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
EXECUTION COPY
TABLE OF CONTENTS
Page
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
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
EXECUTION COPY
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
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
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
EXECUTION COPY
"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
EXECUTION 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
EXECUTION COPY
"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.
4
EXECUTION COPY
(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
EXECUTION COPY
"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.
6
EXECUTION COPY
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.
7
EXECUTION COPY
(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.
8
EXECUTION COPY
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.
9
EXECUTION COPY
(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.
10
EXECUTION COPY
(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.
11
EXECUTION COPY
(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 Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, XX 00000, 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.
12
EXECUTION COPY
(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.
13
EXECUTION COPY
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.
14
EXECUTION COPY
(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 Xxxx-Xxxxx-Xxxxxx 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.
15
EXECUTION COPY
(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.
16
EXECUTION COPY
(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
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 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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
18
EXECUTION COPY
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.
19
EXECUTION COPY
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.
20
EXECUTION COPY
(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.
21
EXECUTION COPY
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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
22
EXECUTION COPY
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.
23
EXECUTION COPY
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.
24
EXECUTION COPY
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 SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
25
EXECUTION COPY
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 SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
26
EXECUTION COPY
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 SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
27
EXECUTION COPY
(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 SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
28
EXECUTION COPY
(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
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.
29
EXECUTION COPY
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.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to CFFTI:
Cystic Fibrosis Foundation Therapeutics, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxx, President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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.
30
EXECUTION COPY
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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.
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.
31
EXECUTION COPY
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
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.
32
EXECUTION COPY
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 Xxxx Xxxxx Xxxxxx 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]
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.
33
EXECUTION COPY
IN WITNESS WHEREOF, the Parties hereto have executed this Strategic
Alliance Agreement as of the date first above written.
ALTUS BIOLOGICS INC.
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Xxxxx Xxxxxxxx
President
CYSTIC FIBROSIS FOUNDATION THERAPEUTICS, INC.
By: ______________________________
Xx. Xxxxxx Xxxxx
President
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.
34
EXECUTION COPY
IN WITNESS WHEREOF, the Parties hereto have executed this Strategic
Alliance Agreement as of the. date first above written.
ALTUS BIOLOGICS INC.
By: ____________________________
Xxxxx Xxxxxxxx
President
CYSTIC FIBROSIS FOUNDATION THERAPEUTICS,
INC.
By: /s/ Xx. Xxxxxx Xxxxx
--------------------------
Xx. Xxxxxx Xxxxx
President
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.
35
EXECUTION COPY
EXHIBIT 1.1
MILESTONE GRANT FUNDING PLAN
CFFTI COMPANY
TOTAL FUNDING FUNDING
YEAR QTR COSTS AMOUNT AMOUNT
-------------- ----- ----- ------- -------
2001 [***] [***] [***] [***]
[***] [***] [***] [***]
M1 [***] [***] [***] [***] [***]
M2 [***] [***] [***] [***] [***]
2002 [***] [***] [***] [***]
M3 [***] [***] [***] [***] [***]
[***] [***] [***] [***]
M4 [***] [***] [***] [***] [***]
2003 M5 [***] [***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***] [***] [***]
2004 [***] [***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***] [***] [***]
M7 [***] [***] [***] [***] [***]
TOTAL [***] [***] [***]
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
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
EXECUTION COPY
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
--- ------------------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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 [***]
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
EXECUTION COPY
23 [***]
24 [***]
25 [***] [***] [***]
26 [***]
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
EXECUTION COPY
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
--- ------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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 [***]
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
EXECUTION COPY
51 [***]
52 [***]
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
EXECUTION COPY
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
--- ------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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 [***]
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
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
EXECUTION COPY
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
--- ---------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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 [***]
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
EXECUTION COPY
95 [***]
96 [***]
97 [***]
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
EXECUTION COPY
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
--- ------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
98 [***]
99 [***]
100 [***] Product
101 [***]
102 [***]
103 Sales and Marketing
104 [***]
105 [***]
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
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
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
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
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:
Column A Column B
COMMON STOCK COLUMN A PLUS Column C
VESTED SHARES OUTSTANDING OPTIONS
SHARES HELD OPTIONS/WARRANTS OUTSTANDING
--------------------- --------------------- ------------------------ -----------
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***] [***] [***]
===================== ===================== ============================== ===========
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
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
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 000 Xxxxxx Xxxxxx, 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 000 Xxxxxx Xxxxxx, 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
EXECUTION COPY
7. The Company has agreed to pay to XX Xxxxx 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
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
EXECUTION COPY
Schedule 3.7 (b)
Patent Rights
(a) Patents covering TheraCLEC products
NUMBER TITLE COMMENTS
------ ----- --------
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
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
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
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.
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
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 Warrant
Shares computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Warrant Shares to be issued to the Warrantholder.
Y = the number of Warrant Shares under this Warrant (or such lesser
number of Shares as the Warrantholder elects to purchase, in the
case of a partial exercise).
A = the fair market value of one share of Common Stock on the date of
exercise.
B = the Exercise Price.
As used herein, the fair market value of the Common Stock shall be deemed
to be the mean between the highest and lowest quoted selling prices as reported
in The Wall Street Journal on the last trading day preceding the date of
determination on the primary securities exchange where the Common Stock of the
Company is traded or if not traded on a securities exchange, then on The Nasdaq
Stock Market, or if there were no sales on the applicable date, on the next
preceding date within a reasonable period (as determined in the sole discretion
of the Board of
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.
59
EXECUTION COPY
Directors of the Company (the "Board of Directors")) on which there were sales.
In the event that there were no sales in such a market within a reasonable
period, the fair market value shall be as determined in good faith by the Board
of Directors. In the event the Warrantholder disagrees with the fair market
value determined by the Board of Directors, the Company and the Warrantholder
shall negotiate in good faith and use their best efforts to agree upon the
selection of an independent appraiser, who will have 30 days in which to
determine the fair market value of the Common Stock, and whose determination
will be final and binding on all parties concerned. If no individual appraiser
can be agreed upon, each party shall select an appraiser and the two selected
appraisers shall select a third to serve as the independent appraiser for
purposes of determining fair market value. All costs of the independent
appraiser shall be borne equally by the Company and the Warrantholder.
ARTICLE III RECORD HOLDER. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided in Section 1.2. above and the person entitled
to receive the Warrant Shares of Common Stock issuable upon such exercise or
conversion shall be treated for all purposes as the holder of such Warrant
Shares of record as of the close of business on such date.
ARTICLE IV PAYMENT OF TAXES. The Company shall pay all taxes and other
governmental charges (other than income taxes) that may be imposed in respect of
the issue of the Warrant Shares or any portion thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for the Warrant Shares or any
portion thereof in any name other than that of the registered holder of the
Warrant surrendered in connection with the purchase of such shares, and in such
case the Company shall not be required to issue or deliver any certificate until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.
ARTICLE V TRANSFER AND EXCHANGE.
7.1 TRANSFER. Subject to the terms hereof, including, without limitation,
Sections 5.1 and 5.3, the Warrant and all rights thereunder are transferable, in
whole or in part, on the books of the Company maintained for such purpose at its
office designated in Section 8.4 hereof by the registered holder hereof in
person or by duly authorized attorney, upon surrender of the Warrant properly
endorsed; provided, however, that this Warrant may not be transferred in part
unless such transfer is to a transferee who pursuant to such transfer receives
the right to purchase at least 75,000 shares of Common Stock. Upon any partial
transfer, the Company will issue and deliver to such holder a new warrant or
warrants with respect to the Warrant Shares not so transferred. Each taker and
holder of the Warrant, by taking or holding the same, consents and agrees that
the Warrant when endorsed in blank shall be deemed negotiable, and that when the
Warrant shall have been so endorsed, the holder may be treated by the Company
and all other persons dealing with the Warrant as the absolute owner of such
Warrant for any purpose and as the person entitled to exercise the rights
represented thereby, or to the transfer on the books of the Company, any notice
to the contrary notwithstanding; but until such transfer on such books, the
Company may treat the registered holder of the Warrant as the owner for all
purposes. The term "Warrant" as used herein shall include the Warrant and, any
warrants delivered in substitution or exchange therefor as provided herein.
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.
60
EXECUTION COPY
7.2 EXCHANGE. The Warrant is exchangeable for a warrant or warrants for
the same aggregate number of Warrant Shares, each new Warrant to represent the
right to purchase such number of Warrant Shares as the holder shall designate at
the time of such exchange. The Warrant may be subdivided, at the Warrantholder's
option, into several warrants to purchase the Warrant Shares (collectively, also
referred to as the "Warrant"). Such subdivision may be accomplished in
accordance with the provisions of this Section 4.
ARTICLE VI TRANSFER OF SECURITIES.
7.1 RESTRICTIONS ON TRANSFER. Neither the Warrant nor any of the Warrant
Shares shall be transferable except upon the conditions specified in this
Section 5.1, which conditions are intended to insure compliance with applicable
provisions of the 0000 Xxx.
(1) Unless and until otherwise permitted by this Section 5.1, the Warrant
and each certificate or other document evidencing any of the Warrant Shares
shall be endorsed with the legend substantially in the following form:
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 TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.
