contractors . Except as set forth herein, neither Party will have any responsibility for the hiring, termination or compensation of

the other Party’s employees or for any employee benefits of such employee. No employee or representative of a Party will have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever, or to create or impose any contractual or other obligation or liability on the other Party without said other Party’s approval or as provided in this Agreement. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, each Party’s legal relationship to the other Party under this Agreement will be that of independent contractor. This Agreement is not a partnership agreement and nothing in this Agreement will be construed to establish a relationship of partners or joint venturers between the Parties and it is expressly agreed that the relationship between Purdue and Infinity shall not constitute a partnership, joint venture, or agency. Neither Purdue nor Infinity shall have the authority to make any statements, representations, or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

Section 9.9 No Strict Construction . This Agreement shall not be strictly construed against either Party.

enforceable, the intent and purpose of such invalid, illegal or unenforceable provision; provided , however , that the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein will not be in any way impaired thereby, it being intended that all of the rights and privileges of the Parties hereto will be enforceable to the fullest extent permitted by Law.

Section 9.15 Interpretation . The definitions of the terms herein apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun will include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation.” Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any Laws herein will be construed as referring to such Laws as from time to time enacted, repealed or amended, (c) any reference herein to any Person will be construed to include the Person’s successors and assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) any reference herein to the words “mutually agree” or “mutual written agreement” will not impose any obligation on either Party to agree to any terms relating thereto or to engage in discussions relating to such terms except as such Party may determine in such Party’s sole discretion, except as expressly provided in this Agreement, (f) as applied to a Party, the word “will” shall be construed to have the same meaning and effect as the word “shall,” and (g) all references herein without a reference to any other agreement to Articles, Sections, Exhibits or Schedules will be construed to refer to Articles, Sections, Exhibits and Schedules of this Agreement.

Section 9.16 Performance by Affiliates . Any obligation of Infinity under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Infinity’s sole and exclusive option, either by Infinity directly or by any Affiliate of Infinity that Infinity causes to satisfy, meet or fulfill such obligation, in whole or in part. Any obligation of Purdue under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Purdue’s sole and exclusive option, either by Purdue directly or by any Affiliate of Purdue that Purdue causes to satisfy, meet or fulfill such obligation, in whole or in part. With respect to any particular action, the use of the words “Infinity will” also means “Infinity will cause” the particular action

to be performed, and the use of the words “Purdue will” also means “Purdue will cause” the particular action to be performed. Each of the Parties guarantees the performance of all actions, agreements and obligations to be performed by any Affiliates of such Party under the terms and conditions of this Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Parties have executed this Termination and Revised Relationship Agreement as of the Effective Date.


INFINITY PHARMACEUTICALS, INC.

By:		/s/ Adelene Q. Perkins
Name: Adelene Q. Perkins
Title: President and Chief Executive Officer

PURDUE PHARMACEUTICAL PRODUCTS L.P.

By:		Purdue Pharmaceutical Products Inc., its general partner

By:		/s/ Stuart D. Baker
		Stuart D. Baker
		Executive Vice President, Counsel to the Board

[Execution Page]

Schedule A

Press Release

[attached]

S-1

FOR RELEASE ON WEDNESDAY, JULY 18, 2012, AT 6:30 A.M. ET

Contact:

Infinity Pharmaceuticals, Inc.

Jaren Irene Madden, 617-453-1336

Jaren.Madden@infi.com

http://www.infi.com

Media:

Liz Falcone, 617-671-6727

Liz.Falcone@infi.com

INFINITY REGAINS WORLDWIDE RIGHTS TO PI3K, FAAH AND EARLY

DISCOVERY PROGRAMS

– Infinity, Purdue and Mundipharma Conclude Strategic Alliance Restructuring –

– Purdue Pharma L.P. Makes $27.5 Million Equity Investment; Infinity Has Cash Runway

Through Key Data Inflection Points for IPI-145 and Retaspimycin HCl –

– Encouraging Early Data of IPI-145 in Patients with Hematologic Malignancies Informs Trial Expansion –

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In addition, the company plans to initiate a Phase 2 trial of IPI-145 in patients with asthma as well as a Phase 2 trial in patients with rheumatoid arthritis in the second half of 2012.

Transaction Terms

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Additional Pipeline Update: Retaspimycin HCl

Financial Guidance

Conference Call Information

About Infinity Pharmaceuticals, Inc.

Forward Looking Statements

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Exhibit 99.1

LOGO

FOR RELEASE ON WEDNESDAY, JULY 18, 2012, AT 6:30 A.M. ET

Contact:

Infinity Pharmaceuticals, Inc.

