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Exhibit 10.15
EXECUTION COPY
STRATEGIC ALLIANCE AGREEMENT
Dated as of February 22, 2001
by and between
ALTUS BIOLOGICS INC.
and
CYSTIC FIBROSIS FOUNDATION THERAPEUTICS, INC.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
1
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS..................................................................
1
1.1 USE OF DEFINED
TERMS...........................................................
7
1.2 ACCOUNTING
TERMS...............................................................
7
1.3 SECTIONS, EXHIBITS AND
SCHEDULES...............................................
7
1.4 MISCELLANEOUS
TERMS............................................................
7
ARTICLE II. ALLIANCE AND THE ALLIANCE GRANT
FUNDING..................................... 7
2.1 THE
ALLIANCE...................................................................
7
2.2 MANAGEMENT OF THE
ALLIANCE....................................................
8
2.3 OBLIGATIONS OF THE
COMPANY.....................................................
10
2.4 OBLIGATIONS OF
CFFTI...........................................................
12
2.5
FUNDINGS.......................................................................
13
2.6 LICENSE
FEE....................................................................
14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.............................. 14
3.1
ORGANIZATION...................................................................
14
3.2
AUTHORITY......................................................................
15
3.3
CAPITALIZATION.................................................................
15
3.4 NO
CONFLICT....................................................................
16
3.5 FINANCIAL STATEMENTS;
UNDISCLOSED LIABILITIES; INDEBTEDNESS....................
16
3.6
LITIGATION.....................................................................
17
3.7 INTELLECTUAL
PROPERTY..........................................................
17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
CFFTI..................................... 18
4.1 ORGANIZATION; AUTHORIZATION;
NO CONFLICT....................................... 18
4.2 INVESTMENT
REPRESENTATIONS.....................................................
19
4.3 CFFTI'S ACKNOWLEDGMENT AS TO
INFORMATION....................................... 19
4.4
LITIGATION.....................................................................
19
ARTICLE V.
LICENSES.....................................................................
20
5.1 CFFTI
LICENSE..................................................................
20
5.2 COMPANY
SUBLICENSE.............................................................
21
5.3 JOINT
LICENSE..................................................................
21
5.4 RETAINED RIGHTS OF THE
COMPANY.................................................
21
5.5 PROSECUTION; ENCUMBRANCES;
OTHER MATTERS....................................... 21
5.6 FURTHER
ASSURANCES.............................................................
22
ARTICLE VI. EVENTS OF
DEFAULT...........................................................
22
6.1 COMPANY
DEFAULT................................................................
22
6.2 CONSEQUENCES OF A COMPANY
DEFAULT.............................................. 23
6.3 CFFTI
DEFAULT..................................................................
23
6.4 CONSEQUENCES OF A CFFTI
DEFAULT................................................
24
ARTICLE VII. CONFIDENTIALITY; PUBLICATIONS;
PUBLICITY................................... 25
7.1
CONFIDENTIALITY................................................................
25
7.2 PUBLIC
ANNOUNCEMENTS...........................................................
25
7.3
PUBLICATIONS...................................................................
25
ARTICLE VIII. INDEMNIFICATION AND
INSURANCE............................................. 26
8.1 CFFTI
INDEMNIFICATION..........................................................
26
8.2 COMPANY
INDEMNIFICATION.......................................................
26
8.3
PROCEDURE......................................................................
26
ARTICLE IX. CONDITIONS
PRECEDENT........................................................
27
9.1 CONDITIONS TO OBLIGATIONS OF
THE COMPANY AT THE INITIAL GRANT FUNDING.......... 27
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PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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9.2 CONDITIONS TO OBLIGATIONS OF
CFFTI AT THE INITIAL ALLIANCE GRANT FUNDING....... 28
ARTICLE X.
TERMINATION..................................................................
29
10.1
CFFTI RIGHT TO
TERMINATE......................................................
29
10.2
COMPANY'S RIGHT
TO TERMINATE..................................................
30
10.3
OTHER
TERMINATIONS OF
AGREEMENT...............................................
30
10.4
CONSEQUENCES OF
TERMINATION...................................................
30
ARTICLE XI.
MISCELLANEOUS...............................................................
31
11.1
NOTICES.......................................................................
31
11.2
CAPTIONS......................................................................
32
11.3
EXPENSES......................................................................
32
11.4
NO
WAIVER.....................................................................
32
11.5
SEVERABILITY;
INTEGRATED TRANSACTION..........................................
32
11.6
ENTIRE
AGREEMENT..............................................................
32
11.7
AMENDMENT.....................................................................
32
11.8
LIMITATION ON
ASSIGNMENT......................................................
32
11.9
GOVERNING
LAW.................................................................
32
11.10
ARBITRATION...................................................................
32
11.11
COUNTERPARTS..................................................................
33
11.12
FORCE
MAJEURE.................................................................
34
11.13
INDEPENDENT
CONTRACTORS.......................................................
34
11.14
FURTHER
ASSURANCES............................................................
34
11.15
SURVIVAL......................................................................
34
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PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
2
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STRATEGIC ALLIANCE AGREEMENT
This
STRATEGIC ALLIANCE AGREEMENT, is made as of February 22, 2001
("Agreement"), by and between Altus Biologics Inc, a Massachusetts
corporation
(the "Company"), and Cystic Fibrosis Foundation Therapeutics, Inc.,
a Maryland
corporation ("CFFTI" and collectively, with the Company, the
"Parties," and each
a "Party").
WHEREAS,
CFFTI has, as one of its principal objectives, the development
of
therapies that will improve the quality of life for patients
suffering from
cystic fibrosis and has developed an extensive network of medical
providers,
researchers, and patients who participate in this effort, and the
Company
possesses certain skills and technology which can aid in this
objective; and
WHEREAS,
the Company and CFFTI wish to collaborate with respect to the
farther development, testing, and marketing of a new drug developed
by the
Company to treat pancreatic insufficiency in cystic fibrosis
patients in North
America, based on technology developed by the Company and using the
expertise
and contacts of CFFTI including CFFTI's Therapeutic Development
Network; and
WHEREAS,
the Company and CFFTI desire that CFFTI provide grant funding
to
an aggregate total of Twenty Five Million Dollars ($25,000,000) to
fund the
Company's development and marketing of TheraCLEC Total(TM) to treat
pancreatic
insufficiency in cystic fibrosis patients in North America, on the
terms and
subject to the conditions set forth in this Agreement; and
WHEREAS,
the Company desires to issue to CFFTI, and CFFTI desires that
the
Company issue it, warrants to acquire up to four hundred thousand
(400,000)
shares of the Company's common stock, par value $.0l per share (the
"Common
Stock"), on the terms and subject to the conditions set forth in
this Agreement;
and
NOW,
THEREFORE, in consideration of the foregoing and of the
respective
covenants and undertakings hereunder and for other good and
valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the
Parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in
this Agreement, the following terms have the meanings set forth
below.
"AAA"
shall have the meaning set forth in Section 11.10 hereof.
"Affiliate" shall mean any Person that, directly or indirectly,
through
one or more intermediaries, controls, is controlled by or is under
common
control with any other Person and, for purposes of this Agreement,
control shall
include the power to elect a majority of the board of
directors.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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"Deadlock
Event" shall mean a failure of the ASC to reach agreement on a
Material ASC Matter within the period set forth in Section 2.2 (d)
hereof.
"Development Activities" shall mean activities related to the
development
and marketing of the Products in North America, which shall include
research,
development, animal tests, clinical trials and other testing,
seeking applicable
approvals of governmental bodies and others, manufacturing,
marketing,
promotion, sales, and distribution activities and any other act or
acts required
or reasonably necessary to obtain FDA approval for the marketing
and
distribution of the Products to treat pancreatic insufficiency in
cystic
fibrosis patients or to otherwise market and sell the Products in
compliance
with any applicable Law for such treatment, in each case in North
America.
"Encumbrance" shall mean any security agreement, properly filed
financing
statement, mortgage, lien (statutory or otherwise), or other
consignment or
bailment given for security purposes, or other title retention
agreement, with
respect to any material asset of such Person, or, in the case of
intellectual
property rights, any license materially affecting such rights,
whether direct,
indirect, accrued or contingent, except for transfer restrictions
imposed by the
Securities Act, the Securities Exchange Act of 1934, as amended,
and/or state
securities Laws.
"Entity"
shall mean any corporation, partnership, limited liability
company, joint venture, trust, association, unincorporated
organization, group
or other corporate or non-corporate entity.
"Fair
Market Value" of any shares of Common Stock issued or issuable
upon
exercise of the Warrants shall mean the fair market value of such
shares on the
date of determination, which shall be determined as follows:
(a) if the Common Stock is listed on any domestic securities
exchange or quoted in the NASDAQ System or the over-the-counter
market, the
average of the closing prices of the sales of shares of Common
Stock on all
securities exchanges on which Common Stock may at the time be
listed, or, if
there have been no sales on any such exchange on any day, the
average of the
highest bid and lowest asked prices on all such exchanges, or, if
on any day
shares of Common Stock are not so listed, the average of the
representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New
York City
time, or, if on any day shares of Common Stock are not quoted in
the NASDAQ
System, the average of the highest bid and lowest asked prices in
the domestic
over-the-counter market as reported by the National Quotation
Bureau
Incorporated, or any similar successor organization, as applicable,
averaged
over the 20 consecutive trading days prior to the date of
determination;
provided however that notwithstanding the foregoing, the Fair
Market Value of
the shares of Common Stock issued or issuable upon exercise of the
Warrants
shall be reduced if and to the extent that a block sale of all of
such shares is
reasonably likely, in the good faith judgment of a registered
broker-dealer who
is affiliated with a reputable, nationally recognized brokerage
house (and who
is independent, that is, has to interest in the contemplated block
sale and is
not the regular broker-dealer for either CFFTI or the Company), to
depress the
trading price of shares of Common Stock and the Fair Market Value
of the shares
of Common Stock issued or issuable upon exercise of the Warrants;
and
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(b) if at any time the Common Stock is not listed on any
domestic
securities exchange or quoted in the NASDAQ System or the
domestic
over-the-counter market, then the Fair Market Value of the shares
of Common
Stock issued of issuable upon exercise of the Warrants shall be
determined by an
Independent Appraiser (taking into account, among such other
factors as
appraisers commonly consider, the lack of a public market for such
shares, the
minority nature and size of stake of such shares, general market
conditions and
market conditions in the private equity markets related to the
Company's
business, and any pending bona fide written offer to buy the Shares
that CFFTI
has received from an unrelated third party) who shall determine and
report to
the Company and CFFTI the fair market value of the Common Stock not
later than
30 days after the date such Independent Appraiser is selected. The
Independent
Appraiser shall be selected jointly by the Company and CFFTI not
later than five
days after the Appraisal Date; provided however that if the Company
and CFFTI
cannot agree on the selection of such an Independent Appraiser
within such
period, then the Independent Appraiser will be selected by the
Company's
auditors not later than eight days after the Approval Date.
"FDA"
means the United States Food and Drug Administration, or any
successor thereto.
"Financial
Statements" shall have the meaning set forth in Section 3.5
hereof.
"GAAP"
shall mean generally accepted accounting principles of the
United
States of America.
"Grace
Period" shall mean with respect to a specified Milestone
Achievement Date, the number of days that lapsed between such
specified
Milestone Achievement Date and the immediately preceding Milestone
Achievement
Date, multiplied by [**].
"Grant"
shall mean $25,000,000 to be funded by CFFTI subject to the
conditions and in accordance with the terms of this Agreement.
"Improvements" means all developments to, enhancements in, and
new
versions or improvements of the intellectual Property, whether or
not
patentable, which are invented, developed, discovered or otherwise
acquired by
or for the Company as a result of the Development Activities
hereunder,
"Independent Appraiser" shall mean one of the nationally
recognized
accounting firms that regularly engages or has significant
experience in the
valuation of companies similar to the Company, which has not been
engaged by
either the Company or CFFTI at any time during the three year
period immediately
prior to the date on which the Independent Appraiser is selected
pursuant to
this Agreement.
"Initial
Alliance Grant Funding" shall have the meaning set forth in
Section 2.5(a) hereof.
"Initial
Alliance Grant Funding Date" shall mean the date on which the
Initial Grant Funding Amount is paid by CFFTI to the Company.
"Initial
Grant Funding Amount" shall have the meaning set forth in
Section
2.5(a) herof.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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"Intellectual Property" shall mean all, patents, patent
applications,
rights acquired through patent licenses, Trademarks, trade secrets,
software,
copyrights, copyright applications, inventions, technologies,
know-how,
formulae, processes, all other intellectual property and
applications for any of
the foregoing, owned, leased, licensed, used or held for use,
directly or
indirectly, by, on behalf of or for the account of the Company and
all
proprietary rights to such Intellectual Property, which are used or
useful for
the manufacture, use or sale of the Products owned, leased,
licensed used or
held for use, directly or indirectly, by, on behalf of or for the
account of the
Company.
"Joint
License Event" shall have the meaning set forth in Section 5.3
hereof.
"Judgment"
shall mean any unsatisfied judgment, decree, or order of any
governmental body having competent jurisdiction.
"Law"
shall mean any statute, ordinance, code, rule, regulation or
order
enacted, adopted, or promulgated, by any governmental body.
"License
Fee" shall have the meaning set forth in Section 2.6 hereof.
"Licensed
Products" shall have the meaning set forth in Section 5.1
hereof.