(2) Neither the Warrant nor any of the Warrant Shares shall be transferred
and the Company shall not be required to register any such transfer, unless and
until one of the following events shall have occurred:
(a) the Company shall have received an opinion of counsel reasonably
acceptable to the Company and its counsel, stating that the contemplated
transfer is exempt from registration under the 1933 Act as then in effect, and
the Rules and Regulations of the Commission thereunder. Within ten days after
delivery to the Company and its counsel of such an opinion, the Company either
shall deliver to the proposed transferor a statement to the effect that such
opinion is not satisfactory in the reasonable opinion of its counsel (and shall
specify the legal analysis supporting any such conclusion) or shall authorize
the Company's transfer agent to make the requested transfer;
(b) the Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or
(c) (i) the Warrant or the Warrant Shares, as the case may be, have
been registered pursuant to a registration statement filed by or on behalf of
the Company, (ii) such registration statement has been declared effective by the
Commission under the 1933 Act and is not subject to any stop order, and (iii)
the Company has not sent a notice to the Warrantholder requesting that sales
under such registration statement and the related prospectus should 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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
61
EXECUTION COPY
halted until such time as the Company has corrected or updated such registration
statement and the related prospectus.
The restrictions on transfer imposed by Section 5.1 shall cease and terminate as
to the Warrant or the Warrant Shares, as the case may be, when (i) such
securities shall have been effectively registered under the 1933 Act and sold by
the holder thereof in accordance with such registration, or (ii) an acceptable
opinion as described in Section 5.1.2(a) or a "no action" letter described in
Section 5.1.2(b) states that future transfers of such securities by the
transferor or the contemplated transferee would be exempt from registration
under the 1933 Act. When the restrictions on transfer contained in this Section
5.1 have terminated as provided above, the holder of the securities as to which
such restrictions shall have terminated or the transferee of such holder shall
be entitled to receive from the Company, at the expense of the Company, a new
Warrant or a new share certificate, as the case may be, not bearing the legend
set forth in Section 5.1.1 hereof.
COOPERATION. The Company shall cooperate in supplying such information as
may be reasonably requested by the Warrantholder to complete and file any
information reporting forms presently or subsequently required by the Commission
as a condition to the availability of an exemption, presently existing or
subsequently adopted, from the 1933 Act for the sale of the Warrant or Warrant
Shares, which is expressly understood not to include the completion or filing of
any registration statements or other forms used to register such securities for
sale under the 1933 Act or any state's securities laws.
PERMITTED TRANSFERS. Subject to Section 5.1 above and subject to all
applicable laws and rules, the Warrantholder may transfer this Warrant and any
Warrant Shares purchased hereunder.
ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price in
effect from time to time and the number of Warrant Shares shall be subject to
adjustment in certain cases as set forth in this Section 6.
SUBDIVISION OR COMBINATION. In the event the outstanding Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding Common Stock shall be combined into a smaller number of shares of
Common Stock, the Exercise Price shall simultaneously with the effectiveness of
such combination, be proportionately increased and the number of Warrant Shares
proportionately reduced. For the purpose of this Section 6, a distribution or
series of distributions of Common Stock to holders of Common Stock in which the
number of shares distributed is ten percent (10%) or more of the number of
shares of Common Stock upon which the distribution is to be made shall be deemed
to be a subdivision of Common Stock.
ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
In case of any reorganization of the Company (or any other corporation the
stock or other securities of which are at the time receivable on the exercise of
the Warrant) after the Issuance
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.
62
EXECUTION COPY
Date, or in case, after such date, the Company (or any such other corporation)
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Warrantholder, upon exercise of the Warrant as provided in Section 1
hereof at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of the Warrant prior
to such consummation, the stock or other securities or property to which the
Warrantholder would have been entitled upon such consummation if the
Warrantholder had exercised or converted the Warrant immediately prior thereto
(and such stock or securities shall be deemed to be "Warrant Shares" for the
purpose of this Warrant); in each such case, the terms of this Warrant,
including the exercise provisions of Section 1, shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
the Warrant after such consummation.
The Company shall not effect any consolidation, merger or conveyance of
all or substantially all of its assets unless prior to the consummation thereof
the successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation into or for the securities of which
the previously outstanding stock of the Company shall be changed in connection
with such consolidation or merger, or the corporation purchasing such assets, as
the case may be, shall assume by written instrument, in form and substance
reasonably satisfactory to the Warrantholder, executed and delivered in
accordance with Section 8.2 hereof, the obligation to deliver to the
Warrantholder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholder is entitled to purchase.
If a purchase, tender or exchange offer is made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock of the
Company, the Company shall not effect any consolidation, merger or sale with the
Person having made such offer or with any Affiliate of such Person, unless prior
to the consummation of such consolidation, merger or sale the Warrantholder
shall have been given a reasonable opportunity to then elect to receive either
the stock, securities or assets then issuable upon the exercise of the Warrant
or, if different, the stock, securities or assets, or the equivalent, issued to
previous holders of the Common Stock in accordance with such offer, computed as
though the Warrantholder hereof had been at the time of such offer, a holder of
the stock, securities or assets then purchasable upon the exercise or conversion
of the Warrant. As used in this paragraph 6.2.3. the term "Person" shall mean
and include an individual, a partnership, a corporation, a trust, a joint
venture, a limited liability company, an unincorporated organization and a
government or any department or agency thereof and an "Affiliate" of any Person
shall mean any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with, such other Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
Adjustment to Warrant Shares for Certain Dilutive Issuances.
Special Definitions. For purposes of this Subsection 6.3, the following
definitions shall apply:
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.
63
EXECUTION COPY
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Subsection 6.3.2 below, deemed to be
issued) by the Company after the Threshold Financing Closing Date other than:
Common Stock issued or issuable upon conversion of shares of
the Company's preferred stock, par value $.01 per share (the "Preferred Stock"),
outstanding as of the close of business on the Threshold Financing Closing Date;
Common Stock issued or issuable (i) upon exercise of the
Vertex Warrants outstanding as of the close of business on the Threshold
Financing Closing Date, (ii) in exchange for any shares of Preferred Stock held
by Vertex or (iii) pursuant to the letter agreement dated December 1, 2000,
between the Company and Vertex;
Common Stock granted, or issued or issuable upon the exercise
of Options granted, to employees, consultants, creditors or other persons
performing or providing services or products to the Company or any affiliate of
the Company, in connection with their employment, advisory or other relationship
with the Company, pursuant to stock grants, options or other arrangements
approved by the Board of Directors of the Company Shares of Common Stock or
Options previously issued pursuant to any such stock grants or option plans as
of the date that the exclusion hereunder is being determined shall be included
in calculating the number of shares of Common Stock subject to such exclusion;
Common Stock issued as a dividend or distribution on the
Preferred Stock;
Common Stock issued in any public offering of Common Stock or
Convertible Securities;
Common Stock issued in connection with any strategic alliance,
license, distribution, marketing or collaboration agreements, up to an aggregate
of 500,000 shares of Common Stock (as such number may be adjusted in connection
with any of the events described in Section 6.1); and
issuances with respect to which an adjustment is made pursuant
to Section 6.1 above.
"Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities including Options, directly or
indirectly convertible into or exchangeable for Common Stock.
"Factor" shall initially be one (1) and shall be subject to
adjustment pursuant to this Section 6.3.
"Option" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Stock or Convertible Securities.
"Threshold Financing" shall mean the Company's next equity
financing in which Convertible Securities or shares of Common Stock are issued
or series or group of such
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.
64
EXECUTION COPY
financings occurring after the Issuance Date and resulting in proceeds to the
Company in an aggregate amount equal to or greater than $10,000,000.
"Threshold Financing Closing Date" shall mean the closing date
of the Threshold Financing and in the event any potential Threshold Financing
has multiple closing dates or several financings occur prior to a Threshold
Financing occurring, the Threshold Financing Closing Date shall mean the date
the applicable financing or financings first result in the receipt by the
Company of aggregate proceeds in excess of $10,000,000.
"Threshold Price" shall mean (i) the consideration per share
(determined pursuant to Subsection 6.3.5 hereof) paid by the investors in the
Threshold Financing or (ii) in the event several financings occur prior to a
Threshold Financing occurring, the average of the amount of consideration per
share (determined pursuant to Subsection 6.3.5 hereof) paid by the investors in
each component financing comprising the Threshold Financing, (as adjusted to
reflect stock splits or reverse stock splits occurring after such financing but
prior to the Threshold Financing Closing Date); in each case provided however
that if Convertible Securities are issued therein, such Convertible Securities
shall initially convert at the rate of one Convertible Security for one share of
Common Stock or if another conversion ratio is used, CFFTI and the Company shall
jointly determine the Threshold Price in good faith taking into account the
price per share paid and the rate at which such Convertible Security converts
into Common Stock.
"Vertex Warrants" shall mean the Company's warrants for the
purchase of Common Stock issued to Vertex Pharmaceuticals Incorporated.
Deemed Issue of Additional Shares of Common Stock.