Jaren Irene Madden, 617-453-1336

Jaren.Madden@infi.com

http://www.infi.com

Media:

Cara Amoroso, 202-729-4013

Cara.Amoroso@fkhealth.com

INFINITY REGAINS WORLDWIDE RIGHTS TO PI3K, FAAH AND EARLY

DISCOVERY PROGRAMS

– Infinity, Purdue and Mundipharma Conclude Strategic Alliance Restructuring –

– Purdue Pharma L.P. Makes $27.5 Million Equity Investment; Infinity Has Cash Runway

Through Key Data Inflection Points for IPI-145 and Retaspimycin HCl –

– Encouraging Early Data of IPI-145 in Patients with Hematologic Malignancies Informs

Trial Expansion –

In addition, the company plans to initiate a Phase 2 trial of IPI-145 in patients with asthma as well as a Phase 2 trial in patients with rheumatoid arthritis in the second half of 2012.

Transaction Terms

Under the terms of the termination agreements with Purdue and Mundipharma, Infinity has reacquired all worldwide development and commercialization rights for its PI3K, FAAH and early discovery programs, and Mundipharma will no longer provide research and development funding to Infinity. Mundipharma and Purdue are entitled to receive royalties on product sales for programs previously included in the strategic alliance, at rates ranging from one to four percent. Infinity also entered into a stock purchase agreement with Purdue Pharma L.P. (PPLP) under which Infinity will issue and sell 1,896,552 shares of its common stock, at a price of $14.50 per share, for aggregate proceeds to Infinity of $27.5 million. Infinity will also issue 3,520,013 shares of Infinity common stock, at the same price per share, to repay the principal and accrued interest outstanding under the $50 million line of credit made available by PPLP. These equity purchases are subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction of other customary closing conditions. Upon completion of these equity purchases, PPLP, together with certain associated entities, would hold approximately 28 percent on a combined basis of Infinity’s fully diluted common stock outstanding. In addition, PPLP and the associated entities have agreed to vote any shares held by them in accordance with the voting recommendations put forth by Infinity’s Board of Directors, subject to certain exceptions for shares held by the associated entities prior to entry into the stock purchase agreement with respect to votes on major corporate transactions and charter amendments. Further, Mundipharma’s Board observation rights have terminated.

Additional Pipeline Update: Retaspimycin HCl

Retaspimycin HCl is an intravenously administered, potent and selective heat shock protein 90 (Hsp90) inhibitor.

Financial Guidance

Conference Call Information

About Infinity Pharmaceuticals, Inc.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Such forward-looking statements include the expectation that Infinity will report results from the Phase 1 clinical trial of IPI-145 in patients with hematologic malignancies in the second half of 2012 and be able to expand this study in additional patient populations following identification of the maximum tolerated dose, will begin Phase 2 development of IPI-145 in asthma and rheumatoid arthritis in the second half of 2012, will complete enrollment of the clinical trial evaluating retaspimycin hydrochloride and docetaxel this Fall and to report data therefrom in the first half of 2013, has cash runway into the second half of 2013 and will provide updated financial guidance during its

second quarter financial results call planned for August 7, 2012, and that we will be able to complete the transactions contemplated in the securities purchase agreement with PPLP and the associated entities. These forward looking statements also include those articulating our belief that having global development commercialization rights is a key strategic opportunity to create shareholder value, and that we expect to create such value in the future. Such statements are subject to numerous factors, risks and uncertainties that may cause actual events or results to differ materially from the company’s current expectations. For example, there can be no guarantee that any product candidate Infinity is developing will successfully complete necessary preclinical and clinical development phases, that development of any of Infinity’s product candidates will continue, or that positive data seen in any clinical trial will be replicated in a larger patient population or in subsequent trials. Further, there can be no guarantee that any positive developments in Infinity’s product portfolio will result in stock price appreciation. Management’s expectations could also be affected by risks and uncertainties relating to: Infinity’s results of clinical trials and preclinical studies, including subsequent analysis of existing data and new data received from ongoing and future studies; the content and timing of decisions made by the U.S. Food and Drug Administration, the U.S. Federal Trade Commission and other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies; Infinity’s ability to enroll patients in its clinical trials; unplanned cash requirements and expenditures, including in connection with business development activities; development of agents by Infinity’s competitors for diseases in which Infinity is currently developing its product candidates; and Infinity’s ability to obtain, maintain and enforce patent and other intellectual property protection for any product candidates it is developing. These and other risks which may impact management’s expectations are described in greater detail under the caption “Risk Factors” included in Infinity’s quarterly report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on May 8, 2012. Any forward-looking statements contained in this press release speak only as of the date hereof, and Infinity expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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