"Material
ASC Matter" means a determination by the ASC as to whether a
specified Milestone has been met, or as to whether a Technical
Failure has
occurred, or as to whether the Milestone Grant Funding Plan should
be amended
pursuant to Section 2.2(b)(i) hereof.
"Milestone" shall mean a milestone set forth in the Milestone
Grant
Funding Plan and which has a corresponding Milestone Achievement
Date and Grant
Funding Amount, each of which is set forth in the Milestone Grant
Funding Plan
opposite such milestone, as amended from time to time by the ASC.
For purposes
of the Milestone Grant Funding Plan, the achievement of a Milestone
shall
include the transmittal of data resulting from Development
Activities related to
the said Milestone.
"Milestone
Achievement Date" shall mean [******************] specified in
the Milestone Grant Funding Plan on which a related Milestone is to
be
completed, as amended from time to time by the ASC.
"Milestone
Grant Funding Plan" shall mean the Milestone Grant Funding Plan
attached hereto as Exhibit 1.1, as the same shall be amended and
modified from
time to time pursuant to approval of the ASC in accordance with
Section 2.2
hereof.
"Net
Sales" shall mean
[*************************************************
*] in arm's length sales to unrelated third parties, less the
following amounts
incurred in the ordinary course of business with respect to such
sale to the
extent separately included in the invoice for the Product as part
of the gross
invoiced sales price:
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(c) trade, cash and quantity discounts or rebates
[***********************];
(d) credits or allowances given or made for rejection of or
return
of, and for uncollectible amounts on, previously sold Products or
for
retroactive price reductions
[*************************************************************];
(e) charges for insurance, freight and other transportation
costs
[******************************] of Product; and
(f) sales, transfer and other excise taxes levied on the sale
or
delivery of a Product (including any tax such as a value added or
similar tax or
government charge) borne by the seller thereof,
[*******************************************************].
"Party"
and "Parties" shall have the meaning set forth in the preamble
of
this Agreement.
"Person"
shall mean any individual, Entity or governmental body.
"Phase IIb
Milestone Date" shall mean the last day of the quarter
specified in the Milestone Grant Funding Plan within which Phase
IIb is to be
completed and all [**********] associated with the Phase IIb
transmitted by the
Company to CFFTI in accordance with the Milestone Grant Funding
Plan.
"Products"
shall mean the pharmaceutical products developed by or on
behalf of the Company, currently identified by the Company as
"TheraCLEC
Total(TM)", and any derivatives thereof, which contain the
[***********************] and either or both of the
[***************************], and [*****], and which are, in
either case,
designed to treat pancreatic insufficiency in cystic fibrosis
patients.
"Property"
shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Registration Rights Agreement" shall have the meaning set forth
in
Section 2.3(c) hereof.
"Regular
Rate" shall mean the rate announced by Fleet Bank from time to
time as its prime rate of interest plus [**************].
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shares"
shall mean the shares of Common Stock issued or issuable upon
exercise of the Warrants.
"TDN"
shall have the meaning set forth in Section 2.4(d) hereof.
"Team
Leader" shall have the meaning set forth in Section 2.2(a)
hereof.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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"Technical Failure" means that (a) none of the Products
[************************************] as determined by the ASC,
(b) the
Products' toxicity levels exceed FDA standards and cannot be
corrected within a
scientifically reasonable period of time as determined by the ASC,
or (c) the
ASC has reasonably determined that, [******************
***************************************] developed or marketed.
"Trademarks" shall mean all trademarks, trademark applications,
brand names, and trade names used, owned or licensed by the Company
that are
used or intended to be used in association with the Products.
"Unresolved Deadlock Event" shall mean a Deadlock Event that is
not
resolved after completion of the resolution procedures set forth in
Section
2.2(d) hereof.
"Warrants" shall have the meaning set forth in Section 2.3(b)
hereof.
"Work Plan" shall mean the work plan attached hereto as Exhibit
1.2,
as the same shall be amended and modified from time to time in
accordance with
Section 2.2 hereof.
1.1 Use of Defined Terms. Any defined term used in the plural
shall
refer to all members of the relevant class, and any defined term
used in the
singular shall refer to any one or more of the members of the
relevant class.
The use of either gender shall be applicable to both genders.
1.2 Accounting
Terms. All accounting terms not otherwise defined in
this Agreement shall be construed in conformity with GAAP.
1.3 Sections, Exhibits and Schedules. References in this
Agreement
to Sections, Exhibits and Schedules are to Sections, Exhibits and
Schedules of
and to this Agreement. The Exhibits and Schedules to this Agreement
are hereby
incorporated herein by this reference as if fully set forth
herein.
1.4 Miscellaneous Terms. The term "or" shall not be exclusive.
The
terms "herein," "hereof," "hereto," "hereunder" and other terms
similar to such
terms shall refer to this Agreement as a whole and not merely to
the specific
article, section, paragraph or clause where such terms may appear.
The term
"including" shall mean including, but not limited to unless such
qualification
already appears.
ARTICLE II
ALLIANCE AND THE ALLIANCE GRANT FUNDING
2.1 The Alliance.
(1) Formation of the Alliance. The Parties hereto hereby agree to
associate
themselves for the purpose of collaborating on the development,
testing,
manufacturing, marketing, and promoting of the Products for use in
North America
with respect to the treatment of pancreatic insufficiency in cystic
fibrosis
patients (the "Alliance"). The Alliance shall be conducted,
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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operated and administered in accordance with the terms of this
Agreement, and no
separate or jointly owned corporate or other entity or entities
shall be
established for the purpose of conducting or administering the
joint efforts and
endeavors of the Parties hereunder.
(2) Relationship of the Parties. The Parties hereto understand
and agree that the Alliance is limited to the development, testing,
and
marketing of the Products for use in North America with respect to
the treatment
of pancreatic insufficiency in cystic fibrosis patients and to the
activities,
rights and obligations as set forth in this Agreement. Nothing in
this Agreement
shall be construed to create or imply a general partnership,
limited partnership
or other legal entity between the Parties, to make either Party the
agent of the
other for any purpose, to alter, amend, supersede or vitiate any
other
arrangements between the Parties with respect to any subject
matters not covered
hereunder, to give either Party the right to bind the other, to
create any
duties or obligations between the Parties except as expressly set
forth in or
arising from this Agreement, or to, grant any direct or implied
licenses or any
other right other than as expressly set forth herein.
(3) Ethical Conduct. In carrying out its responsibilities
under this Agreement, each Party agrees that, in all material
respects, its
activities will be conducted in compliance with all applicable
Laws, including
the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated pursuant
thereto or any equivalent applicable Laws pertaining to the subject
matter of
such Act in other jurisdictions. Neither Party will engage the
services of any
Person debarred by any relevant governmental body from conducting
or
participating in any of the activities to be conducted under this
Agreement.
2.2 Management
of the Alliance.
(a) Membership on the ASC. The Parties shall establish an
alliance
steering committee (the "ASC") consisting of [**] members, [***] of
whom shall
be appointed (and may be removed by the Company and whose expenses
shall be
borne by the Company, and [***] of whom shall be appointed by (and
may be
removed) by CFFTI and whose expenses shall be borne by CFFTI. Each
of the
members of the ASC shall be required to enter into a
confidentiality agreement
reasonably acceptable to the Company and CFFTI in connection with
their
appointment to the ASC. The Company and CFFTI shall each appoint
one of its
members on the ASC as its "Team Leader". The goal of the ASC shall
be to
facilitate the Company's development of the Products, its
regulatory approval,
and the commercial launch of the Products.
(b) Duties of the ASC. The ASC shall have responsibility for
the
following activities:
(i) determining whether Milestones have been met in accordance
with
the Milestone Grant Funding Plan; provided that, in the event the
Company does
not satisfy a specified Milestone by the associated
[*****************************************] associated therewith,
other than
[********************], the ASC may reasonably amend the Milestone
Achievement
Date, upon a reasonable showing by the Company that A) [*******
******************************************] and B) the Company has
exercised and
will continue to exercise good faith, reasonable efforts to achieve
said
Milestones and has made and will continue to apply appropriate
resources to such
efforts;
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(ii) determining whether a Technical Failure has occurred;
(iii)
reviewing and approving the Work Plan and the Milestone Grant
Funding Plan and recommending and approving all amendments thereto;
provided
that the ASC shall cause the Milestone Grant Funding Plan to be
amended to take
into account any Grace Periods afforded the Company or CFFTI
hereunder and any
period during which funding by CFFTI was deferred pursuant to the
provisions of
Section 2.5(b); and provided further that if any Milestone
Achievement is
amended by the ASC, all future Milestone Achievement Dates and
Funding Amounts
shall be adjusted to reflect the said amendments;
(iv) ensuring that Development Activities are monitored in
accordance with legal and regulatory requirements; and
(v) making recommendations regarding the following matters:
clinical
trials, the acquisition and use of resources including the
application for
necessary approvals from governmental bodies, patent applications
or
controversies, and priorities among the various Development
Activities.
(c)
Meetings; Voting. The ASC shall meet in connection with each
Milestone Achievement Date and as needed to determine whether the
related
Milestone has been achieved, but in any event no fewer than [**]
times per year,
at the place and in the manner determined jointly by the Team
Leaders. All
decisions of the ASC shall be made by the affirmative vote of the
members
appointed by the Company (who shall each be entitled to cast one
vote) and the
members appointed by CFFTI (who shall each be entitled to cast one
vote), and
the ASC may act so long as at least two members appointed by the
Company and two
members appointed by CFFTI are present at a meeting or execute a
written
consent, in lieu thereof. Decisions of the ASC are binding on the
Parties and
may be made at (i) a regularly scheduled meeting (including via
teleconference
or video conference) or (ii) at a special meeting called by the
Team Leaders or
(iii) by written consent of at least two members appointed by the
Company and
two members appointed by CFFTI. Persons other than members of the
ASC may be
present at meetings of the ASC (and their expenses shall be borne
by the Party
requesting such Person's presence) if [************************] or
the ASC
determines that it is necessary or appropriate and, if requested by
either
Party, provided such Person or Persons agree to execute
appropriate
confidentiality agreements in a form agreed upon by the Parties
prior to
attendance at such meeting.
(d) Deadlock Events. In the event that the ASC is unable to
agree
with respect to any Material ASC Matter within
[*******************], then on
the [********************] a Deadlock Event shall be deemed to have
occurred,
and the determination of the said Material ASC Matter will be
accelerated
[*************************************]. If the
[*********************] cannot
reach resolution within [***************], then each Party will
[***************************] (who shall not be
[******************************
*************] of such Party or a member of the ASC) to meet and
negotiate in
good faith to reach a fair and reasonable resolution to the
controversy. If
such board members cannot reach resolution within
[***************], then the
Parties shall promptly participate in mediation before an impartial
mediator
certified by the AAA and mutually agreeable to the Parties. Such
mediation shall
take place at a location
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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agreed upon by the Parties, and if they do not agree, the first
such mediation
shall take place in Washington, D.C., and the second such mediation
shall take
place in Boston, Massachusetts and thereafter the locations shall
continue to
alternate. The expenses of such mediator shall be shared by the
Parties equally.
Any decision made pursuant to this Section shall be binding on the
Parties. If
no decision is reached [***************] after mediation has
occurred, then such
Deadlock Event shall continue and be deemed an Unresolved Deadlock
Event for
purposes of this Agreement.
(i) If a Deadlock Event occurs then CFFTI
[*************************] CFFTI Funding Amount that
[*******************]
during the period in which the resolution procedures set forth in
Section 2.2(d)
are occurring with respect to the related Deadlock Event, and the
Company
[**********************************] Development Activities in
support thereof;
(ii) If an Unresolved Deadlock Event occurs and
[**********************] Development Activities, this Agreement
shall be
terminated as set out in Section 10.3.
(iii) If an Unresolved Deadlock Event occurs, and the Company
determines to proceed thereafter with Development Activities, then
CFFTI
[***************************] CFFTI Funding Amount that
[**************************] the end of the applicable Grace Period
after the
effective date of the Unresolved Deadlock Event, which shall be
determined
[******************] between the Milestone Achievement Date of the
next
Milestone to be achieved and the Milestone Achievement Date of the
last
Milestone that was achieved according to the ASC, at which time
such CFFTI
Funding Amount [**********************], provided however,
thereafter, after a
Milestone has been achieved, the CFFTI Funding Amount shall be
due
[**************] after receipt of an invoice from the Company and
CFFTI shall
promptly pay such amounts, or be in default under Section 6.3.
(iv) If an Unresolved Deadlock Event occurs and CFFTI determines
to
proceed thereafter with funding of Development Activities, then the
Company
[************************] if it does not achieve the said
Milestone within the
applicable Grace Period, determined by [***************] between
the Milestone
Achievement Date of the next Milestone to be achieved and the
Milestone
Achievement Date of the last Milestone that was achieved according
to the ASC,
provided CFFTI [********************************] under the
Milestone Grant
Funding Plan.
(e) Minutes. The ASC shall keep minutes of its deliberations
that
record in reasonable detail all actions recommended or taken.
Drafts of the
minutes shall be delivered to each of the Team Leaders within a
reasonable time
not to exceed fifteen business days after the meeting. The Party
hosting the
meeting or a member of the ASC designated by the Team Leaders as
secretary of
such meeting, as applicable, shall be responsible for the
preparation and
circulation of the draft minutes. Draft minutes may be edited by
the Team
Leaders and shall be issued in final form within a reasonable time
not to exceed
[********] days after the meeting only with their approval and
agreement as
evidenced by their signatures on the minutes.