6.3.2.1 IF THE COMPANY AT ANY TIME OR FROM TIME TO TIME AFTER THE
THRESHOLD FINANCING CLOSING DATE SHALL ISSUE ANY OPTIONS (OTHER THAN OPTIONS
EXCLUDED PURSUANT TO SECTION 6.3.1(C) HEREOF) OR CONVERTIBLE SECURITIES OR SHALL
FIX A RECORD DATE FOR THE DETERMINATION OF HOLDERS OF ANY CLASS OF SECURITIES
ENTITLED TO RECEIVE ANY SUCH OPTIONS OR CONVERTIBLE SECURITIES, THEN THE MAXIMUM
NUMBER OF SHARES OF COMMON STOCK (AS SET FORTH IN THE INSTRUMENT RELATING
THERETO WITHOUT REGARD TO ANY PROVISION CONTAINED THEREIN FOR A SUBSEQUENT
ADJUSTMENT OF SUCH NUMBER) ISSUABLE UPON THE EXERCISE OF SUCH OPTIONS OR, IN THE
CASE OF CONVERTIBLE SECURITIES AND OPTIONS THEREFOR, THE CONVERSION OR EXCHANGE
OF SUCH CONVERTIBLE SECURITIES, SHALL BE DEEMED TO BE ADDITIONAL SHARES OF
COMMON STOCK ISSUED AS OF THE TIME OF SUCH ISSUE OR, IN CASE SUCH A RECORD DATE
SHALL HAVE BEEN FIXED, AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE, PROVIDED
THAT ADDITIONAL SHARES OF COMMON STOCK SHALL NOT BE DEEMED TO HAVE BEEN ISSUED
UNLESS THE CONSIDERATION PER SHARE (DETERMINED PURSUANT TO SUBSECTION 6.3.5
HEREOF) OF SUCH ADDITIONAL SHARES OF COMMON STOCK WOULD BE LESS THAN THE
THRESHOLD PRICE THEN IN EFFECT, AND PROVIDED FURTHER THAT IN ANY CASE IN WHICH
ADDITIONAL SHARES OF COMMON STOCK ARE DEEMED TO BE ISSUED:
no further adjustment in the Factor shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities;
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.
65
EXECUTION COPY
if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Factor computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
no readjustment pursuant to clause (B) above shall have the
effect of increasing the Factor to an amount which exceeds the lower of (i) the
Factor on the original adjustment date, or (ii) the Factor that would have
resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;
upon the expiration or termination of any unexercised Option,
the Factor shall be readjusted, and the Additional Shares of Common Stock deemed
issued as the result of the original issue of such Option shall no longer be
deemed issued for the purposes of any subsequent adjustment of the Factor; and
in the event of any change in the number of shares of Common
Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Factor then in effect shall forthwith be
readjusted to such Factor as would have obtained had the adjustment that was
made upon the issuance of such Option or Convertible Security (prior to such
change) been made upon the basis of such change, but no further adjustment shall
be made for the actual issuance of Common Stock upon the exercise or conversion
of any such Option or Convertible Security.
No Adjustment of Number of Shares. No adjustment to the Factor shall be
made unless the consideration per share (determined pursuant to Subsection
6.3.5) for an Additional Share of Common Stock issued or deemed to be issued by
the Company hereunder is less than the Threshold Price then in effect.
Adjustment of Factor and Threshold Price Upon Issuance of Additional
Shares of Common Stock. In the event the Company shall issue or sell (or
pursuant to Section 6.3.2 be deemed to have issued) Additional Shares of Common
Stock without consideration or for a consideration per share less than the
Threshold Price then in effect (each such event a "Dilutive Event"), then and in
such Dilutive Event, the number of Warrant Shares subject to purchase under this
Warrant shall be increased to a number that is determined by dividing the number
of Warrant Shares prior to the Dilutive Event by the factor determined by
reference to the formula below (the "Factor") and the Exercise Price in effect
prior to the Dilutive Event shall be decreased to a price that is determined by
multiplying such price by the Factor. The Factor shall be determined as follows:
Factor = CSB + X
-------
CSA
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.
66
EXECUTION COPY
where
CSB = the total outstanding shares of Common Stock outstanding and deemed
to outstanding immediately prior to the dilutive transaction (calculated
to include the number of shares of Common Stock issuable upon conversion
of the outstanding Options and Convertible Securities).
X = the number of shares determined by dividing the aggregate
consideration received in the dilutive transaction (as determined by
reference to Section 6.3.5) divided by the Threshold Price.
CSA = the total outstanding shares of Common Stock immediately after the
dilutive transaction (calculated to include the number of shares of Common
Stock issuable upon conversion of the outstanding Options and Convertible
Securities).
In addition, the Threshold Price for future determination under this Section 6.3
shall be adjusted by multiplying the Threshold Price in effect immediately prior
to the dilutive issuance by the Factor.
Determination of Consideration. For purposes of this Section 6.3, the
consideration received by the Company for the issue of any Additional Shares of
Common Stock shall be computed as follows:
6.3.5.1 CASH, SERVICES AND PROPERTY: SUCH CONSIDERATION SHALL:
insofar as it consists of cash, be computed at the aggregate
of cash received by the Company, excluding amounts paid or payable for accrued
interest or accrued dividends;
insofar as it consists of services or property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
in the event Additional Shares of Common Stock are issued
together with other assets of the Company for consideration which includes cash,
property or services, be the proportion of such consideration so received for
the Additional Shares of Common Stock as determined in good faith by the Board
of Directors.
6.3.5.2 OPTIONS AND CONVERTIBLE SECURITIES. THE CONSIDERATION PER
SHARE RECEIVED BY THE COMPANY FOR OPTIONS AND CONVERTIBLE SECURITIES SHALL BE
DETERMINED BY DIVIDING
the total amount of cash, services or property, if any,
received or receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for
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.
67
EXECUTION COPY
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
the maximum number of shares of Common Stock (as set forth in
the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
NOTICE OF ADJUSTMENT. When any adjustment is required to be made in the
Exercise Price or the Factor, the Company shall promptly notify the
Warrantholder of such event, of the calculation by which such adjustment is to
be made and of the resulting Exercise Price and Factor.
DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event occurs as to
which in the opinion of the Board of Directors the other provisions of this
Section 6 are not strictly applicable or if strictly applicable would not fairly
protect the purchase and exercise rights of the Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such purchase rights
as aforesaid.
RESERVATION OF WARRANT SHARES. The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock the full number
of Warrant Shares deliverable upon exercise of the Warrant, as such number may
change from time to time pursuant to the terms hereof. Also, the Company shall,
at its own expense, take all such actions and obtain all such permits and orders
as may be necessary to enable the Company lawfully to issue fully paid and
nonassessable Warrant Shares upon the exercise or conversion of the Warrant,
provided, however, this Section 7 shall not be construed to require the Company
to register the Warrant or the Warrant Shares under the 1933 Act or any state's
securities laws.
MISCELLANEOUS.
ENTIRE AGREEMENT. This Warrant, the Registration Rights Agreement of even
date herewith between the Company and the Holder and the Alliance Agreement
constitute the full and entire understanding and agreements between the parties
hereto with respect to the subjects hereof and thereof.
SUCCESSORS AND ASSIGNS. The terms and conditions of this Warrant shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, except as expressly provided otherwise herein.
GOVERNING LAW. This Warrant shall be governed by and construed under the
internal laws of the Commonwealth of Massachusetts (without reference or regard
to conflict or choice of law provisions).
NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery or the day following deposit with a nationally recognized
overnight courier service, or upon the fifth day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Holder, Cystic
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.
68
EXECUTION COPY
Fibrosis Foundation Therapeutics, Inc., at 0000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX
00000, (000) 000-0000 (fax), Attention: Xx. Xxxxxx Xxxxx, or at such other
address as shall have furnished to the Company in writing, with a copy to
Xxxxxxx Berlin Xxxxxxx Xxxxxxxx, LLP, 0000 X Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxx, X.X. 00000, (000) 000-0000 (fax), Attention: Xxxxxxx X. Xxxxxxx,
Esquire, (b) if to the Company, a copy should be sent to 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, (000) 000-0000 (fax), Attention: Treasurer, or at such
other address as the Company shall have furnished in writing to the
Warrantholder, with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, (000) 000-0000 (fax),
Attention: Xxxxxxxx X. Xxxxxxx, Esquire, or (c) if to any other Warrantholder,
at such address as such holder shall have furnished to the Company in writing,
or, until such Warrantholder so furnishes an address to the Company, then to and
at the address of the last holder of such Warrant who so furnished an address to
the Company.
DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or
remedy accruing to any holder of any securities issued or sold or to be issued
or sold hereunder, upon any breach or default of the Company under this Warrant,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Warrant, or any waiver on the part of any holder of any
provisions or conditions of this Warrant must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Warrant or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
SURVIVAL. The representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this Warrant, except as
expressly provided otherwise herein.
WAIVERS AND AMENDMENTS. With the written consent of the record or
beneficial holders of more than 50% in interest of the Warrant Shares, the
obligations of the Company and the rights of the Warrantholders may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its board of
directors, may enter into a supplemental agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Warrant; provided, however, that no such waiver or supplemental agreement
shall reduce the aforesaid percentage of the Warrant Shares, the holders of
which are required to consent to any waiver or supplemental agreement, without
the consent of the record or beneficial holders of all the Warrant Shares
(treated as if exercised). Upon the effectuation of each such waiver, consent,
agreement of amendment or modification the Company promptly shall give written
notice thereof to the record holders of the Warrant and the Warrant Shares. This
Warrant or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 8.7.
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.
69
EXECUTION COPY
SEVERABILITY. If one or more provisions of this Warrant are held to be
invalid, illegal or unenforceable under applicable law, such provision shall be
modified in such manner as to be valid, legal and enforceable, but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant as if such provision
were not included in either case, and the balance of this Warrant shall not in
any way be affected or impaired thereby and shall be enforceable in accordance
with its terms.
