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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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EXECUTION COPY
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.
1
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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
</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.
2
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EXECUTION COPY
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.
1
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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.
2
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COPY
(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.
3
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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.
5
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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.
17
<PAGE>
EXECUTION COPY
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