2.3
Obligations of the Company. Subject to the terms and conditions
of
this Agreement, the Company shall:
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(a) authorize the execution and delivery of this Agreement, the
Warrants and the Registration Rights Agreement, and the performance
of its
obligations hereunder and thereunder;
(b) upon execution of this Agreement, issue and deliver to
CFFTI
warrants to acquire an aggregate of four hundred thousand (400,000)
shares of
Common Stock in the form of Warrant 5-A ("Warrant A") and Warrant
5-B ("Warrant
B"), attached hereto as Exhibit 2.3(b)(i) and (ii) respectively
(together the
"Warrants");
(c) execute and deliver to CFFTI the Registration Rights
Agreement
in the form attached hereto as Exhibit 2.3(c) (the "Registration
Rights
Agreement");
(d) grant to CFFTI the licenses set forth in Article V herein
below;
(e) control and be primarily responsible for the conduct of the
Development Activities, engage in Development Activities at all
times during the
term of this Agreement and, without limiting the foregoing, use
good faith
reasonable efforts (i) to develop the Products and bring the
Products to market
in North America as soon as reasonably practicable, and in any
event in
accordance with the Milestone Grant Funding Plan and the Work Plan,
(ii) to
obtain all necessary approvals of applicable governmental bodies
for the
marketing and distribution of the Products in North America, and
(iii) market
and distribute the Products in North America after such approvals
are obtained.
Development Activities will be conducted by the Company, or the
Company will
cause its subcontractor to conduct Development Activities, in
accordance with
accepted ethical principles and regulatory requirements in
facilities selected
by the Company which are reasonable and adequate for the conduct of
Development
Activities;
(f) use the Grant funds received hereunder to fund Development
Activities, and to the extent that additional resources and funding
in excess of
the Grant amounts funded by the CFFTI under this Agreement are
required for the
Company to satisfy the next succeeding Milestone set forth on the
Milestone
Grant Funding Plan, the Company shall provide all such additional
resources and
funds, and together with the invoice to be delivered pursuant to
Section 2.5(b)
in connection with the funding of the Grant next following a
Milestone
Achievement Date, the Company will provide the ASC with a summary
of the
Company's plans for funding or providing resources equivalent to
the amount set
forth on the Milestone Grant Funding Plan under the heading
"Company Funding
Amount", on a [*******] basis during the period from the date of
such Milestone
Achievement Date until the next occurring Milestone Achievement
Date;
(g) provide the ASC with a written report within [*********]
following the end of each fiscal quarter, documenting in reasonable
detail the
Development Activities conducted by the Company during such
quarter, and
indicating (i) whether any Milestone identified on the Milestone
Grant Funding
Plan has been achieved during such quarter, (ii) any material
deviation from the
schedule of work shown in the Work Plan, and (iii) the Company's
analysis as to
whether the next succeeding Milestone is likely to be satisfied by
the related
Milestone Achievement Date or, if not, by the end of the related
Grace Period,
and if not, the identified reason or reasons for the anticipated
delay;
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(h) consult from time to time with the ASC, CFFTI, and the TDN
concerning the Development Activities and use the TDN, at the sole
expense of
the Company (which expense may be satisfied using the Grant funding
to be
provided by CFFTI hereunder), in conducting clinical trials needed
in connection
with the Development Activities and the Products;
(i) pay the License Fees to CFFTI as set out in Section 2.6 or
the
royalties provided in Section 10.1(c) hereinbelow if
applicable;
(j) keep records of amounts expended on Development Activities
that
are complete and accurate in all material respects, and permit
CFFTI, with
reasonable written notice to the Company, to cause an independent,
certified
public accountant reasonably acceptable to the Company to audit
such records not
more than [************] at the place or places of business where
such records
are customarily kept at a mutually convenient time and subject to
execution by
the accountant of a reasonable confidentiality agreement acceptable
to the
Company, in order to verify the reasonable accuracy of the reports
of amounts
spent in respect of Development Activities; provided that CFFTI
[**********************] of such audit unless such audit discloses
that the
Company has materially misstated the amount(s) expended on
Development
Activities, in which event, the Company
[****************************] of such
audit;
(k) permit the members of the ASC appointed by CFFTI, upon
reasonable notice and at reasonable intervals and during normal
business hours,
to confer with the financial, legal, technical, scientific and
accounting
representatives of the Company and be furnished all relevant
documents, records
and other information concerning the Products and the Development
Activities
that such persons, with the consent or approval of the ASC, may
reasonably
request;
(l) participate in the ASC [****************]; and
(m) prior to the initial public offering of the Company's
Common
Stock, deliver to CFFTI (i) as soon as practicable after the end of
each fiscal
year of the Company, and in any event on or within
[*********************] days
thereafter, an unaudited balance sheet of the Company as of the end
of such year
and unaudited statements of income and stockholders' equity for
such year; and
(ii) as soon as practicable after the end of each fiscal quarter
(except the
last fiscal quarter of each fiscal year), and in any event on or
before or
within [************] days thereafter, an unaudited balance sheet
of the Company
as of the end of such quarter, and an unaudited statement of income
for each
quarter and for the current fiscal year to date, and, if available,
audited
statements and any other financial statements or reports provided
generally to
holders of the Company's securities in the ordinary course of
business.
2.4
Obligations of CFFTI. Subject to the terms and conditions of
this
Agreement, CFFTI shall:
(a) authorize the execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrants and the performance
of its
obligations hereunder and thereunder, and obtain the authorization
and approval
of any Affiliate that will provide funds to be used in the
Grant;
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(b) effective as of December 31, 2000 commit to provide the
Grant
and thereafter provide non-refundable grant funding to the Company
in accordance
with Section 2.5 in the total amount of twenty five million
dollars
($25,000,000) to support the development and testing of the
Products;
(c) use good faith reasonable efforts to cause the Company to
be
provided with the names of prospective patients and medical
providers who may
participate in the development of the Products and in clinical
testing;
(d) provide the Company with reasonable access to its
Therapeutic
Development Network of medical providers, patients, researchers,
and others who
are involved in the care and treatment of cystic fibrosis patients
("TDN") and
use reasonable efforts to promote the involvement of TDN in the
development and
testing of the Products, in each case in a manner and consistent
with the
recommendation of the ASC;
(e) grant to the Company the sublicense set forth in Article V;
(f) participate in the ASC [****************]; and
(g) provide reasonable assistance and cooperation requested by
the
Company in support of the expeditious development, testing,
regulatory approval
and market launch of the Products, in a manner and consistent with
the
recommendation of the ASC in support of Development Activities.
2.5
Fundings.
(a) Upon satisfaction (or waiver) of the conditions thereto set
forth in this Agreement, the closing of the issuance of the
Warrants and the
first payment of the Grant (the "Initial Alliance Grant Funding")
shall take
place at the offices of Swidler Berlin Shereff Friedman, LLP, 3000
K Street, NW,
Washington, DC 20007, on February 20, 2001 or at such other place
and date as
the Parties may agree in writing, but in no event later than
February 22, 2001.
At the Initial Alliance Grant Funding, the Parties shall deliver
the documents
and agreements they are required to deliver pursuant to Article IX
hereof CFFTI
shall pay [*****************************************************]
of the Grant
by wire transfer of immediately available funds to the account
specified in
Schedule 2.5(a) (the "Initial Grant Funding Amount"), and the
Parties shall
deliver such other documents, agreements and certificates as a
Party may
reasonably request in connection with the Initial Alliance Grant
Funding.
(b) Subject to the terms and conditions of this Agreement,
CFFTI
shall make additional Grant payments to the Company within
[*********] after
receipt of an invoice from the Company therefore delivered in
accordance with
the Milestone Grant Funding Plan (but in no event shall CFFTI be
required to
make a Grant payment prior to
[************************************] specified
on the Milestone Grant Funding Plan) by paying the specified CFFTI
Funding
Amount by wire transfer of immediately available funds to the
account specified
in Schedule 2.5(a) attached hereto provided that no Technical
Failure shall have
occurred as of the date of such payment; and provided, further:
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(i) If CFFTI has paid the Initial Grant Funding Amount and each
of
the CFFTI Funding Amounts previously invoiced and due in accordance
with the
terms hereof, and the Company
[**************************************************************],
then CFFTI
will not be obligated to [***************************] of the Grant
or any
further CFFTI Funding Amounts that would otherwise be due pursuant
to invoices
provided by the Company in accordance with the Milestone Grant
Funding Plan
until [************************], at which time CFFTI's obligation
to make
[*******] payments of the CFFTI Funding Amounts shall resume in
accordance with
the Milestone Grant Funding Plan as revised to reflect the
extension of time,
provided CFFTI shall not be relieved of paying any amounts on the
Milestone
Grant Funding Plan;
(ii) If a Company Default [****************] then CFFTI shall not
be
obligated to fund any CFFTI Funding Amount that would otherwise be
due; and
(iii) With respect to each CFFTI Funding Amount due immediately
following a Milestone Achievement Date, the invoice related to such
CFFTI
Funding Amount shall be accompanied by a certificate on behalf of
the Company
stating that the previous related Milestone has been achieved.
2.6
License Fee. On the date on which the Company obtains approval
from
the FDA to market and distribute the Products in North America (the
"Approval
Date"), the Company shall be obligated to pay to CFFTI an amount in
cash in
United States dollars equal to the amount by which
[***************************]
exceeds the [********************************] (such excess is
referred to
herein as the "License Fee") and upon payment in full of the
License Fee, the
license granted to CFFTI under Section 5.1 and all sublicenses
thereunder shall
terminate, and CFFTI shall be obligated to transmit to the Company
all products
and information and promotional or marketing materials and data
relating to the
Products that are in the possession of CFFTI or any sublicensees of
CFFTI other
than the Company. The License Fee shall be paid as follows: (i)
[*********]
after the Approval Date, the Company shall pay by wire transfer of
immediately
available funds to an account designated in writing by CFFTI an
amount equal to
the greater of (a) [********] or (b) [******************] of the
License Fee,
whichever is higher, and (ii) [******************************], the
Company
shall pay by wire transfer of immediately available funds to an
account
designated in writing by CFFTI an amount equal to the greater of
(a) [********]
or (b) [******************] of the License Fee, whichever is higher
(plus
interest accrued through such date on [***] of the License Fee)
until the
License Fee (plus all accrued interest thereon) has been paid in
full. Interest
on the outstanding balance of the License Fee shall be
[************************] on the outstanding balance of the
License Fee at
[************]. If a Company Default occurs following the Approval
Date, the
entire unpaid License Fee shall become immediately due and payable
without any
action of CFFTI, and the Company shall immediately pay such amount
to CFFTI, and
such overdue amounts shall bear interest at a rate equal to
[********************************].
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a
material inducement to CFFTI to enter into this Agreement and
to
consummate the transactions contemplated herein, the Company
represents and
warrants to CFFTI as follows:
3.1
Organization. The Company is a corporation duly incorporated,
validly
existing and in good corporate standing under the Laws of the
Commonwealth of
Massachusetts. The Company has full corporate power and authority
to own and
lease its Properties and carry on its Business and is duly
qualified, registered
or licensed as a foreign corporation to do business and is in good
standing in
each jurisdiction in which the ownership or leasing of its
Properties or the
character of its operations makes such qualification, registration
or licensing
necessary except where the failure to be so qualified registered or
licensed
would not have a material adverse effect on the Business of the
Company. The
Company has previously delivered to CFFTI true, correct and
complete copies of
its Charter Documents, as amended to date and as currently in
effect.
3.2
Authority. The Company has the corporate right, power and authority
to
carry on the Business and to execute and deliver this Agreement,
the Warrants
and each of the other Company Closing Documents required to be
executed and
delivered at the Initial Alliance Grant Funding and to consummate
the
transactions contemplated by this Agreement. The execution and
delivery of this
Agreement and each of the other Company Closing Documents required
to be
executed at the Initial Alliance Grant Funding and the consummation
of the
transactions contemplated by this Agreement have been duly and
validly
authorized by all necessary corporate action on the part of the
Company and no
other corporate proceedings on the part of the Company are
necessary to
authorize this Agreement, any of the other Company Closing
Documents required to
be executed at the Initial Alliance Grant Funding or the
consummation of the
transactions contemplated by this Agreement. This Agreement and
each of the
other Company Closing Documents required to be executed at the
Initial Alliance
Grant Funding have been duly and validly executed by the Company
and constitute
legal, valid and binding obligations of the Company, enforceable
against the
Company except as limited by applicable bankruptcy, insolvency,
reorganization,
moratorium or other laws of general application affecting
enforcement of
creditors' rights.
3.3
Capitalization.
(a) Immediately prior to the Initial Alliance Grant Funding, (i)
the
authorized capital of the Company consist of 15,000,000 shares of
Common Stock
and 537,500 shares of Preferred Stock, of which 2,836,787 of Common
Stock,
450,000 shares of Redeemable Preferred Stock and 87,500 shares of
Convertible
Preferred Stock are issued and outstanding. The Company holds no
shares of
capital stock of the Company in its treasury. The Company has
reserved 3,000,000
shares of Common Stock for issuance under option plans. All of the
issued and
outstanding shares of capital stock of the Company are duly
authorized, validly
issued, fully paid and non-assessable.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(b) From the date hereof, until such time as the Warrants is
exercised, the Company will have authorized and reserved a
sufficient number of
shares of Common Stock for issuance upon exercise of the
Warrants.