REGISTERED HOLDER. The Company may deem and treat the registered
Warrantholder(s) hereof as the absolute owner(s) of this Warrant
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise or conversion hereof, of any
distribution to the Warrantholder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Other than as set
forth herein, this Warrant does not entitle any Warrantholder hereof to any
rights of a stockholder of the Company.
TITLES AND SUBTITLES. The titles of the sections and subsections of this
Warrant are for convenience and are not to be considered in construing this
Warrant.
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.
70
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.
ALTUS BIOLOGICS INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxx
President
ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:
CYSTIC FIBROSIS FOUNDATION
THERAPETICS, INC.
By: _________________________
Name: Xx. Xxxxxx Xxxxx
Title: President
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.
EXECUTION COPY
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.
ALTUS BIOLOGICS INC.
By: ______________________
Xxxxx Xxxxxxxx
President
ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By: /s/ Xx. Xxxxxx Xxxxx
----------------------------
Name: Xx. Xxxxxx Xxxxx
Title: President
SIGNATIRE PAGE FOR WARRANT B
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.
72
EXECUTION COPY
NOTICE OF EXERCISE
(To be Executed by the Registered Warrantholder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ________________________________________ (______________) shares of the
Common Stock, $.01 par value, of Altus Biologics Inc., a Massachusetts
corporation, covered by Warrant No. W-___, according to the conditions thereof
and herewith makes payment of the Exercise Price of such Warrant Shares in full.
I. Such payment is hereby tendered in the form of $__________________ by
wire transfer or certified or bank check.
II. The undersigned elects to receive the net value of the Warrant Shares
pursuant to Section 1.2 of the Warrant.
III. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Warrant and the shares of Common Stock to be issued upon
exercise thereof are being acquired solely for the account of the undersigned
and not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of all or any portion of
the Warrant or such Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.
Printed Name of Warrantholder: ___________________________
Signature: ___________________________
Title (if signing on
behalf of a Warrantholder): ___________________________
Date: ___________________________
Address: ___________________________
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.
EXECUTION COPY
FORM OF ASSIGNMENT
For Value Received, the undersigned registered owner of this Warrant
issued by Altus Biologics Inc. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant No. W-______, with respect to the number of Warrant Shares of Common
Stock set forth below:
Name of Assignee Address Number of Warrant Shares
---------------- ------- ------------------------
and does hereby irrevocably constitute and appoint ____________________ attorney
to make such transfer on the books of Altus Biologics Inc., maintained for such
purpose, with full power of substitution in the premises.
Dated: ___________________ _________________________________
Signature of registered owner
Witness: _________________
The Assignee acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws. Further, the Assignee has acknowledged that upon
exercise of this Warrant, the Assignee shall, if requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or sale in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
_________________________________
Signature of Assignee
Print Name: ____________________
Print Title: ____________________
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.
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-5B 169,600 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 One Hundred Sixty Nine
Thousand Six Hundred (169,600) (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, 2011 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 Approval 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); or (iv) a Company Default (as
defined in the Alliance Agreement).
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.
75
EXECUTION COPY
EXERCISE OF WARRANT.
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.
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 Warrant Shares
computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Warrant Shares to be issued to the Warrantholder.
Y = the number of Warrant Shares under this Warrant (or such lesser
number of Shares as the Warrantholder elects to purchase, in
the case of a partial exercise).
A = the fair market value of one share of Common Stock on the date
of exercise.
B = the Exercise Price.
As used herein, the fair market value of the Common Stock shall be deemed
to be the mean between the highest and lowest quoted selling prices as reported
in The Wall Street Journal on the last trading day preceding the date of
determination on the primary securities exchange where the Common Stock of the
Company is traded or if not traded on a securities exchange, then on The Nasdaq
Stock Market, or if there were no sales on the applicable date, on the next
preceding date within a reasonable period (as determined in the sole discretion
of the Board of Directors of the Company (the "Board of Directors")) on which
there were sales. In the event that there were no sales in such a market within
a reasonable period, the fair market value shall be as determined in good faith
by the Board of Directors. In the event the Warrantholder disagrees with the
fair market value determined by the Board of Directors, the Company and 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.
76
EXECUTION COPY
Warrantholder shall negotiate in good faith and use their best efforts to agree
upon the selection of an independent appraiser, who will have 30 days in which
to determine the fair market value of the Common Stock, and whose determination
will be final and binding on all parties concerned. If no individual appraiser
can be agreed upon, each party shall select an appraiser and the two selected
appraisers shall select a third to serve as the independent appraiser for
purposes of determining fair market value. All costs of the independent
appraiser shall be borne equally by the Company and the Warrantholder.
RECORD HOLDER. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided in Section 1.2. above and the person entitled to receive
the Warrant Shares of Common Stock issuable upon such exercise or conversion
shall be treated for all purposes as the holder of such Warrant Shares of record
as of the close of business on such date.
PAYMENT OF TAXES. The Company shall pay all taxes and other governmental
charges (other than income taxes) that may be imposed in respect of the issue of
the Warrant Shares or any portion thereof. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for the Warrant Shares or any portion
thereof in any name other than that of the registered holder of the Warrant
surrendered in connection with the purchase of such shares, and in such case the
Company shall not be required to issue or deliver any certificate until such tax
or other charge has been paid or it has been established to the Company's
satisfaction that no tax or other charge is due.
TRANSFER AND EXCHANGE.
TRANSFER. Subject to the terms hereof, including, without limitation,
Sections 5.1 and 5.3, the Warrant and all rights thereunder are transferable, in
whole or in part, on the books of the Company maintained for such purpose at its
office designated in Section 8.4 hereof by the registered holder hereof in
person or by duly authorized attorney, upon surrender of the Warrant properly
endorsed; provided, however, that this Warrant may not be transferred in part
unless such transfer is to a transferee who pursuant to such transfer receives
the right to purchase at least 75,000 shares of Common Stock. Upon any partial
transfer, the Company will issue and deliver to such holder a new warrant or
warrants with respect to the Warrant Shares not so transferred. Each taker and
holder of the Warrant, by taking or holding the same, consents and agrees that
the Warrant when endorsed in blank shall be deemed negotiable, and that when the
Warrant shall have been so endorsed, the holder may be treated by the Company
and all other persons dealing with the Warrant as the absolute owner of such
Warrant for any purpose and as the person entitled to exercise the rights
represented thereby, or to the transfer on the books of the Company, any notice
to the contrary notwithstanding; but until such transfer on such books, the
Company may treat the registered holder of the Warrant as the owner for all
purposes. The term "Warrant" as used herein shall include the Warrant and, any
warrants delivered in substitution or exchange therefor as provided herein.
EXCHANGE. The Warrant is exchangeable for a warrant or warrants for the
same aggregate number of Warrant Shares, each new Warrant to represent the right
to purchase such number of Warrant Shares as the holder shall designate at the
time of such exchange. The Warrant may be subdivided, at the Warrantholder's
option, into several warrants to purchase 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.
77
EXECUTION COPY
Warrant Shares (collectively, also referred to as the "Warrant"). Such
subdivision may be accomplished in accordance with the provisions of this
Section 4.
TRANSFER OF SECURITIES.
RESTRICTIONS ON TRANSFER. Neither the Warrant nor any of the Warrant
Shares shall be transferable except upon the conditions specified in this
Section 5.1, which conditions are intended to insure compliance with applicable
provisions of the 1933 Act.
Unless and until otherwise permitted by this Section 5.1, the Warrant and
each certificate or other document evidencing any of the Warrant Shares shall be
endorsed with the legend substantially in the following form:
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 TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.
Neither the Warrant nor any of the Warrant Shares shall be transferred and
the Company shall not be required to register any such transfer, unless and
until one of the following events shall have occurred:
the Company shall have received an opinion of counsel reasonably
acceptable to the Company and its counsel, stating that the contemplated
transfer is exempt from registration under the 1933 Act as then in effect, and
the Rules and Regulations of the Commission thereunder. Within ten days after
delivery to the Company and its counsel of such an opinion, the Company either
shall deliver to the proposed transferor a statement to the effect that such
opinion is not satisfactory in the reasonable opinion of its counsel (and shall
specify the legal analysis supporting any such conclusion) or shall authorize
the Company's transfer agent to make the requested transfer;
the Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or
(i) the Warrant or the Warrant Shares, as the case may be, have been
registered pursuant to a registration statement filed by or on behalf of the
Company, (ii) such registration statement has been declared effective by the
Commission under the 1933 Act and is not subject to any stop order, and (iii)
the Company has not sent a notice to the Warrantholder requesting that sales
under such registration statement and the related prospectus should be halted
until such time as the Company has corrected or updated such registration
statement and the related prospectus.
The restrictions on transfer imposed by Section 5.1 shall cease and terminate as
to the Warrant or the Warrant Shares, as the case may be, when (i) such
securities shall have been effectively
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.
78
EXECUTION COPY
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration, or (ii) an acceptable opinion as described in Section
5.1.2(a) or a "no action" letter described in Section 5.1.2(b) states that
future transfers of such securities by the transferor or the contemplated
transferee would be exempt from registration under the 1933 Act. When the
restrictions on transfer contained in this Section 5.1 have terminated as
provided above, the holder of the securities as to which such restrictions shall
have terminated or the transferee of such holder shall be entitled to receive
from the Company, at the expense of the Company, a new Warrant or a new share
certificate, as the case may be, not bearing the legend set forth in Section
5.1.1 hereof.
COOPERATION. The Company shall cooperate in supplying such information as
may be reasonably requested by the Warrantholder to complete and file any
information reporting forms presently or subsequently required by the Commission
as a condition to the availability of an exemption, presently existing or
subsequently adopted, from the 1933 Act for the sale of the Warrant or Warrant
Shares, which is expressly understood not to include the completion or filing of
any registration statements or other forms used to register such securities for
sale under the 1933 Act or any state's securities laws.
PERMITTED TRANSFERS. Subject to Section 5.1 above and subject to all
applicable laws and rules, the Warrantholder may transfer this Warrant and any
Warrant Shares purchased hereunder.
ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price in
effect from time to time and the number of Warrant Shares shall be subject to
adjustment in certain cases as set forth in this Section 6.
SUBDIVISION OR COMBINATION. In the event the outstanding Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding Common Stock shall be combined into a smaller number of shares of
Common Stock, the Exercise Price shall simultaneously with the effectiveness of
such combination, be proportionately increased and the number of Warrant Shares
proportionately reduced. For the purpose of this Section 6, a distribution or
series of distributions of Common Stock to holders of Common Stock in which the
number of shares distributed is ten percent (10%) or more of the number of
shares of Common Stock upon which the distribution is to be made shall be deemed
to be a subdivision of Common Stock.
ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
In case of any reorganization of the Company (or any other corporation the
stock or other securities of which are at the time receivable on the exercise of
the Warrant) after the Issuance Date, or in case, after such date, the Company
(or any such other corporation) shall consolidate with or merge into another
corporation or convey all or substantially all of its assets to another
corporation, then and in each such case the Warrantholder, upon exercise of the
Warrant as provided in Section 1 hereof at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other
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.
79
EXECUTION COPY
securities and property receivable upon the exercise of the Warrant prior to
such consummation, the stock or other securities or property to which the
Warrantholder would have been entitled upon such consummation if the
Warrantholder had exercised or converted the Warrant immediately prior thereto
(and such stock or securities shall be deemed to be "Warrant Shares" for the
purpose of this Warrant); in each such case, the terms of this Warrant,
including the exercise provisions of Section 1, shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
the Warrant after such consummation.
The Company shall not effect any consolidation, merger or conveyance of
all or substantially all of its assets unless prior to the consummation thereof
the successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation into or for the securities of which
the previously outstanding stock of the Company shall be changed in connection
with such consolidation or merger, or the corporation purchasing such assets, as
the case may be, shall assume by written instrument, in form and substance
reasonably satisfactory to the Warrantholder, executed and delivered in
accordance with Section 8.2 hereof, the obligation to deliver to the
Warrantholder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholder is entitled to purchase.
If a purchase, tender or exchange offer is made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock of the
Company, the Company shall not effect any consolidation, merger or sale with the
Person having made such offer or with any Affiliate of such Person, unless prior
to the consummation of such consolidation, merger or sale the Warrantholder
shall have been given a reasonable opportunity to then elect to receive either
the stock, securities or assets then issuable upon the exercise of the Warrant
or, if different, the stock, securities or assets, or the equivalent, issued to
previous holders of the Common Stock in accordance with such offer, computed as
though the Warrantholder hereof had been at the time of such offer, a holder of
the stock, securities or assets then purchasable upon the exercise or conversion
of the Warrant. As used in this paragraph 6.2.3. the term "Person" shall mean
and include an individual, a partnership, a corporation, a trust, a joint
venture, a limited liability company, an unincorporated organization and a
government or any department or agency thereof and an "Affiliate" of any Person
shall mean any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with, such other Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
Adjustment to Warrant Shares for Certain Dilutive Issuances.
Special Definitions. For purposes of this Subsection 6.3, the following
definitions shall apply:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued (or, pursuant to Subsection 6.3.2 below, deemed to be issued) by
the Company after the Threshold Financing Closing Date other than:
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.
80
EXECUTION COPY
Common Stock issued or issuable upon conversion of shares of
the Company's preferred stock, par value $.01 per share (the "Preferred Stock"),
outstanding as of the close of business on the Threshold Financing Closing Date;
Common Stock issued or issuable (i) upon exercise of the
Vertex Warrants outstanding as of the close of business on the Threshold
Financing Closing Date, (ii) in exchange for any shares of Preferred Stock held
by Vertex or (iii) pursuant to the letter agreement dated December 1, 2000,
between the Company and Vertex;
Common Stock granted, or issued or issuable upon the exercise
of Options granted, to employees, consultants, creditors or other persons
performing or providing services or products to the Company or any affiliate of
the Company, in connection with their employment, advisory or other relationship
with the Company, pursuant to stock grants, options or other arrangements
approved by the Board of Directors of the Company. Shares of Common Stock or
Options previously issued pursuant to any such stock grants or option plans as
of the date that the exclusion hereunder is being determined shall be included
in calculating the number of shares of Common Stock subject to such exclusion;
Common Stock issued as a dividend or distribution on the
Preferred Stock;
Common Stock issued in any public offering of Common Stock or
Convertible Securities;
Common Stock issued in connection with any strategic alliance,
Iicense, distribution, marketing or collaboration agreement up to an aggregate
of 500,000 shares of Common Stock (as such number may be adjusted in connection
with any of the events described in Section 6.1); and
issuances with respect to which an adjustment is made pursuant
to Section 6.1 above.
"Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities including Options, directly or
indirectly convertible into or exchangeable for Common Stock.
"Factor" shall initially be one (1) and shall be subject to
adjustment pursuant to this Section 6.3.
"Option" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Stock or Convertible Securities.
"Threshold Financing" shall mean the Company's next equity
financing in which Convertible Securities or shares of Common Stock are issued
or series or group of such financings occurring after the Issuance Date and
resulting in proceeds to the Company in an aggregate amount equal to or greater
than $10,000,000.
"Threshold Financing Closing Date" shall mean the closing date
of the Threshold Financing and in the event any potential Threshold Financing
has multiple closing
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.
81
EXECUTION COPY
dates or several financings occur prior to a Threshold Financing occurring, the
Threshold Financing Closing Date shall mean the date the applicable financing or
financings first result in the receipt by the Company of aggregate proceeds in
excess of $10,000,000.
"Threshold Price" shall mean (i) the consideration per share
(determined pursuant to Subsection 6.3.5 hereof) paid by the investors in the
Threshold Financing or (ii) in the event several financings occur prior to a
Threshold Financing occurring, the average of the amount of consideration per
share (determined pursuant to Subsection 6.3.5 hereof) paid by the investors in
each component financing comprising the Threshold Financing, (as adjusted to
reflect stock splits or reverse stock splits occurring after such financing but
prior to the Threshold Financing Closing Date); in each case provided however
that if Convertible Securities are issued therein, such Convertible Securities
shall initially convert at the rate of one Convertible Security for one share of
Common Stock or if another conversion ratio is used, CFFTI and the Company shall
jointly determine the Threshold Price in good faith taking into account the
price per share paid and the rate at which such Convertible Security converts
into Common Stock.
"Vertex Warrants" shall mean the Company's warrants for the
purchase of Common Stock issued to Vertex Pharmaceuticals Incorporated.
Deemed Issue of Additional Shares of Common Stock.
6.3.2.1 If the Company at any time or from time to time after the
Threshold Financing Closing Date shall issue any Options (other than Options
excluded pursuant to Section 6.3.1(C) hereof) or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subsection 6.3.5
hereof) of such Additional Shares of Common Stock would be less than the
Threshold Price then in effect, and provided further that in any case in which
Additional Shares of Common Stock are deemed to be issued:
no further adjustment in the Factor shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities;
if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the consideration
payable to the Company, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Factor computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
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.
82
EXECUTION COPY
any such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
no readjustment pursuant to clause (B) above shall have the effect
of increasing the Factor to an amount which exceeds the lower of (i) the Factor
on the original adjustment date, or (ii) the Factor that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
upon the expiration or termination of any unexercised Option, the
Factor shall be readjusted, and the Additional Shares of Common Stock deemed
issued as the result of the original issue of such Option shall no longer be
deemed issued for the purposes of any subsequent adjustment of the Factor; and
in the event of any change in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange of any Option or Convertible
Security, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Factor then in effect shall forthwith be
readjusted to such Factor as would have obtained had the adjustment that was
made upon the issuance of such Option or Convertible Security (prior to such
change) been made upon the basis of such change, but no further adjustment shall
be made for the actual issuance of Common Stock upon the exercise or conversion
of any such Option or Convertible Security.
No Adjustment of Number of Shares. No adjustment to the Factor shall be
made unless the consideration per share (determined pursuant to Subsection
6.3.5) for an Additional Share of Common Stock issued or deemed to be issued by
the Company hereunder is less than the Threshold Price then in effect.
Adjustment of Factor and Threshold Price Upon Issuance of Additional
Shares of Common Stock. In the event the Company shall issue or sell (or
pursuant to Section 6.3.2 be deemed to have issued) Additional Shares of Common
Stock without consideration or for a consideration per share less than the
Threshold Price then in effect (each such event a "Dilutive Event"), then and in
such Dilutive Event, the number of Warrant Shares subject to purchase under this
Warrant shall be increased to a number that is determined by dividing the number
of Warrant Shares prior to the Dilutive Event by the factor determined by
reference to the formula below (the "Factor") and the Exercise Price in effect
prior to the Dilutive Event shall be decreased to a price that is determined by
multiplying such price by the Factor. The Factor shall be determined as follows:
Factor = CSB + X
----------
CSA
where
CSB = the total outstanding shares of Common Stock outstanding and
deemed to outstanding immediately prior to the dilutive transaction
(calculated to include the number of shares of Common Stock issuable
upon conversion of the outstanding Options and Convertible Securities).