(c) Except as set forth on Schedule 3.3(c), upon issuance to
CFFTI
in accordance with the terms of the Warrants, the Shares will be
duly
authorized, validly issued, fully paid, and non-assessable and will
be free and
clear of any Encumbrances, preemptive rights, restrictions on use,
voting or
transfer rights created by or through the Company other than as set
forth in
this Agreement, the Warrants, or the Charter Documents or that
arise or exist as
a result of Law.
(d) Except as set forth on Schedule 3.3(d), there are (i) no
outstanding rights, conversion rights, agreements, commitments or
preemptive or
other similar rights of any kind relating to the issuance, sale,
purchase,
redemption, voting or transfer of any shares of capital stock or
other
securities of the Company to which the Company is a party, and (ii)
no
outstanding registration rights or voting rights agreements to
which the Company
is a party. The Company is not an "investment company" within the
meaning of the
Investment Company Act of 1940, as amended.
(e) Assuming the truth and accuracy in all respects of CFFTI's
representations and warranties set forth in the Investor's
Representation Letter
and in Sections 4.2 and 4.3 below as of the date of the Initial.
Alliance Grant
Funding, and assuming the truth and accuracy in all respects of
CFFTI's
representations and warranties set forth in the Investor's
Representation Letter
and in Sections 4.2 and 4.3 below as of the date of issuance of the
Shares by
the Company to CFFTI pursuant to the Warrants, the issuance of the
Warrants and
the Warrant Shares to CFFTI, are or will be, as the case may be,
exempt from the
registration requirements of the Securities Act and the securities
laws of the
Commonwealth of Massachusetts and the State of Maryland as such
Laws are in
effect as of the date hereof.
3.4 No
Conflict. Except as set forth on Schedule.3.4, neither the
execution and delivery of this Agreement or the Company Closing
Documents nor
the consummation of the transactions contemplated hereby and
thereby will (a)
violate any provision of the Charter Documents of the Company, (b)
violate, be
in conflict with, constitute a default (or an event which, with
notice or lapse
of time or both, would constitute a default) under, result in the
termination
of, accelerate or excuse the performance required by any Person of
any of its
obligations under, cause the acceleration of the maturity of any
material amount
of debt or material obligation pursuant to or result in the
creation or
imposition of any material Encumbrance upon any property of the
Company under,
any material contract to which the Company is a party or by which
any of its
property is bound or subject such that any such occurrence will
have a material
adverse effect on the Company, or (c) subject to compliance with
applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as
amended (the "HSR Act"), and except for compliance with federal and
state
securities laws which are separately addressed in Section 3.3(e)
above, violate
in any material manner any Material Law or Judgment applicable to
the Company or
its Properties.
3.5
Financial Statements; Undisclosed Liabilities; Indebtedness.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(a) The Company's Confidential Offering Memorandum dated
[**********] (the "PPM") contains copies of the audited balance
sheets of the
Company for the year ended December 31, 1999 and the related
audited statements
of operations, statements of stockholder's equity and statements of
cash flows,
together with any related notes thereto, for the year ended
December 31, 1999
and (ii) the unaudited balance sheet of the Company as of September
30, 2000 for
the nine months ended September 30, 2000 (collectively, the
"Financial
Statements"). Each of the Financial Statements fairly present in
all material
respects, as the case may be, the financial condition, assets and
liabilities of
the Company as of date thereof or the Company's results of
operations and
changes in the Company's financial position for the period set
forth therein.
Each of the Financial Statements was prepared in accordance with
GAAP
consistently applied during the relevant period, except as
otherwise set forth
in the notes thereto and subject, in the case of the unaudited
Financial
Statements, to normal and recurring year-end adjustments and the
omission of
footnotes.
(b) Except as disclosed in Schedule 3.5(d), as of the date
hereof
the Company has not incurred any material liabilities or material
obligations of
any nature, whether or not accrued, absolute, contingent or
otherwise, other
than liabilities adequately provided or reserved for in the
Financial Statements
or disclosed in any related notes thereto.
(c) Since September 30, 2000, there has been no material
adverse
change in the Business of the Company, or any damage or impairment
to, or
destruction or loss, sale, assignment, transfer, lapse or
Encumbrance of any
Intellectual Property (whether or not covered by insurance) that
could
reasonably be expected to have a material adverse effect on the
Development
Activities.
3.6
Litigation. There is no litigation, arbitration, claim, action,
suit,
governmental or other proceeding (formal or informal) to which the
Company is a
party or to the knowledge of the Company, investigation pending or,
threatened
against or affecting the Company, its Business or the Intellectual
Property that
could reasonably be expected to have a material adverse effect on
the
Development Activities or that could reasonably be expected to
affect in a
material adverse manner the ability of the Company to comply in all
material
respects with its obligations under this Agreement.
3.7
Intellectual Property.
(a) Trademarks. Schedule 3.7(a) sets forth as of the date hereof
an
accurate, correct and complete list of all United States
trademarks, trademark
applications, trademark registrations, brand names, and trade names
owned or
licensed by the Company that relate to the Products (the
"Trademarks") and no
other Person has been granted by the Company (or to the knowledge
of the
Company, has been granted by any other Person) any rights, or has
any interest,
in such. The Company owns and possesses all right, title and
interest, or holds
a valid license, in and to the Trademarks. No claim has been
asserted or, to the
knowledge of the Company, threatened by any Person regarding the
use or
licensing by the Company of the Trademarks. To the knowledge of the
Company, its
use of the Trademarks does not violate or infringe, and has not in
the past
violated or infringed, in each ease in any material manner the
rights of any
Person and no material claims have been asserted by the Company
against any
other Person claiming infringement of its Trademarks.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(b) Patents and Know-how. Schedule 3.7(b) sets forth as of the
date
hereof an accurate, correct and complete list of patents and patent
applications
owned or licensed by the Company that are reasonably necessary to
the
development, testing or use of the Products (the "Patent Rights").
The Company
owns and possesses all right, title and interest, or holds a valid
license, in
and to the Patent Rights. No claim has been asserted or, to the
knowledge of the
Company, threatened by any Person regarding the use or licensing by
the Company
of the Patent Rights. To the knowledge of the Company, its use of
the Patent
Rights does not violate or infringe, and has not in the past
violated or
infringed, in each case in any material manner the rights of any
Person and no
material claims have been asserted by the Company against any other
Person
claiming infringement of the Patent Rights.
(c) All rights and licenses to the Intellectual Property and
Improvements that are reasonably necessary or useful for making,
using or
selling the Products have been licensed to CFFTI pursuant to
Section 5.1
hereunder.
(d) Other than as set forth in (a) (b) and (c) hereinabove, the
Company makes no representations or warranties with respect to the
Intellectual
Properly. Without limiting the generality of the foregoing, the
Company does not
warrant the results of the Development Activities or that the
Patent Rights or
Intellectual Property will be fit for a particular purpose or
merchantable or
will not violate or infringe the rights of any third parties.
3.8 No
Brokers, Finders or Investment Bankers. Neither the Company nor
to
its knowledge any of its executive officers or directors has
employed any broker
or finder or investment banker or incurred any liability which
remains
unsatisfied for any brokerage or finder's fees or commissions or
similar
payments in connection with this Agreement or the transactions
contemplated by
this Agreement for which CFFTI could become liable.
3.9
Subsidiaries. Other than Altus Biocatalysis, Inc., a Delaware
corporation ("Altus Biocatalysis"), the Company has no
subsidiaries. Altus
Biocatalysis was incorporated as a wholly owned subsidiary of the
Company. Altus
Biocatalysis is not currently engaged in and has never been engaged
in any
business nor does it own any assets or property.
3.10
Compliance with Law. The Company has conducted its Business in
all
material respects in compliance with applicable.
3.11
Assets. To the Company's knowledge, the Company owns or has a
valid
right to use all material Property that is used by the Company to
conduct its
business as presently conducted except where the failure to own or
have a valid
right to use would not have a material adverse effect on the
Business of the
Company.
3.12
Affiliates. Except for contracts and transactions with
[*********************************] or its officers or directors
described in
the PPM or listed on Schedule 3.3(d) or 3.5(b) and for employment
or employment
related benefits, the Company is not party to any material
contracts with any
Affiliates.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CFFTI
As a
material inducement to the Company to enter into this Agreement
and
to consummate the transactions contemplated herein, CFFTI
represents and
warrants to the Company as follows:
4.1
Organization; Authorization; No Conflict. CFFTI is a corporation
duly
incorporated, validly existing and in good standing under the Laws
of the State
of Maryland. CFFTI is an Affiliate of the Cystic Fibrosis
Foundation ("CFF").
CFFTI has full corporate, right, power and authority to execute and
deliver this
Agreement, the Registration Rights Agreement, and the Warrants and
to consummate
the transactions contemplated hereby and thereby. The execution and
delivery of
this Agreement, the Registration Rights Agreement and the Warrants
and the
consummation of the transactions contemplated hereby and thereby
and the
acceptance of the Warrants have been duly and validly authorized by
all
necessary corporate action on the part of CFFTI and the CFF and no
other
proceedings are necessary on the part of CFFTI or the CFF to
authorize this
Agreement, the Registration Rights Agreement, or the Warrants or
the
consummation of the transactions contemplated by this Agreement,
the Warrants or
the Registration Rights Agreement. This Agreement, the Registration
Rights
Agreement and the Warrants and have been duly and validly executed
by CFFTI and
constitute the legal, valid and binding obligations of CFFTI
enforceable against
CFFTI in accordance with their respective terms. The execution,
delivery and
performance of this Agreement, the Registration Rights Agreement
and the
Warrants by CFFTI and the consummation of the transactions
contemplated hereby
and thereby do not and will not (a) require the consent of any
Person that has
not been obtained; (b) violate any provision of the Charter
Documents of CFFTI;
(c) violate, conflict with or constitute a default (or an event
which, with
notice or lapse of time or both, would constitute a default) under,
result in
the termination of, accelerate or excuse the performance required
by any Person
of any of its obligations under, cause the acceleration of the
maturity of any
material amount of debt or material obligation pursuant to or
result in the
creation or imposition of any material Encumbrance upon any
Property of CFFTI
under, any material contract to which CFFTI is a party or by which
it or its
Property is bound or subject such that any such occurrence will
have a material
adverse effect on CFFTI or violate in any material manner any
material Law or
any Judgment applicable to CFFTI or its Properties. CFFTI has
previously
provided to the Company true, correct and complete copies of its
Charter
Documents, as amended to date and as currently in effect.
4.2
Investment Representations. CFFTI is acquiring the Warrants and
the
Shares for its own account, for investment, and not with a view to,
or for sale
in connection with, the distribution thereof or of any interest
therein. CFFTI
is an accredited investor as such term is defined in Rule 501(a) of
the
Regulation D promulgated under the Securities Act. Without limiting
the
foregoing, CFFTI has adequate net worth and means of providing for
its current
needs and contingencies and is able to sustain a complete loss of
the investment
in the Company as contemplated by this Agreement and in the
Warrants, has no
need for liquidity in such investment and its illiquid investments
are not
excessive given its liabilities, current needs, net worth and
business. CFFTI
was not formed for the purpose of acquiring the Warrants or the
Shares. CFFTI
has sufficient knowledge and experience in financial and business
matters to be
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
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capable of evaluating the merits and risks of an investment in the
Company as
contemplated by this Agreement and the investment represented by
the Warrants
and the Shares, and CFFTI has evaluated the merits and risks of the
investment
in the Company as contemplated by this Agreement and investment
represented by
Warrants and the Shares. CFFTI understands that the offer and sale
of the
Warrants and the Shares has not been and will not be registered
under the
Securities Act, that the Warrants and the Shares have not been and
will not be
registered under applicable state securities Laws and that the
Warrants and the
Shares may not be sold or otherwise disposed of unless registered
under the
Securities Act and applicable state securities Laws or disposed of
pursuant to
an exemption thereto.
4.3
CFFTI's Acknowledgment as to Information. CFFTI has received from
the
Company such information as CFFTI has deemed necessary and relevant
in
connection with the transactions contemplated by this Agreement,
the Warrants,
and the Warrant Shares and CFFTI has had the opportunity to ask
questions of and
receive answers from persons acting on behalf of the Company
necessary to verify
the information so obtained.
4.4 Litigation.
There is no litigation, arbitration, claim, action, suit,
governmental or other proceeding (formal or informal), to which
CFFTI or CFF is
a party or to the knowledge of CFFTI, investigation pending or,
threatened
against or affecting CFFTI or CFF, the business of CFFTI as
currently conducted
or as proposed to be conducted in the future and the operations,
and assets of
CFFTI or CFF that could reasonably be expected to have a material
adverse effect
on the funding of the Grant or that could reasonably be expected to
affect in a
material adverse manner the ability of CFFTI to comply in all
material respects
with its obligations under this Agreement.
4.5 No
Brokers, Finders or Investment Bankers. Neither CFFTI nor to
its
knowledge any of its Affiliates, executive officers or directors
has employed
any broker or finder or investment banker or incurred any liability
which
remains unsatisfied for any brokerage or finder's fees or
commissions or similar
payments in connection with this Agreement or the transactions
contemplated by
this Agreement for which CFFTI could become liable.
ARTICLE V
LICENSES
5.1 CFFTI
License.