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.
83
EXECUTION COPY
X = the number of shares determined by dividing the aggregate
consideration received in the dilutive transaction (as determined by
reference to Section 6.3.5) divided by the Threshold Price.
CSA = the total outstanding shares of Common Stock immediately after the
dilutive transaction (calculated to include the number of shares of Common
Stock issuable upon conversion of the outstanding Options and Convertible
Securities).
In addition, the Threshold Price for future determination under this Section 6.3
shall be adjusted by multiplying the Threshold Price in effect immediately prior
to the dilutive issuance by the Factor.
Determination of Consideration. For purposes of this Section 6.3, the
consideration received by the Company for the issue of any Additional Shares of
Common Stock shall be computed as follows:
6.3.5.1 Cash, Services and Property: Such consideration shall:
insofar as it consists of cash, be computed at the aggregate
of cash received by the Company, excluding amounts paid or payable for accrued
interest or accrued dividends;
insofar as it consists of services or property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
in the event Additional Shares of Common Stock are issued
together with other assets of the Company for consideration which includes cash,
property or services, be the proportion of such consideration so received for
the Additional Shares of Common Stock as determined in good faith by the Board
of Directors.
6.3.5.2 Options and Convertible Securities. The consideration per
share received by the Company for Options and Convertible Securities shall be
determined by dividing
the total amount of cash, services or property, if any,
received or receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
the maximum number of shares of Common Stock (as set forth in
the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
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.
84
EXECUTION COPY
NOTICE OF ADJUSTMENT. When any adjustment is required to be made in the
Exercise Price or the Factor, the Company shall promptly notify the
Warrantholder of such event, of the calculation by which such adjustment is to
be made and of the resulting Exercise Price and Factor.
DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event occurs as to
which in the opinion of the Board of Directors the other provisions of this
Section 6 are not strictly applicable or if strictly applicable would not fairly
protect the purchase and exercise rights of the Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such purchase rights
as aforesaid.
RESERVATION OF WARRANT SHARES. The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock the full number
of Warrant Shares deliverable upon exercise of the Warrant, as such number may
change from time to time pursuant to the terms hereof. Also, the Company shall,
at its own expense, take all such actions and obtain all such permits and orders
as may be necessary to enable the Company lawfully to issue fully paid and
nonassessable Warrant Shares upon the exercise or conversion of the Warrant,
provided, however, this Section 7 shall not be construed to require the Company
to register the Warrant or the Warrant Shares under the 1933 Act or any state's
securities laws.
MISCELLANEOUS.
ENTIRE AGREEMENT. This Warrant, the Registration Rights Agreement of even
date herewith between the Company and the Holder and the Alliance Agreement
constitute the full and entire understanding and agreements between the parties
hereto with respect to the subjects hereof and thereof.
SUCCESSORS AND ASSIGNS. The terms and conditions of this Warrant shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, except as expressly provided otherwise herein.
GOVERNING LAW. This Warrant shall be governed by and construed under the
internal Iaws of the Commonwealth of Massachusetts (without reference or regard
to conflict or choice of law provisions).
NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery or the day following deposit with a nationally recognized
overnight courier service, or upon the fifth day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Holder, Cystic Fibrosis
Foundation Therapeutics, Inc., at 0000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX 00000, (301)
000-0000 (fax), Attention: Xx. Xxxxxx Xxxxx, or at such other address as shall
have furnished to the Company in writing, with a copy to Xxxxxxx Berlin Xxxxxxx
Xxxxxxxx, LLP, 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, (202)
000-0000 (fax), Attention: Xxxxxxx X. Xxxxxxx, Esquire, (b) if to the Company, a
copy should be sent to 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, (000) 000-0000
(fax), Attention: Treasurer, or at such other address as the Company shall have
furnished in writing to the Warrantholder, with a copy to Mintz, Levin, Cohn,
Ferris,
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.
85
EXECUTION COPY
Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
(000) 000-0000 (fax), Attention: Xxxxxxxx X. Xxxxxxx, Esquire, or (c) if to any
other Warrantholder, at such address as such holder shall have furnished to the
Company in writing, or, until such Warrantholder so furnishes an address to the
Company, then to and at the address of the last holder of such Warrant who so
furnished an address to the Company.
DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or
remedy accruing to any holder of any securities issued or sold or to be issued
or sold hereunder, upon any breach or default of the Company under this Warrant,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Warrant, or any waiver on the part of any holder of any
provisions or conditions of this Warrant must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Warrant or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
SURVIVAL. The representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this Warrant, except as
expressly provided otherwise herein.
WAIVERS AND AMENDMENTS. With the written consent of the record or
beneficial holders of more than 50% in interest of the Warrant Shares, the
obligations of the Company and the rights of the Warrantholders may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its board of
directors, may enter into a supplemental agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Warrant; provided, however, that no such waiver or supplemental agreement
shall reduce the aforesaid percentage of the Warrant Shares, the holders of
which are required to consent to any waiver or supplemental agreement, without
the consent of the record or beneficial holders of all the Warrant Shares
(treated as if exercised). Upon the effectuation of each such waiver, consent,
agreement of amendment or modification. the Company promptly shall give written
notice thereof to the record holders of the Warrant and the Warrant Shares. This
Warrant or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 8.7.
SEVERABILITY. If one or more provisions of this Warrant are held to be
invalid, illegal or unenforceable under applicable law, such provision shall be
modified in such manner as to be valid, legal and enforceable, but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant as if such provision
were not included in either case, and the balance of this Warrant shall not in
any way be affected or impaired thereby and shall be enforceable in accordance
with its terms.
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.
86
EXECUTION COPY
REGISTERED HOLDER. The Company may deem and treat the registered
Warrantholder(s) hereof as the absolute owners) of this Warrant (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise or conversion hereof, of any distribution to the
Warrantholder(s) hereof, and for all other purposes, and the Company shall not
be affected by any notice to the contrary. Other than as set forth herein, this
Warrant does not entitle any Warrantholder hereof to any rights of a stockholder
of the Company.
TITLES AND SUBTITLES. The titles of the sections and subsections of this
Warrant are for convenience and are not to be considered in construing this
Warrant.
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.
87
EXECUTION COPY
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.
ALTUS BIOLOGICS INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
President
ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:
CYSTIC FIBROSIS FOUNDATION
THERAPETICS, INC.
By:
----------------------------------
Name: Xx. Xxxxxx Xxxxx
Title: President
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.
88
EXECUTION COPY
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.
ALTUS BIOLOGICS INC.
By:
--------------------------------
Xxxxx Xxxxxxxx
President
ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By: /s/ Xx. Xxxxxx Xxxxx
---------------------------------
Name: Xx. Xxxxxx Xxxxx
Title: President
SIGNATURE PAGE FOR WARRANT A
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.
89
EXECUTION COPY
NOTICE OF EXERCISE
(To be Executed by the Registered Warrantholder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ___________ _______________(________) shares of the Common Stock, $.01
par value, of Altus Biologics Inc., a Massachusetts corporation, covered by
Warrant No. W-___, according to the conditions thereof and herewith makes
payment of the Exercise Price of such Warrant Shares in full.
I. Such payment is hereby tendered in the form of $______________ by wire
transfer or certified or bank check.
II The undersigned elects to receive the net value of the Warrant Shares
pursuant to Section 1.2 of the Warrant.
III. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Warrant and the shares of Common Stock to be issued upon
exercise thereof are being acquired solely for the account of the undersigned
and not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of all or any portion of
the Warrant or such Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.
Printed Name of Warrantholder: __________________________
Signature: __________________________
Title (if signing on
behalf of a Warrantholder): __________________________
Date: __________________________
Address: __________________________
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.
90
EXECUTION COPY
FORM OF ASSIGNMENT
For Value Received, the undersigned registered owner of this Warrant
issued by Altus Biologics Inc. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant No. W-______, with respect to the number of Warrant Shares of Common
Stock set forth below:
Name of Assignee Address Number of Warrant Shares
and does hereby irrevocably constitute and appoint ______________________
attorney to make such transfer on the books of Altus Biologics Inc., maintained
for such purpose, with full power of substitution in the premises.
Dated: ______________________ ______________________________
Signature of registered owner
Witness: _________________________
The Assignee acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws. Further, the Assignee has acknowledged that upon
exercise of this Warrant, the Assignee shall, if requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or sale in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
_________________________________
Signature of Assignee
Print Name:______________________
Print Title:_____________________
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.
91
EXECUTION COPY
EXHIBIT 2.3 (c)
Registration Rights Agreement
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-
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of February 22, 2001 is among
Altus Biologics Inc., a Massachusetts corporation (the "Company"), and Cystic
Fibrosis Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI" and
together with all other holders of Registrable Securities (as defined below),
the "Holders").
WITNESSETH
WHEREAS, the execution and delivery of this Agreement is among the
conditions to the consummation of the transaction contemplated by the Strategic
Alliance Agreement dated as of February 22, 2001 between the Company and CFFTI
(the "Strategic Alliance Agreement");
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth below, the parties agree as follows:
Certain Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock, $.01 par value per share, of
the Company, and shall include any securities into which such common stock shall
have been changed after the date hereof as the result of any (i)
recapitalization or reorganization of the Company, (ii) reclassification of such
common stock, or (iii) consolidation or merger of the Company with another
corporation.
"Form S-3" shall mean Form S-3 issued by the Commission or any
substantially similar form then in effect.
"Initial Public Offering" shall mean the first underwritten public
offering of the Common Stock of the Company for the account of the Company and
offered on a "firm commitment" or "best efforts" basis pursuant to an offering
registered under the Securities Act with the Commission on Form X-0, X-00, or
their then equivalent.
"Qualified Public Offering" shall mean a fully underwritten (by nationally
recognized underwriters), firm commitment public offering pursuant to an
effective registration statement under the Securities Act covering the offer and
sale by the Company of its Common Stock in which the aggregate gross proceeds to
the Company equal or exceed $15,000,000 and in which the price per share of
Common Stock equals or exceeds $5.00 (such price subject to equitable adjustment
in the event of any stock split, stock dividend, combination, reorganization,
reclassification, or other similar event.)
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act
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-
EXECUTION COPY
("Registration Statement"), and the declaration or ordering of the effectiveness
of such Registration Statement.
"Registrable Securities" shall mean all shares of Common Stock (i) issued
or issuable upon exercise of the Warrant or (ii) issued pursuant to stock
splits, stock dividends and similar distributions with respect to such shares,
provided that any such securities will cease to be Registrable Securities if and
when they become eligible for resale under Rule 144(k) under the Securities Act,
provided however, that Registrable Securities shall not include any shares of
Common Stock that have been previously registered under the Securities Act or
which have been sold to the public either pursuant to a registration statement
or Rule 144 as promulgated under the Securities Act or which have been sold in a
private transaction in which the transferor's rights under this Agreement are
not assigned.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all federal and
state registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company and one special counsel for the Holders
(whose fees and expenses shall be reasonable), blue sky fees and expenses, but
shall not include underwriting discounts and selling commissions applicable to
the sale of Registrable Securities pursuant to this Agreement, and the fees and
expenses of more than one special counsel for the Holders.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Warrants" shall mean the Company's Warrant No. W-5A and Warrant W-5B for
the purchase of an aggregate of 400,000 shares of Common Stock, each dated as of
the date hereof and issued to CFFTI.
"Piggy-Back" Registrations. If at any time the Company shall determine to
register under the Securities Act (including pursuant to the demand of any
stockholder of the Company exercising registration rights) any of its
securities, other than on Form X-0, Xxxx X-0 or their then equivalents, it shall
send to each Holder of Registrable Securities, including each Holder who has the
right to acquire Registrable Securities, written notice of such determination
and, if within ten (10) business days after receipt of such notice, such Holder
shall so request in writing, the Company shall use its best efforts to include
in such Registration Statement all or any part of the Registrable Securities
such Holder requests to be registered therein, except that if in connection with
any offering involving an underwriting of Common Stock to be issued by the
Company, the managing underwriter shall impose a limitation on the number of
shares of such Common Stock which may be included in any such Registration
Statement because, in its judgment, such limitation will facilitate an orderly
public distribution, then such limitation shall be imposed pro rata with respect
to the holders of all securities to be included in such Registration Statement.
Demand Registration. If on any one occasion after the earlier of the Initial
Public Offering or two (2) years from the date of this Agreement (including an
occasion of registration on Form S- 1 or its then equivalent) one or more
Holders of at least a majority of the Registrable Securities shall notify the
Company in writing that it or they intend to offer or cause to be offered
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-
EXECUTION COPY
Registrable Securities for public sale, the Company will so notify all Holders
of Registrable Securities, including all Holders who have a right to acquire
Registrable Securities. Upon written request of any Holder given within ten (10)
business days after the receipt by such Holder from the Company of such
notification, the Company will use its best efforts to cause such of the
Registrable Securities as may be requested by any Holder thereof (including the
Holder or Holders giving the initial notice of intent to offer) to be registered
under the Securities Act as expeditiously as possible. The Company shall not be
required to effect more than one registration pursuant to this Section 3;
provided, however, that if the Company determines to include shares to be sold
by it or any stockholders other than the Holders in any registration requests
pursuant to this Section 3, such registration shall be deemed to have been a
registration under Section 2 of this Agreement, and not a registration under
this Section 3, if the Holders of Registrable Securities are unable to include
in any such Registration Statement all of the Registrable Securities initially
requested for inclusion in such Registration Statement, either as a result of
any limitation on the registration of shares placed by the underwriters or for
any other reason. The Company shall not be obligated or required to effect a
registration pursuant to this Section 3: (a) if the registration would be the
Company's Initial Public Offering and does not (or in the opinion of the
underwriters is not likely to) constitute a Qualified Public Offering; or (b)
during the period commencing on the Company's filing of, and ending on the date
one hundred and twenty (120) days following the effective date of any
Registration Statement pertaining to any registration initiated by the Company,
for the account of the Company, or by Company in response to the exercise of
demand registration rights by other stockholders of the Company, if the written
request of Holders for demand registration pursuant to this Section 3 shall have
been received by the Company after the Company has given notice to all Holders
of Registrable Securities stating that the Company is commencing a registration;
provided, however, that the Company shall use its best efforts in good faith to
cause any such Registration Statement to be filed and to become effective as
expeditiously as shall be reasonably possible and provided further that in the
case of any registration initiated by the Company in response to the exercise of
demand registration rights of other stockholders of the Company, the Holders of
Registrable Securities shall have been able to include in such registration all
of the Registrable Securities requested by the Holders for inclusion in such
registration pursuant to Section 2 above. A registration requested pursuant to
this Section 3 shall not be deemed to have been effected (i) unless a
Registration Statement with respect thereto has been declared effective by the
Commission or (ii) if the Registration Statement does not remain effective for a
period of at least 180 days beyond the effective date thereof or, with respect
to an underwritten offering of Registrable Securities, until 45 days after the
commencement of the distribution by the holders of the Registrable Securities
included in such Registration Statement. If a registration requested pursuant to
this Section 3 is deemed not to have been effected as provided herein, then the
Company shall continue to be obligated to effect one demand registration
pursuant hereto without giving effect to such requested registration.
Short-Form Registration on Form S-3. In addition to the rights provided to the
Holders of Registrable Securities in Sections 2 and 3 hereof, if one or more
Holders of at least a majority of the Registrable Securities shall notify the
Company in writing that it or they intend to offer or cause to be offered
Registrable Securities for public sale, and the Company shall determine that
such registration can be effected on Form S-3 (or any similar form promulgated
by the Commission), the Company will so notify each Holder of Registrable
Securities, including each
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.
-4-
EXECUTION COPY
Holder who has a right to acquire Registrable Securities, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on said Form S-3 of all or such portion of
the Registrable Securities as the Holder or Holders shall specify; provided,
however, that the Company will not be required to effect a registration pursuant
to this Section 4 unless the Holder or Holders are requesting registration of
shares of Registrable Securities having an aggregate expected public offering
price (before deduction of underwriting discounts and expenses of sale) of at
least $500,000. The Company shall not be obligated or required to effect a
registration pursuant to this Section 4 during the period commencing on the
Company's filing of, and ending on the date one hundred and twenty (120) days
following the effective date of, any Registration Statement pertaining to any
underwritten registration initiated by the Company, for the account of the
Company, if the written request of Holders for such demand registration pursuant
to this Section 4 shall have been received by the Company after the Company
shall have given to all Holders of Registrable Securities a written notice
stating that the Company is commencing an underwritten registration initiated by
the Company; provided, however, that the Company shall use its best efforts in
good faith to cause any such Registration Statement to be filed and to become
effective as expeditiously as shall be reasonably possible. The obligations of
the Company under this Section 4 shall expire at any time after the Company has
effected three registrations for the benefit of the Holders of Registrable
Securities pursuant to a Registration Statement on Form S-3.
Effectiveness of Registration Statements. The Company will use its best efforts
to maintain the effectiveness of any Registration Statement pursuant to which
any of the Registrable Securities are being offered until the earlier to occur
of (i) the completion by the underwriters of distribution pursuant to such
Registration Statement or (ii) six (6) months after the effectiveness of such
Registration Statement, and from time to time will amend or supplement such
Registration Statement and the prospectus contained therein as and to the extent
necessary to comply with the Securities Act and any applicable state securities
regulation. The Holders of Registrable Securities included in any Registration
Statement will not (until further notice) effect sales thereof after receipt of
written notice from the Company to suspend sales to permit the Company to
correct or update such Registration Statement or prospectus; but the obligations
of the Company with respect to maintaining any Registration Statement current
and effective shall be extended by a period of days equal to the period such
suspension is in effect. The Company will provide each Holder of Registrable
Securities with as many copies of the prospectus contained in such Registration
Statement as it may reasonably request.
Blue Sky Qualification. In the event of any registration of Registrable
Securities hereunder, the Company will exercise its best efforts to register and
qualify the securities covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as the Holders shall
reasonably request and as shall be reasonably appropriate for the distribution
of such securities and to keep any such registration or qualification in effect
during the effectiveness period set forth in Section 5; provided, however, that
(i) the Company shall not be required to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions, and
(ii) notwithstanding anything in this Agreement to the contrary, in the event
any jurisdiction in which the securities shall be qualified imposes a
non-waivable requirement that expenses incurred in connection with the
qualification of the securities be borne by selling shareholders, such expenses
shall be payable pro rata by selling shareholders.