(a) Grant of License to CFFTI. Subject to all the terms and
conditions of this Agreement, the Company hereby confers upon CFFTI
an
exclusive, [*************************] license to practice and use
the
Intellectual Property and all Improvements thereon in order to
make, use, or
sell the Products (the "Licensed Products"), for all uses and in
all
applications and indications within North America, and except as
provided in
Section 5.2, the Company shall not use the Licensed Products within
North
America for any purpose. The license granted in this Section 5.1
includes
[******************************************************************************
**********] within North America, subject to the conditions on
CFFTI's license
under Section 5.1 of this Agreement and retained rights of the
Company under
Section 5.4 of this Agreement. To the extent that the
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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Licensed Products includes copyrights in software and other
documentation, CFFTI
shall have the right to make, retain and use such copies of the
software and
documentation as are reasonably necessary to exercise its rights
hereunder.
(b) Conditions of License. As a material condition of the
license
granted in this Section 5.1, CFFTI shall, and shall require any of
its
sublicensees to provide the Company with copies of any clinical
data that the
Company does not already have, which results from testing, use or
sale of the
Products in North America, within [********] of the receipt of such
data by
CFFTI or its sublicensee, and throughout the term of this license,
the Company
shall provide CFFTI with [******************************], use, or
sale of the
Products outside of North America, and in North America, if the
sublicense
granted under Section 5.2 is in effect, within sixty days of the
preparation or
receipt of such data by the Company or its sublicensee.
(c) Termination of License. The license granted in this Section
5.1
shall terminate on the first to occur of (i) the payment in full of
the License
Fees pursuant to Section 2.6, (ii) the date on which a CFFTI
Default occurs;
(iii) the date on which CFFTI terminates this Agreement under
Section 10.1(c),
(iv) the date on which a Technical Failure has occurred, (v) the
date on which
the Parties mutually agree not to proceed with Development
Activities following
the occurrence of an Unresolved Deadlock Event, or (vi) upon the
occurrence of a
Bankruptcy Event of Default with respect to CFFTI.
5.2
Company Sublicense. Subject to all the terms and conditions of
this
Agreement, CFFTI, hereby confers upon the Company an exclusive
[********************] sublicense of equal scope to the license in
Section 5.1
hereinabove, to make, use, or sell the Licensed Products for
[*******************************] within North America
[*************]. The
sublicense granted in this Section 5.2 shall terminate on the first
to occur of
(a) [******] on which the [****************************]
terminates, or (b) the
date of a [*************]. Any sublicense granted hereunder shall
be restricted
by the restrictions and conditions of this Company sublicense.
5.3 Joint
License. Subject to the terms and conditions of this Agreement,
each of CFFTI and the Company agree that upon termination of the
license and
sublicense granted pursuant to Sections 5.1 and 5.2, respectively,
because of a
Technical Failure or because the Parties mutually agree following
the occurrence
of an Unresolved Deadlock Event not to proceed with Development
Activities (a
"Joint License Event"), the Licensed Products shall be licensed
jointly, and
hereby is exclusively licensed jointly, to each of CFFTI and the
Company
[**************************************************] within North
America. All
actions and decisions with respect to the Licensed Products
following a Joint
License Event shall be made [******************************], and
in the event
that the Licensed Products is sublicensed, sold, or otherwise
transferred for
value by mutual agreement of the Parties, all proceeds received or
receivable in
such transaction shall be allocated and distributed as follows:
(a) First, [******************] has received an amount in cash
and/or cash equivalents equal to
[********************************************]
as of the date of such Joint License Event (the "Funded Grant
Amount");
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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(b) Second, [**************************] has received an amount
in
cash and/or cash equivalents equal to
[*****************************************
*********] during the term of this Agreement for the Products and
Development
Activities as of the date of such Joint License Event;
(c) Third, [****************] has received an amount in cash
and/or
cash equivalents equal to (i) [**********************], less
(ii)
[***************************] as of the date of the initial
disbursements under
this Section 5.3(c) and (B) [*********************], and
(d) Fourth, all remaining proceeds shall be distributed to the
[*****].
5.4
Retained Rights of the Company. Notwithstanding the grant of
any
license to CFFTI under Section 5.1 or 5.3, or the termination of
the Sublicense
granted to the Company under Section 5.2, the Company shall retain
all rights,
title, licenses and interest in and to the Intellectual Property
and
Improvements outside of CFFTI's license to the Licensed Products
for North
America. or the Joint License, respectively, if either of such
licenses is in
effect, and the Company shall retain the right to use the Licensed
Products and
all data relating to or arising from the Licensed Products for all
uses and in
all applications and indications, provided that any products
resulting therefrom
shrill be distributed or sold by the Company solely outside of
North America,
and the Company shall retain the rights to use Trademarks for
products and
purposes unrelated to the Licensed Products.
5.5
Prosecution; Encumbrances; Other Matters. Until the sublicense
granted
pursuant to Section 5.2 terminates, (a) the Company shall pursue,
prosecute and
maintain any Intellectual Property protections, including
registrations, with
respect to the Licensed Products in the United States
[************************************************], (b) the Company
shall not
create, permit or suffer to exist, and will defend the Licensed
Products against
and take such other action as is reasonably necessary to remove any
Encumbrance
on the Licensed Products created by or through the Company (other
than any
Encumbrances created by this Agreement or disclosed to CFFTI in
Schedule 5.5
hereto), or created in the ordinary course of business of the
Company; (c) the
Company shall be required to make [*********] payments with respect
to the
Licensed Products (including without limitation, payments in
respect of
licenses, regulatory filings and applications, taxes, royalties and
other sums
that may become due in respect of the Licensed Products), and (d)
CFFTI may, but
shall not be required to, take any steps CFFTI reasonably deems
necessary or
appropriate to preserve any Licensed Products or any rights against
third
parties to any of the Licensed Products, at any time when the
Company has failed
to do so, provided CFFTI has first provided the Company with
written notice of
the action CFFTI reasonably deems necessary or appropriate to
preserve any
Licensed Products or any rights against third parties to any of the
Licensed
Products, and [**************], or such earlier time as is
necessary in order
that CFFTI rights are not prejudiced by delay the Company has not
taken the said
action or a reasonable alternative course of action, and the
[************************************************], all documented,
reasonable
expenses incurred in connection therewith. Until the license
granted pursuant to
Section 5.1 terminates CFFTI shall not create, permit or suffer to
exist, and
will defend the Licensed Products against and take such other
action as is
necessary to remove any Encumbrance on the
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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Licensed Products created by or through CFFTI other than the
Encumbrances
created by this Article V or in the ordinary course of business of
CFFTI.
5.6
Further Assurances. Each of the Parties shall give, execute,
deliver,
file and/or record such notices, instruments, documents, agreements
or other
papers that may be necessary or desirable (in the reasonable
judgment of the
other Party) to create, preserve, perfect or validate the license,
sublicense
and, if applicable, joint license granted pursuant hereto or to
enable each of
the Parties to exercise and enforce its respective rights under
this Article V.
ARTICLE VI
EVENTS OF DEFAULT
6.1
Company Default. For purposes of this Agreement, a "Company
Default"
shall occur upon any of the following events:
(a) specified Milestone to have been satisfied by a specified
Milestone Achievement Date (as amended from time to time by the ASC
pursuant to
Section 2.2(b)(i) hereinafter) is not satisfied other than
[*******************
***************************************************************]. A
Company
Default will not occur if after the Company's failure to satisfy a
Milestone by
the end of the applicable Grace Period, this Agreement has not been
terminated
pursuant to and in accordance with its terms and
[*****************************
*********************] with respect to the specified Milestone;
(b) an Unresolved Deadlock Event shall have occurred, and,
provided
that no Technical Failure then exists and the Parties have not
agreed in writing
to terminate this Agreement, thereafter the Company determines not
to proceed
with Development Activities;
(c) any material default by the Company in the performance of any
of
its covenants or agreements in this Agreement that is not cured
within
[*************] after written notice from CFFTI of the same (it
shall be a
material default under this section if the license purported to be
granted by
Section 5.1 shall fail to be exclusive or otherwise in full force
or effect in
all material respects (other than in accordance with the terms of
this
Agreement));
(d) a case or proceeding under the bankruptcy Laws of the
United
States of America now or hereafter in effect is filed against the
Company or all
or substantially all its Property and such petition or application
is not
dismissed within [******] after the date of its filing or the
Company shall file
any answer admitting or not contesting such petition or
application; or
(e) a case or proceeding under the bankruptcy Laws of the
United
States of America now or hereafter in effect or under any
insolvency,
reorganization, receivership, readjustment of debt, dissolution or
liquidation
Law or statute of any jurisdiction now or hereafter in effect
(whether at a law
or equity) is filed by the Company for all or substantially all of
its Property.
6.2
Consequences of a Company Default. Upon the occurrence of a
Company
Default, and at any time thereafter unless and until such Company
Default has
been waived by
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
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CFFTI or cured to the reasonable satisfaction of CFFTI, CFFTI may
terminate the
sublicense in Section 5.2 immediately, and CFFTI may take any such
action as
CFFTI may have been afforded expressly hereunder or under any other
contract or
agreement at any time and exercise such other rights as CFFTI may
have pursuant
to applicable Laws, including without limitation a legal action
seeking damages
pursuant to the arbitration provisions set forth in Section
11.10.
Notwithstanding a Company Default, CFFTI shall retain all rights to
the
Warrants, and all licenses in and to Licensed Products in North
America granted
pursuant to Section 5.1 hereunder, subject to the conditions set
out in Section
5.1 and the Company's retained rights as set out in Section 5.4
hereunder.
6.3 CFFTI
Default. For purposes of this Agreement, a "CFFTI Default"
shall
occur upon any of the following events:
(a) CFFTI shall fail to make any Grant payment on the date due
after
giving effect to the provisions of Section 2.5(b);
(b) any other material default by CFFTI in the performance of any
of
its covenants or agreements in this Agreement that is not cured
within sixty
(60) days after notice from the Company of the same (it shall be a
material
default under this section if the sublicense purported to be
granted by Section
5.2 shall fail to be exclusive or otherwise in full force or effect
in all
material respects (other than in accordance with the terms of this
Agreement));
(c) a case or proceeding under the bankruptcy Laws of the
United
States of America now or hereafter in effect is filed against CFFTI
or all or
substantially all its Property and such petition or application is
not dismissed
within 120 days after the date of its filing or CFFTI shall file
any answer
admitting or not contesting such petition or application; or
(d) a case or proceeding under the bankruptcy Laws of the
United
States of America now or hereafter in effect or under any
insolvency,
reorganization, receivership, readjustment of debt, dissolution or
liquidation
Law or statute of any jurisdiction now or hereafter in effect
(whether at a law
or equity) is filed by the Company for all or substantially all of
its Property.
6.4
Consequences of a CFFTI Default. Upon the occurrence of a CFFTI
Default and at any time thereafter unless and until such CFFTI
Default has been
waived by the Company or cured to the reasonable satisfaction of
the Company,
(i) the license granted by the Company pursuant to Section 5.1
hereunder shall
immediately terminate and the Company may, in its sole discretion,
assume or
terminate any sublicenses granted thereunder by CFFTI, (ii) all
rights to the
License Fee under Section 2.6 or the license termination fees under
Section
10.1(c) from the Company shall terminate immediately, and (iii) the
Company may
take any such other action that the Company may have been afforded
expressly
hereunder or under any other contract or agreement at any time and
exercise such
other rights as the Company may have pursuant to applicable Law,
including
without limitation, a legal action seeking damages pursuant to the
arbitration
provisions set forth in Section 11.10 hereof.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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ARTICLE VII
CONFIDENTIALITY; PUBLICATIONS ; PUBLICITY
7.1
Confidentiality. Each of the Parties hereto acknowledges that it
may
have access to materials and information of the other Party that
is
confidential, and that certain data, results, plans, and
information arising
from and relating to the Development Activities and the Products
may be
confidential (the "Confidential Material"). Each Party receiving
Confidential
Material agrees to keep confidential the Confidential Material and
all
information therein, and agrees to treat the same with the same
degree of
protection it would afford to its own Confidential Material, and
shall require
its employees, agents and representatives to do so, and neither
Party shall use
or disclose the Confidential Material or the information therein in
any way or
for any purposes other than as is reasonably necessary to
accomplish the
purposes of this Agreement. Notwithstanding the foregoing, the term
Confidential
Material does not include information that (a) is or becomes
publicly available
other than through breach of this provision, (b) is already known
to a Party at
the time of disclosure or is independently developed by a Party
without
reference to the Confidential Material as demonstrated by business
records, (c)
is received by a Party from a third party not under a duty of
confidentiality to
the other Party. Each of the Parties agrees to take reasonable
precautions to
safeguard the Confidential Material from disclosure to anyone other
than
appropriate employees, officers, directors, partners and
representatives,
including auditors and attorneys, of such Party, which Persons
shall be advised
of the confidential nature of the material. In the event that a
Party or any of
its representatives receives a request or demand to disclose all or
any part of
the Confidential Material under the terms of a subpoena or order
issued by a
court of competent jurisdiction or otherwise, the receiving Party
shall notify
the other Party of the existence, terms and circumstances
surrounding such
request or demand so that the other Party may seek a protective
order or other
appropriate relief or remedy or waive compliance with the terms
hereof and if,
in the opinion of receiving Party's counsel, disclosure by
receiving Party of
all or any part of the Confidential Material is required by Law,
the receiving
Party shall notify the other Party of the proposed disclosure, and
disclose only
such Confidential Material which is required by Law (in the
reasonable opinion
of the disclosing Party's counsel) to be disclosed.
7.2 Public
Announcements. The Company and CFFTI shall consult with, and
obtain the prior approval of the other, which shall not be
unreasonably withheld
or delayed, before issuing any press release or otherwise making
any public
statements with respect to the Product, CFFTI or the transactions
contemplated
hereby. Notwithstanding the foregoing, this Section 7.2 shall not
preclude any
Party from issuing such press releases, making such other public
statements or
making such filings with or applications to governmental bodies
with respect to
the transactions contemplated hereby, as such Party in, good faith
believes to
be required under applicable Law; provided that reasonable prior
notice of the
content thereof and of the basis for such belief shall be provided
to the other
Party.
7.3
Publications. Subject to Sections 7.1 and 7.2, in the event the
Parties hereto wish to publish any research papers relating to the
Product or
the Development Activities, representatives of the Parties may be
co-authors of
such papers, subject to customary scientific practices; provided
however, each
Party's contribution to the research described in such papers will
be
acknowledged in all such papers, regardless of authorship. To
afford each of the
Parties
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
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an opportunity to determine that no Confidential Material of such
Party is
disclosed in any proposed publications, whether written or oral
(including
without limitation, presentations to a journal or editor or other
written
materials, abstracts, presentations to a seminar, meeting or other
third party
or any other oral disclosure or abstract) and that patent filings
or other
Intellectual Property Rights will not be jeopardized, and to keep
each Party
informed of upcoming disclosures, each Party will provide the other
with an
advance copy of any proposed publication or abstract relating to
the Products at
least [**************] prior to submission of such manuscript
or
[**************] prior to presentation if such publication is to be
made orally.
At the non-publishing Party's request, the publishing Party will
delay
submitting such manuscripts and will cooperate by making any such
redactions or
revisions to the proposed publications that will allow the
non-publishing Party
to take such steps it deems necessary to file patent applications
or otherwise
protect its Confidential Material and Intellectual Property
Rights.
ARTICLE VIII
INDEMNIFICATION AND INSURANCE
8.1 CFFTI
Indemnification. CFFTI agrees to defend, indemnify and hold the
Company and its Affiliates and their respective directors,
officers, employees,
agents and shareholders, harmless from and against any losses,
costs, claims,
liabilities or expenses (including reasonable attorney's fees and
expenses of
litigation) claimed by Persons not covered by this indemnification
arising out
of or in connection with the research and development, manufacture,
use,
promotion, marketing, sale or other distribution of the Products by
CFFTI or its
Affiliates or licensees if the sublicense granted pursuant to
Section 5.2 is
terminated pursuant to Section 5.2(b), except to the extent that
such claims
result from the negligence or willful misconduct of the Company or
its
Affiliates and any of their respective officers, directors,
employees or agents.
8.2
Company Indemnification. The Company agrees to defend, indemnify
and
hold CFFTI and its Affiliates and their respective directors,
officers,
employees and agents, harmless from and against any losses, costs,
claims,
liabilities or expense (including reasonable attorney's fees and
expenses of
litigation) claimed by Persons not covered by this indemnification
arising out
of or in connection with the research and development, manufacture,
use,
promotion, marketing, sale, or other distribution of the Products
by the Company
or its Affiliates, except to the extent that such claims result
from the
negligence or willful misconduct of CFFTI or its Affiliates and any
of their
respective officers, directors, employees or agents, it being the
intent of the
Parties that the Company be the developer and study sponsor of the
Products and
that CFFTI shall have no legal or other obligations to any Person
in respect of
the development or use of the Products unless and until the
sublicense granted
pursuant to Section 5.2 is terminated pursuant to Section
5.2(b).
8.3
Procedure. The Parties agree to promptly notify each other of
any
claim or liability subject to this Article 8. The indemnifying
Party will have
the right to [*****] the defense thereof with counsel of its
choice; provided
however, that the indemnified Party will have the right to
retain
[*************] at its own expense for any reason. The indemnified
party will
cooperate with the indemnifying Party and its legal representatives
in the
investigation
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
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of any action, claim or liability covered by this Article 8. The
indemnified
Party will not, except at its own cost, voluntarily make any
payment or incur
any expense with respect to any claim or suit or settle any
indemnified action,
claim or liability covered by this Article 8 without the prior
written consent
of the indemnifying Party.
8.4
Insurance. The Parties will maintain insurance with financially
sound
and reputable insurance companies or associations in such amounts
and covering
such risks as are usually carried by companies engaged in a similar
business and
owning similar Properties in the same general geographical areas in
which the
respective Parties operate.
ARTICLE IX
CONDITIONS PRECEDENT
9.1
Conditions to Obligations of the Company at the Initial Grant
Funding.
The obligation of the Company to consummate the transactions which
pursuant to
the terms hereof shall be effected at the Initial Alliance Grant
Funding is
subject to the satisfaction or waiver at the Initial Alliance Grant
Funding of
the conditions set forth below. The benefit of these conditions is
for the
Company only and may be waived in writing by the Company at any
time in its sole
discretion.
(a) Accuracy of Representations and Warranties of CFFTI. Each of
the
representations and warranties of CFFTI contained herein shall be
true and
correct in all material respects at and as of the Initial Alliance
Grant Funding
Date.
(b) Performance by CFFTI. At or before the Initial Alliance
Grant
Funding, CFFTI shall have performed, satisfied and complied with,
in all
material respects, all covenants, agreements and conditions
required to be
performed by it under this Agreement at or before the Initial
Alliance Grant
Funding.
(c) Deliveries by CFFTI at the Initial Alliance Grant Funding. At
or
before the Initial Alliance Grant Funding, CFFTI will deliver, or
cause to be
delivered, to the Company, against delivery of a certificate
representing the
Warrants duly registered in the name of CFFTI,
(i) the Initial Grant Funding Amount in accordance with Section
2.5(a);
(ii) a copy of the Registration Rights Agreement duly executed
by
CFFTI;
(iii) a copy of the warrants duly executed by CFFTI;
(iv) a copy of the Certificate of Incorporation of CFFTI,
certified
by the Secretary of State of Maryland not more than thirty (30)
days prior to
the Initial Alliance Grant Funding Date;
(v) a certificate, dated as of the Initial Alliance Grant
Funding
Date, executed by the Secretary of CFFTI and certifying (A) that
the Certificate
of Incorporation of CFFTI has not been amended since the date of
the certified
copy of such Certificate of Incorporation delivered pursuant to
(iv) above; (B)
that attached thereto are (x) true, complete and correct
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
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copies of the by-laws of CFFTI, as in full force and effect on the
Initial
Alliance Grant Funding Date and (y) true, complete and correct
copies of the
resolutions of the Board of Directors of CFFTI authoring the
execution, delivery
and performance of this Agreement, the Registration Rights
Agreement, the
Warrants and the transactions contemplated by this Agreement and by
such other
agreements, which resolutions were duly adopted, are in full force
and effect
and have not been rescinded or amended as of the Initial Alliance
Grant Funding
Date; and (C) as to the incumbency and specimen signatures of
officers of CFFTI
who shall have executed instruments, agreements and other documents
in
connection with the transactions contemplated by this
Agreement;
(vi) a certificate, dated as of the Initial Alliance Grant
Funding
Date, executed by the Secretary of the CFFTI and certifying (i)
true, complete
and correct copies of the resolutions of the Board of Directors of
CFFTI
authorizing the execution, delivery and performance by CFFTI of
this Agreement,
the Registration Rights Agreement, the Warrants and the
transactions
contemplated by this Agreement and by such other agreements and
evidencing the
commitment of CFF to lend assistance to CFFTI in the performance of
CFFTI's
obligation under the Agreement including a commitment to fund CFFTI
in a manner
sufficient to enable CFFTI to perform its payment obligations under
this
Agreement and (ii) the Affiliate relationship between CFF and
CFFTI, which
resolutions were duly adopted, are in full force and effect and
have not been
rescinded or amended as of the Initial Alliance Grant Funding
Date;
(vii) an opinion of counsel to CFFTI in form and substance
reasonably satisfactory to the Company dated as of the Initial
Alliance Grant
Funding Date; and
(viii) and the Investor's Representation Letter dated as of the
Initial Alliance Grant Funding Date (in the form of Exhibit 9.1
hereto) duly
executed by CFFTI.
9.2
Conditions to Obligations of CFFTI at the Initial Alliance
Grant
Funding. The obligation of CFFTI to consummate the transactions
which pursuant
to the terms hereof shall be effected at the Initial Alliance Grant
Funding is
subject to the satisfaction or waiver at or as of the Initial
Alliance Grant
Funding of the conditions set forth below. The benefit of these
conditions is
for CFFTI only and may be waived in writing by CFFTI at any time in
its sole
discretion.
(a) Accuracy of Representations and Warranties of the Company.
Each
of the representations and warranties of the Company contained
herein shall be
true and correct in all material respects at and as of the Initial
Alliance
Grant Funding Date.
(b) Performance by the Company. At or before the Initial
Alliance
Grant Funding, the Company shall have performed, satisfied and
complied with, in
all material respects, all covenants, agreements and conditions
required to be
performed by it under this Agreement at or before the Initial
Alliance Grant
Funding.
(c)
Registration Rights Agreement. The Company and CFFTI shall have
entered into a registration rights agreement in form and substance
as set forth
in Exhibit 8.3(d) attached hereto (the "Registration Rights
Agreement"), and
such Registration Agreement shall be in full force and effect as of
the Initial
Alliance Grant Funding.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
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(d) Warrants. The Company and CFFTI shall have executed and the
Company shall deliver the Warrants to CFFTI and such Warrants shall
be in full
force and effect as of the Initial Grant Alliance Funding.
(e) Documents and Deliveries by the Company at the Initial
Alliance
Grant Funding. At or before the Initial Alliance Grant Funding, the
Company
shall have delivered to CFFTI each of the following:
(i) a certificate, dated as of the Initial Alliance Grant
Funding
Date, executed the President of the Company, certifying that (A)
the
representations and warranties of the Company set forth in this
Agreement are
true and correct as of the Initial Alliance Grant Funding Date, and
(B) the
Company has performed and complied with all agreements, covenants
and conditions
contained in this Agreement required to be performed and complied
with by it at
or prior to the Initial Alliance Grant Funding;
(ii) a copy of the Certificate of Incorporation of the Company,
certified by the Secretary of State of the Commonwealth of
Massachusetts not
more than thirty (30) days prior to the Initial Alliance Grant
Funding Date;
(iii) a certificate, dated as of the Initial Alliance Grant
Funding
Date, executed by the Assistant Clerk of the Company and certifying
(A) that the
Certificate of Incorporation of the Company has not been amended
since the date
of the certified copy of such Certificate of Incorporation
delivered pursuant to
(ii) above; (B) that attached thereto are (x) true, complete and
correct copies
of the by-laws of the Company, as in full force and effect on the
Initial
Alliance Grant Funding Date and (y) true, complete and correct
copies of the
resolutions of the Board of Directors of the Company authorizing
the execution,
delivery and performance of this Agreement, each of the other
Company Closing
Documents and the transactions contemplated by this Agreement,
which resolutions
were duly adopted, are in full force and effect and have not been
rescinded or
amended as of the Initial Alliance Grant Funding Date; and (C) as
to the
incumbency and specimen signatures of officers of the Company who
shall have
executed instruments, agreements and other documents in connection
with the
transactions contemplated by this Agreement; and
(iv) an opinion of counsel to the Company in form and substance
reasonably satisfactory to CFFTI dated, as of the Initial Alliance
Grant Funding
Date.
ARTICLE X
TERMINATION
10.1 CFFTI
Right to Terminate. Notwithstanding anything to the contrary
set forth in this Agreement, subject to Section 10.4, CFFTI's
obligations under
this Agreement (including without limitation its obligations to
fund the Grant
or any particular CFFTI Funding Amount) may be terminated by CFFTI
by written
notice to the Company as follows:
(a) if all the conditions to the Initial Alliance Grant Funding
shall not have occurred or been waived by February 22, 2001;
and
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
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(b) at any time upon the occurrence of a Company Default that
has
not been cured by the Company or waived by CFFTI; provided however
that upon the
occurrence of a Bankruptcy Event of Default with respect to the
Company, CFFTI's
obligation to fund the Grant and any particular CFFTI Funding
Amount hereunder
shall terminate immediately without any further action of
CFFTI.
(c) within thirty (30) days after the Phase IIb Milestone Date,
CFFTI may terminate this Agreement in its sole discretion without
cause by
sending a written notice of termination to the Company. Such
termination shall
not be deemed a CFFTI Default provided that: (i) CFFTI pays the
Company within
thirty (30) days of the date of such notice, an amount that is
the
[********************************************************] Warrant
B and in the
form attached hereto as Exhibit 2.3(b)(ii) as of the date of such
termination,
or (ii) the Parties agree in writing to a reasonable alternative
course of
action. Upon such termination, CFFTI's license under Section 5.1
and rights to
License Fees will terminate immediately, provided however, after
the Approval
Date, in the event of sales of the Products, the Company will pay
royalties
[**********************************************] to CFFTI, by
paying to CFFTI
[****************] of Net Sales, provided, however, if the Company
sells or
distributes the Products through
[***********************************], the
Company will pay CFFTI [*****************] of any royalties on Net
Sales
received therefrom by the Company, in either case pursuant to a
payment schedule
to be agreed upon by the Parties. Each payment made by the Company
to CFFTI
hereunder shall be accompanied by a written report summarizing the
data used to
calculate the amounts paid, including the amount of Net Sales and
supporting
information reasonably necessary to determine royalties due.
10.2
Company's Right to Terminate. Notwithstanding anything to the
contrary set forth in this Agreement, subject to Section 10.4, the
Company's
obligations under this Agreement may be terminated by the Company
by written
notice to CFFTI as follows:
(a) upon the occurrence of a CFFTI Default that has not been
cured
by CFFTI or waived by the Company provided however, that upon the
occurrence of
a Bankruptcy Event of Default with respect to CFFTI this Agreement
and the
license under Section 5.1 shall immediately terminate without any
further action
of the Company.
10.3 Other
Terminations of Agreement. Notwithstanding anything to the
contrary set forth in this Agreement but subject to Section 10.4
hereinbelow:
(a) The Company and CFFTI may terminate this Agreement by
mutual
written consent (whether after an Unresolved Deadlock Event shall
have occurred
the Parties determine not to proceed with Development Activities or
otherwise);
(b) This Agreement shall automatically terminate and have no
further
force and effect upon the occurrence of a Technical Failure.
10.4
Consequences of Termination. In the event of a termination
pursuant
to Section 10.1, 10.2 or 10.3, this Agreement shall terminate in
its entirety
and be of no further force or effect; provided however that the
provisions of
Articles VII, VIII (other than Section 8.4), and this Section 10.4
shall survive
any such termination; and provided further that in the event of
a
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termination pursuant to Section 10.1(b), Article V and Article VI
(with respect
to the consequences of such termination) and Section 11.10 (with
respect to the
consequences of such termination) shall also survive such
termination; and
provided further that in the event of a termination pursuant to
Section 10.1(c),
Section 10.1(c) shall survive any such termination and provided
further that in
the event of a termination pursuant to Section 10.2, Article VI
(with respect to
the consequences of such termination) and Section 11.10 (with
respect to the
consequences of such termination) shall also survive such
termination; and
provided further that in the event of a termination pursuant to
Section 103(b)
or if after an Unresolved Deadlock Event shall have occurred the
Parties
determine not to proceed with Development Activities, Article V
shall survive
such termination.
ARTICLE XI
MISCELLANEOUS
11.1
Notices. Any notice, request, information or other document to
be
given under this Agreement to any Party by any other Party shall be
in writing
and delivered personally, sent by registered or certified mail,
postage prepaid,
delivered by a nationally recognized overnight courier service or
transmitted by
facsimile machine to such Party at the following addresses or
facsimile numbers
(or at such other address or facsimile numbers that a Party may
specify by like
notice):
If to the
Company, to:
Altus Biologics Inc.
625 Putnam Avenue
Cambridge, MA 10239
Attention: Peter
Lanciano, President
Telephone No.: (617) 577-6488
Telecopier No.: (617) 577-6502
with a
copy to:
Mintz Levin Cohn Ferris Glovsky and Popeo, PC
One Financial Center
Boston, Massachusetts 02111
Attention: Kim E.
Rosenfield
Telephone No.: (617) 832-6098
Telecopier No.: (617) 542-2241
If to
CFFTI:
Cystic Fibrosis Foundation Therapeutics, Inc.
6931 Arlington Road
Bethesda,
MD 20814
Attention: Dr. Robert
Beall, President
Telephone No.: (301) 907-2541
Telecopier No.: (301) 907-2699
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with a
copy to:
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300
Washington, DC 20007
Attention: Kenneth I.
Schaner, Esq.
Telephone No.: (202) 424-7518
Telecopier No.: (202) 424-7643
11.2
Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the
interpretation of this
Agreement.
11.3
Expenses. Except as otherwise provided herein, each Party agrees
to
pay all costs incurred by it in connection with the negotiation,
execution and
closing of any of the transactions contemplated by this Agreement,
including
without limitation, all out-of-pocket costs, accounting fees and
legal fees.
11.4 No
Waiver. The failure of a Party to insist upon strict adherence
to
any term of this Agreement on any occasion shall not be considered
a waiver or
deprive that Party of the right thereafter to insist upon strict
adherence to
that term or any other term of this Agreement. Any waiver must be
in writing.
11.5
Severability; Integrated Transaction. In the event any one or
more
provisions of this Agreement is held to be invalid or unenforceable
in any
respect, in whole or in part, such illegality or unenforceability
shall not
affect the validity or enforceability of the other provisions
hereof and such
other provisions shall remain in full force and effect, unaffected
by such
invalidity or unenforceability; provided however that the Parties
intend that
the transactions contemplated by this Agreement be treated as one
integrated
transaction and that this Agreement not be subdivided for any
purpose into
separately assignable agreements.
11.6
Entire Agreement. This Agreement contains the entire agreement
between the Parties hereto with respect to the matters contemplated
herein and
supersedes all prior agreements or understandings among the Parties
related to
such matters.
11.7
Amendment. Except as otherwise provided herein with respect to
the
Work Plan and the Milestone Grant Funding Plan attached hereto,
this Agreement
may not be amended or modified except by a written instrument
signed by the
Parties.
11.8
Limitation on Assignment. The terms, representations, warranties
and
covenants contained in this Agreement shall be binding upon, and
shall inure to
the benefit of, and be enforceable by, the Company and CFFTI and
their
respective successors, transferees and permitted assigns. This
Agreement will
not be assignable by either Party to any third party without the
prior written
consent of the other Party; except that either Party may assign
this Agreement
without such consent to an Affiliate of such Party provided
that,
notwithstanding such assignment, the assigning Party shall retain
its
obligations pursuant to this Agreement. Without limiting the
foregoing, CFFTI
acknowledges that the Company intends to enter into a migratory
merger for the
purpose of changing the Company's jurisdiction of incorporation
from
Massachusetts to Delaware and consents to such migratory
merger.
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11.9
Governing Law. This Agreement shall be construed in accordance
with,
and governed by, the internal laws of the Commonwealth of
Massachusetts, without
giving effect to the principles of conflict of laws thereof.
11.10
Arbitration. The Parties recognize the disputes as to certain
matters may from time to time arise during the term of this
Agreement other than
matters within the purview of the ASC as set out in Section 2.2
which relate to
either Party's rights and/or obligations hereunder. It is the
objective of the
Parties to establish procedures to facilitate the resolution of
such disputes
arising under this Agreement in an expedient manner by mutual
cooperation and
without resorting to arbitration or litigation; except as set forth
herein
below. The Parties agree that prior to any arbitration concerning
this
Agreement, they will pursue the same dispute resolution procedures
set out in
Section 2.2, whereby disputes will be elevated first to a member of
CFFTI's
senior management and the Company's president or CEO, who will meet
and attempt
in good faith to resolve any disputes concerning this Agreement,
and thereafter
any unresolved disputes will be elevated to members of the Parties'
respective
Boards of Directors, and thereafter, any unresolved disputes will
be referred to
mediation. Thereafter, in the event a dispute other than matters
within the
purview of the ASC as set out in Section 2.2 shall remain
unresolved, within
thirty (30) days of a formal request by either Party to the other,
any Party
may, by written notice to the other, have such dispute referred for
final and
binding arbitration to be conducted in Washington, D.C. if the
arbitration is
requested by the Company, or in Boston, Massachusetts if the
arbitration is
requested by CFFTI, unless the Parties agree otherwise on a
location. The
arbitration will be conducted under the then current Commercial
Arbitration
Rules of the American Arbitration Association ("AAA"), by three (3)
arbitrators
who are knowledgeable in the subject matter that is at issue in the
dispute. One
arbitrator will be selected by CFFTI and one arbitrator will be
selected by the
Company and the third arbitrator will be appointed by the AAA. In
conducting the
arbitration, the arbitrators will determine what discovery will be
permitted,
consistent with the goal of limiting the cost and time which the
Parties must
expend for discovery (and provided that the arbitrators will permit
such
discovery they deem necessary to permit an equitable resolution of
the dispute)
and will be able to decree any and all relief of an equitable
nature, including
but not limited to such relief as a temporary restraining order, a
preliminary
injunction, a permanent injunction, or specific performance. The
arbitrators
will also be able to award actual or general damages (taking into
account the
agreements of the Parties contained herein) and attorney's fees and
expenses and
other reasonable costs incurred in by the prevailing Party in such
arbitration,
and shall give effect to any liquidated damages provisions
contained herein in
making such award. The arbitrators will not award any other form of
damage
(e.g., consequential, punitive or exemplary damages). During the
course of the
arbitration neither Party may fail to perform its obligations under
this
Agreement. The Parties will share equally the arbitrator's fees and
expenses
pending the resolution of the arbitration unless the arbitrators
require the
non-prevailing Party to bear all or any portion of the costs of the
prevailing
Party. The decision of the arbitrators will be final and binding
and may be
enforced by the Party in whose favor it runs in any court of
competent
jurisdiction at the option of such Party. Notwithstanding anything
to the
contrary in this Section 11.10, either Party may seek immediate
injunctive or
other interim relief from any court of competent jurisdiction with
respect to
any breach of Article V or Article VII hereof, or otherwise to
enforce and
protect the patent rights, copyrights, trademarks, or other
intellectual
property rights owned or controlled by such Party. In no event will
a demand for
arbitration be made after
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the date when the institution of a legal or equitable proceeding
based on such
claim, dispute or other matter in question would be barred by the
applicable
statute of limitations.
11.11
Counterparts. This Agreement may be executed in counterparts,
each
of which shall be deemed an original, and all of which together
shall constitute
a single agreement. Facsimile transmissions of any executed
original document
and/or retransmission of any executed facsimile transmission shall
be deemed to
be the same as the delivery of an executed original.
11.12
Force Majeure. Neither Party will be liable to the other for
failure
or delay in the performance of any of its obligations under this
Agreement for
the time and to the extent such failure or delay is caused by
earthquake, riot,
civil commotion, war, hostilities between nations, Law, Judgment
embargo, action
by the governmental body, act of God, storm, fire, accident, labor
dispute or
strike, sabotage, explosion, or other similar or different
contingencies, in
each case, beyond the reasonable control of the respective
Party.
11.13
Independent Contractors. The relationship between the Parties
will
be that of independent contracting parties and nothing in this
Agreement will be
construed to create any other relationship between CFFTI and the
Company. Except
as expressly provided herein, no Party will have the right, power
or authority
to assume, create or incur any expense, liability or obligation,
express or
implied, on behalf of any of the other Parties.
11.14
Further Assurances. At any time and from time to time, upon the
written request of CFFTI and at the sole expense of the Company,
the Company
will promptly and duly execute and deliver any and all such further
instruments,
documents and agreements and take such further actions as CFFTI may
reasonably
require in order for CFFTI to obtain the full benefits of this
Agreement
excluding any filings or actions required under the Hart Scott
Rodino Act of
1974, as amended, in connection with the licenses provided under
Article V or
the exercise of the Warrants and excluding any filings or actions
required to
register the Warrants or the Shares under the Securities Act other
than any such
filings or actions as are required pursuant to the terms of the
Registration
Rights Agreement. At any time and from time to time, upon the
written request of
the Company and at the sole expense of CFFTI, CFFTI will promptly
and duly
execute and deliver any and all such further instruments, documents
and
agreements and take such further actions as the Company may
reasonably require
in order for the Company to obtain the full benefits of this
Agreement and the
Warrants.
11.15
Survival. The representations or warranties of the Company and
CFFTI
contained herein, or in other instruments or agreements delivered
or to be
delivered at or prior to the Initial Alliance Grant Funding shall
survive the
Initial Alliance Grant Funding and in the event of a material
default thereof
the non-breaching Party may exercise such rights as it may have
pursuant to
applicable Law, including without limitation, a legal action
seeking damages
pursuant to the arbitration provisions set forth in Section 11.10
hereof.
[END OF PAGE]
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IN WITNESS
WHEREOF, the Parties hereto have executed this Strategic
Alliance Agreement as of the date first above written.
ALTUS BIOLOGICS INC.
By: /s/ Peter
Lanciano
-------------------------
Peter Lanciano
President
CYSTIC FIBROSIS FOUNDATION THERAPEUTICS, INC.
By: ______________________________
Dr. Robert Beall
President
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IN WITNESS
WHEREOF, the Parties hereto have executed this Strategic
Alliance Agreement as of the. date first above written.
ALTUS BIOLOGICS INC.
By: ____________________________
Peter Lanciano
President
CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
INC.
By: /s/ Dr.
Robert Beall
--------------------------
Dr. Robert Beall
President
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EXHIBIT
1.1
MILESTONE GRANT FUNDING PLAN
<TABLE>
<CAPTION>
CFFTI
COMPANY
TOTAL FUNDING
FUNDING
YEAR
QTR COSTS
AMOUNT
AMOUNT
--------------
----- -----
-------
-------
<S>
<C> <C>
<C>
<C>
2001
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
M1 [***]
[***] [***]
[***]
[***]
M2 [***]
[***] [***]
[***]
[***]
2002
[***] [***]
[***]
[***]
M3 [***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
M4 [***]
[***] [***]
[***]
[***]
2003 M5 [***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
2004 [***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
[***] [***]
[***]
[***]
M7 [***]
[***] [***]
[***]
[***]
TOTAL
[***]
[***] [***]
</TABLE>
Note: [***]
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
36
<PAGE>
EXECUTION COPY
EXHIBIT 1.2
WORK PLAN
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
37
<PAGE>
EXECUTION COPY
<TABLE>
<CAPTION>
2001
2002
2003
2004
ID
Task Name
Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
--- ------------------------ ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
-----
<S> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
1 Research
Work
2
1st generation R&D
3
[***]
4
[***]
5
[***]
6
[***]
7
[***]
8
2nd generation R&D
9
[***]
10
[***]
11
[***]
12 Support
Manufacturing
& Regulatory
13
[***]
14 Development
15
[***]
16
[***]
17
[***]
18
[***]
19
Analytical Development
20
[***] [***]
21
[***]
22
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
38
<PAGE>
EXECUTION COPY
<TABLE>
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
23
[***]
24
[***]
25
[***] [***] [***]
26
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
39
<PAGE>
EXECUTION COPY
<TABLE>
<CAPTION>
2001
2002
2003
2004
ID
Task Name
Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
--- ------------------------- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
-----
<S> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
27
[***]
28
[***]
29
[***]
30
[***]
31
[***] [***]
32
[***]
33
[***]
34
[***]
35
[***]
36
[***]
37
[***] [***]
38
[***]
39
[***]
40
[***]
41
[***]
42
[***]
43
[***]
44
Support Manufacturing
& Regulatory
45
[***]
46 Process Development
&
Manufacturing
47
Process Development
- [***]
48
[***]
49
[***]
50
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
40
<PAGE>
EXECUTION COPY
<TABLE>
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
51
[***]
52
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
41
<PAGE>
EXECUTION COPY
<TABLE>
<CAPTION>
2001
2002
2003
2004
ID
Task Name
Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
--- ------------------------- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
-----
<S> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
53
[***]
54
[***]
55
[***]
56
[***] Technical
Transfer
57
[***] Technical
Transfer
58
[***] Transfer
59
[***]
60
[***]
61
[***]
62
[***] [***] [***]
63 Non-Clinical
Testing
64
[***]
65
[***]
66
[***] [***]
67
[***]
68
[***]
69
[***]
70
[***]
71
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
42
<PAGE>
EXECUTION COPY
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
43
<PAGE>
EXECUTION COPY
<TABLE>
<CAPTION>
2001
2002
2003
2004
ID
Task Name
Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
--- ---------------------- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- -----
<S> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
72
[***] Formulation
73
[***]
74
[***]
75
[***]
76
[***]
77
[***]
78
[***]
79 FDA
Coordination
80
[***]
81
[***]
82
[***]
83
[***]
84
[***]
85
[***]
86
[***]
87
[***]
88
[***]
89
[***]
90 Clinical
Studies
91
[***]
92
[***]
93
[***]
94
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
44
<PAGE>
EXECUTION COPY
<TABLE>
<S>
<C> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
95
[***]
96
[***]
97
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
45
<PAGE>
EXECUTION COPY
<TABLE>
<CAPTION>
2001
2002
2003
2004
ID Task
Name
Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2
Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
---
------------------- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- -----
<S> <C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
98
[***]
99
[***]
100 [***]
Product
101
[***]
102
[***]
103 Sales and
Marketing
104 [***]
105 [***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
46
<PAGE>
EXECUTION COPY
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
47
<PAGE>
EXECUTION COPY
Schedule 2.5(a)
Wire Transfer Instructions
Altus Biologics Inc.
Wiring Instructions
To send money to Altus reference the following:
Fleet Bank
Boston, Massachusetts
Account No. [***]
ABA Routing Number: [***]
Account Name: [***]
Reference: [***]
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
48
<PAGE>
EXECUTION COPY
Schedule 3.3(c) and (d)
Rights Relating to Stock
1. The
Company is party to a Registration Rights Agreement dated as of
February
1, 1999 by and between the Company, Vertex Pharmaceuticals
Incorporated ("Vertex") and certain officers of Vertex which
provides,
among
other things, registration rights.
2. The
Company is party to a Percentage Maintenance Agreement dated as
of
February
1, 1999 by and between Vertex and the Company which provides,
among
other things, a form of preemptive rights to Vertex. The letter
agreement
dated December 1, 2000 with Vertex Pharmaceuticals also
provides,
among other things, a form of preemptive rights to Vertex.
3. Vertex
Pharmaceuticals owns 87,500 Shares of Convertible Preferred
that
are
convertible 10:1 into Common Stock
4. Vertex
holds a Firm Warrant for 1,000,000 shares of Common Stock at
$.05
per
share
5. Vertex
holds Contingent Warrants for an aggregate of 4,500,000 shares:
2,500,000 exercisable at $2,50 a share
1,500,000 exercisable at $3,75 a share
500,000 exercisable at $5.00 a share
6. Vertex
holds 450,000 shares of Redeemable Preferred Stock, redeemable
at
$10 a
share plus interest, due in December, 2006
7.
Transamerica holds a warrant for 100,000 shares of Common Stock
exercisable at $3.00 a share
8.
Transamerica holds a warrant for 27,322 shares of Common Stock
exercisable
at the
lower of $31.35 a share or the price per share paid in the next
equity
financing
9.
Transamerica holds a warrant for 5,000 shares of Common Stock
exercisable
at the
price per share paid in the next equity financing
10. Oxford
Ventures/GE Capital holds a warrant for 2,332 shares of Common
Stock at
$3.43 per share
11. Oxford
Ventures/GE Capital holds a warrant for 1,564 shares of Common
Stock at
$3.43 per share
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
49
<PAGE>
EXECUTION COPY
Schedule 3.3(c) and (d) (con't)
Rights Relating to Stock
12. Outstanding shares of capital stock and options for Common
Stock are
summarized below:
<TABLE>
<CAPTION>
Column A
Column B
COMMON STOCK
COLUMN A PLUS
Column C
VESTED
SHARES
OUTSTANDING
OPTIONS
SHARES
HELD
OPTIONS/WARRANTS
OUTSTANDING
---------------------
---------------------
------------------------
-----------
<S>
<C>
<C>
<C>
[***]
[***]
[***] [***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***]
[***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***]
[***]
[***]
[***]
[***] [***]
[***]
[***]
[***]
[***] [***]
[***] [***]
[***]
[***] [***]
[***]
=====================
=====================
============================== ===========
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
50
<PAGE>
EXECUTION COPY
Schedule 3.4
Under the Company's credit facilities with Transamerica, a consent
was required
in connection with the license rights granted to CFFTI
hereunder.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
51
<PAGE>
EXECUTION COPY
Schedule 3.5
Material Liabilities and Obligations
The following is a list of material liabilities and obligations
taken on by
Altus Biologics Inc. since December 31, 1999.
1. Oxford
Ventures Finance, LLC provided equipment financing for up to $1M
in
equipment.
The agreement is dated 12/17/99. The first equipment loan
financing
was on 1/18/00 for $200,000. The payments are 6,617.71 monthly
for 36
months. The second equipment loan financing was on 10/3/00 for
$134,133.45. The payments are $4,427.48 for 36 months. There have
been no
additional
equipment loans since that time. The facility is secured by a
first lien
on all of the Company's equipment. This facility has since been
assigned
to GE Capital.
2.
Transamerica Business Credit Corporation provided the Company with
an
Accounts
Receivable line of credit for up to $1M. The agreement is dated
October
20, 2000. The Company borrowed $500,000 on 10/26/00. The
facility
is secured
by a lien on all of the Company's assets.
3. Court
Square Leasing provided the Company with an equipment lease for
$21,820
worth of computer equipment on 11/28/00. The Company's payments
are
$778.97 for 36 months.
4. The
Company signed a lease with Fort Washington Associates, LLC for
the
building
at 625 Putnam Avenue, which has a premises consisting of
approximately 15,750 square feet, covering the period of January 1,
2001
until
December 31, 2001. Monthly payments are a minimum $35,318 a
month.
5. The
Company signed a sublease with Vertex Pharmaceuticals for the
building
at 618
Putnam Avenue, which has a premises consisting of approximately
3,000
square feet. The terms of the lease cover the period of January
1,
2001 until
December 31, 2001. Monthly payments are a minimum $$2,592.50
monthly
for 2001 and $2,982.50 a month, beginning with the rent for
January,
2002.
6. The
Company executed a letter agreement dated December 1, 2000 with
Vertex
Pharmaceuticals providing for the restructuring of the Company's
equity
ownership.
Pursuant to such agreement, in the event of an outside
financing
in excess of $5 million, at the election of the Company,
Vertex's
ownership position can be reduced to as low as 42% of the
Company
on a fully
diluted basis after giving effect to such financing. Such
agreement
also provides that in exchange for such reduction in ownership
Vertex is
to receive a royalty not to exceed 3% on net sales of products
and
services using proteins crystals for a 20 year period and a payment
of
$50,000
upon its exercise of its Firm Warrant for the purchase of
1,000,000
shares of Common Stock.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
52
<PAGE>
EXECUTION COPY
7. The
Company has agreed to pay to SG Cowen a fee for services rendered
as
the
Company's placement agent in connection with the Company's
proposed
Series B
financing.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
53
<PAGE>
EXECUTION COPY
Schedule 3.7 (a)
Trademarks
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
54
<PAGE>
EXECUTION COPY
Schedule 3.7 (b)
Patent Rights
(a) Patents
covering TheraCLEC products
<TABLE>
<CAPTION>
NUMBER TITLE
COMMENTS
------ -----
--------
<S>
<C>
<C>
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
</TABLE>
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
55
<PAGE>
EXECUTION COPY
Schedule 5.5
Encumbrances
The Company has granted to Transamerica Business Credit Corporation
a security
interest in all of its assets, including the Intellectual Property
and
Improvements. The Company has an exclusive license under certain
patents owned
by Vertex, a Shareholder of the Company, under which Vertex
reserves limited
rights to the said patents.
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
56
<PAGE>
EXHIBIT 2.3 (b)
Warrants
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>
EXECUTION COPY
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR
(B) THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO
THE COMPANY THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.
Warrant No. W-5A
230,400 Shares
WARRANT
To Purchase Shares of Common Stock
of
ALTUS BIOLOGICS INC.
Dated February 22, 2001
WHEREAS,
pursuant to and in connection with that certain Strategic
Alliance Agreement (the "Alliance Agreement") dated as of the date
hereof by and
between Altus Biologics Inc., a Massachusetts corporation (the
"Company"), and
Cystic Fibrosis Foundation Therapeutics, Inc., a Maryland
corporation ("CFFTI"),
the Company intends to provide CFFTI an opportunity to obtain an
equity interest
in the Company through the acquisition of shares of its Common
Stock, $.0l par
value per share ("Common Stock"), upon the exercise of a warrant
with respect
thereto;
NOW,
THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Company
certifies and agrees as follows:
This
Warrant dated as of February 22, 2001 (the "Issuance Date")
certifies
that, for value received, CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
INC. (the
"Holder"), is entitled, subject to the terms and conditions set
forth herein, to
purchase from the Company a number of shares equal to Two Hundred
Thirty
Thousand Four Hundred (230,400) (the "Warrant Shares") of the fully
paid and
non-assessable Common Stock of the Company, at a price of $.01 (one
cent) per
share (the "Exercise Price"), such number of Warrant Shares and
Exercise Price
subject to adjustment as provided herein. This Warrant shall be
fully vested as
of the Issuance Date. Subject to the terms and conditions set forth
herein, this
Warrant may be exercised at any time on or after February 22, 2008
and before
February 22, 2013 (the "Expiration Date") and shall be void
thereafter;
provided, however, this Warrant may be exercised earlier upon the
first to occur
of (i) the occurrence of the Phase IIa Milestone Achievement Date
(as defined in
the Alliance Agreement); (ii) a Technical Failure (as defined in
the Alliance
Agreement); (iii) a Joint License Event (as defined in the Alliance
Agreement);
(iv) a Company Default (as defined in the Alliance Agreement); or
(v) the
Company's first underwritten public offering of the Common Stock of
the Company
for the account of the Company and offered on a "firm
commitment"
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED
SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION
REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
58
<PAGE>
EXECUTION COPY
basis pursuant to an offering registered under the Securities Act
of 1933, as
amended (the "1933 Act"), with the Securities and Exchange
Commission (the
"Commission") on Form S-1 or its then equivalent.
ARTICLE II
EXERCISE OF WARRANT.
7.1
PROCEDURE. The Holder or any person or entity to whom the Holder
has
assigned its rights under this Warrant or transferred all or a
portion of this
Warrant (collectively referred to as the "Warrantholder") may
exercise this
Warrant, at any time or from time to time, after the date on which
this Warrant
may first be exercised pursuant to the terms of the immediately
preceding
paragraph and prior to the Expiration Date, on any business day, by
surrendering
the Warrant, accompanied by a written notice in the form attached
hereto (the
"Exercise Notice"), to the Company at the address designated in
Section 8.4
hereof, exercising the Warrant and specifying the total number of
Warrant Shares
the Warrantholder will purchase pursuant to such exercise. This
Warrant may be
exercised in whole or in part as to any or all of the Warrant
Shares. A
certificate or certificates for the Warrant Shares purchased upon
exercise of
this Warrant and, in the event of a partial exercise of this
Warrant, a new
Warrant of like tenor representing the balance of the Warrant
Shares purchasable
hereunder, shall be delivered by the Company to the Warrantholder
not later than
ten days after payment is made for the Warrant Shares purchased
upon exercise.
No fractions of a share of Common Stock will be issued upon the
exercise of this
Warrant, but if a fractional share would be issuable upon exercise,
the Company
will pay in cash the fair market value thereof as determined under
Section 1.2
below.
7.2 NET
EXERCISE FORMULA. The Warrantholder may exercise the Warrant
either (i) by paying to the Company, by cash or check, an amount
equal to the
aggregate Exercise Price of the Warrant Shares being purchased, or
(ii) by
electing to receive Warrant Shares equal to the value (as
determined below) of
this Warrant by surrender of the Warrant together with notice of
such election,
in which event the Company shall issue to the Warrantholder a
number of