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-
EXECUTION COPY
Expenses of Registration. All Registration Expenses incurred in connection with
registrations pursuant to this Agreement shall be borne by the Company.
Notwithstanding the above, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 3 hereof if
the registration request is subsequently withdrawn at the request of the Holders
requesting such registration (whereafter such Holders shall bear such expenses
and, if such registration does not become effective as a result of such
withdrawal, the Company shall continue to be obligated to effect one
registration at the request of the Holders pursuant to Section 3 provided the
Holders have paid the Company all Registration expenses incurred by the Company
in respect of the withdrawn registration). Selling expenses to be borne by the
Holders of the Registrable Securities registered shall be borne pro rata on the
basis of the number of Registrable Securities included in the Registration
Statement.
Holder Obligations.
Delivery of Information. Notwithstanding anything in this Agreement to the
contrary, no Holder of Registrable Securities shall be entitled to sell any of
such Registrable Securities pursuant to a Registration Statement or to receive a
prospectus relating thereto unless such holder has furnished to the Company
promptly after the Company's request, such information regarding such Holder and
the distribution of such Registrable Securities as the Company may from time to
time reasonably request, including but not limited to any information required
to make the Registration Statement not misleading. The Company may exclude from
such registration the Registrable Securities of any Holder who does not furnish
such information provided above. In the event that any information previously
provided by a Holder for inclusion in a Registration Statement becomes
misleading during an effectiveness period, such Holder shall promptly notify the
Company and shall furnish to the Company all information required to be
disclosed in order to make the information included in such Registration
Statement not misleading.
Representation. Any sale of Registrable Securities by a Holder shall
constitute a representation and warranty by such Holder that the information
relating to such Holder and its plan of distribution is as set forth in the
Registration Statement and prospectus delivered by such Holder in connection
with such disposition, that such prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to such Holder or its
plan of distribution and that such prospectus does not as of the time of such
sale omit to state any material fact relating to such Holder or its plan of
distribution necessary to make the statements in such prospectus, in light of
the circumstances under which they were made not misleading.
Compliance with Securities Laws. Each Holder agrees that, in disposing of
any Registrable Securities, the Holder shall comply with all applicable
securities laws, including Rules 10b-2, 10b-5, 10b-6 and 10b-7 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Indemnification.
Company's Indemnification of the Holders. To the extent permitted by law,
the Company will indemnify each of the Holders, each of its directors, officers,
stockholders, partners or other beneficial owners and legal counsel, and each
person controlling such Holder, with respect to which registration,
qualification or compliance of Registrable Securities has been
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.
-6-
EXECUTION COPY
effected pursuant to this Agreement and each underwriter, if any, and each
person who controls any underwriter against all claims, losses, damages or
liabilities (or actions in respect thereof) to the extent such claims, losses,
damages or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or
other document (including any related Registration Statement) incident to any
such registration, qualification or compliance, or are based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance;
and the Company will reimburse each Holder, each of such Holder's directors,
officers, stockholders, partners or other beneficial owners, each such
underwriter and each person who controls any such Holder or underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the indemnity contained in this Section 9(a) shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if settlement is effected without the consent of the Company (which
consent shall not unreasonably be withheld); and provided, further, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based upon (i) any untrue
statement or omission based upon written information furnished to the Company by
any Holder, underwriter, or controlling person and stated to be for use in
connection with the offering of securities of the Company or (ii) a Holder's
failure to deliver an updated or corrected prospectus if the Company has made
the same available to such Holder.
Holder's Indemnification of Company. To the extent permitted by law, each
Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such Registration, qualification or compliance is being
effected pursuant to this Agreement, indemnify the Company, each of its
directors and officers, each legal counsel and independent accountant of the
Company, each underwriter, if any, of the Company's securities covered by such a
Registration Statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact made by such
Holder and contained in any such Registration Statement, prospectus, offering
circular or other document, or any omission (or alleged omission) on the part of
such Holder to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
such Holder of any rule or regulation promulgated under the Securities Act
applicable to such Holder and relating to action or inaction required of such
Holder in connection with any such registration, qualification or compliance;
and will reimburse the Company, such directors, officers, partners, persons, law
and accounting firms, underwriters or control persons for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such Registration Statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use in connection with the offering of securities
of the Company, provided, however, that
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.
-7-
EXECUTION COPY
each Holder's liability under this Section 9(b) shall not exceed such Holder's
net proceeds from the offering of securities made in connection with such
registration.
Indemnification Procedure. Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 9, notify the indemnifying party in
writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the
defense of such claim; and the indemnifying party shall be entitled to select
counsel for the defense of such claim with the approval of any parties entitled
to indemnification, which approval shall not be unreasonably withheld; provided
further, however, that if either party reasonably determines that there may be a
conflict between the position of the Company and the Holders in conducting the
defense of such action, suit or proceeding by reason of recognized claims for
indemnity under this Section 9, then counsel for such party shall be entitled to
conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interest of such party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 9, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 9.
Market Stand-Off. Each Holder hereby agrees that, if so requested by the Company
and any underwriters' representative, such Holder shall agree not to sell or
otherwise transfer any Registrable Securities or other securities of the Company
during the 180-day period following the effective date of a Registration
Statement of the Company filed under the Securities Act; provided that all
persons holding five percent (5%) or more of the aggregate number of shares of
Common Stock outstanding and all officers and directors of the Company enter
into similar agreements.
Current Public Information. During all periods in which the Company's Common
Stock is registered under the Exchange Act, the Company will file all reports
required under the Exchange Act and the rules and regulations thereunder, and
will take such further action as may be reasonably required to enable any holder
of restricted securities (as defined in Rule 144 adopted by the Commission under
the Securities Act) to sell such securities pursuant to Rule 144, as amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission.
Miscellaneous
Termination. This Agreement shall terminate on the later of (i) the fifth
anniversary of the closing of the Company's Initial Public Offering of its
Common Stock and (ii) the fifth anniversary of the Approval Date (as defined in
the Strategic Alliance Agreement).
Governing Law. This Agreement shall be governed in all respects by the
Federal securities laws and the internal laws of the Commonwealth of
Massachusetts. It is acknowledged that it may be impossible to measure in money
the damages that would 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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
-8-
EXECUTION COPY
suffered if the parties fail to comply with any of the obligations imposed on
them by this Agreement and that in the event of any such failure an aggrieved
party will be irreparably damaged and will not have an adequate remedy at law.
Any such party shall, therefore, be entitled to seek injunctive relief and/or
specific performance to enforce such obligations, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.
Successors and Assigns. Except as otherwise expressly provided below in
this Section 12(c) or elsewhere in this Agreement, the provisions of this
Agreement shall inure to the benefit of, and be binding upon the assigns and
successors of the parties; provided, however, that the Company may not assign
its rights or delegate its duties under this Agreement. The registration rights
with respect to the Registrable Securities of each Holder may only be
transferred or assigned to a transferee or assignee of at least 100,000 shares
of Registrable Securities (as presently constituted and subject to adjustments
for stock splits, stock dividends, reverse stock splits and the like) provided
the Company is given written notice at the time of transfer stating the name and
address of the transferee and the number of Registrable Securities transferred
and provided further that the transferee or assignee of such rights assumes in
writing the obligations of the Holder hereunder.
Entire Agreement: Amendment and Waiver. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof. Neither this Agreement nor any term hereof may be
amended, discharged or terminated, except by a written instrument signed by the
Company and the holders of fifty percent (50%) or more of the Registrable
Securities; provided, however, that the effect of any such amendment will be
such that all of the Holders will be treated equally and that such amendment
will be binding upon all Holders. The addition of parties to this Agreement who
acquire Registrable Securities after the date hereof in accordance with Section
12(c) shall not require the consent of any other Holder or the Company. Any
provision of this Agreement may be waived with respect to rights of all Holders
hereunder by a written instrument executed by the holders of fifty percent (50%)
or more of the Registrable Securities; provided, however, that the effect of
such waiver shall be such that all of the Holders will be treated equally and
that such waiver will be binding upon all Holders.
Notices. All notices and other communications required or permitted under
this Agreement shall be in writing and shall be deemed effectively given as of
that day if personally delivered; as of the day of confirmed receipt if by
facsimile; as of the following business day if delivered by a nationally
recognized overnight courier service, or as of five business days from mailing
if deposited with the United States Post Office, by registered or certified
mail, postage prepaid, addressed to the President of the Company at its
principal place of business with a copy to Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo P,C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx XX 00000, Fax 000-000-0000,
Attention: Xxxxxxxx X. Xxxxxxx and to a Holder at his or its address set forth
on the signature page of this Agreement, with a copy to Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000,
Facsimile: 202/424-7643, Attention: Xxxxxxx X. Xxxxxxx, or at such other address
as any party may designate by ten days prior written notice to the other
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.
-9-
EXECUTION COPY
Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party upon any breach or default of another party under
this Agreement shall impair any such right, power or remedy of such
non-defaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or in any similar breach or default
occurring thereafter; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Holder of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions or conditions of this
Agreement, must be made in writing, shall be effective only to the extent
specifically set forth in such writing, and shall only be binding on all Holders
with the written consent of the Holders of at least fifty percent (50%) of the
Registrable Securities; provided, however, that the effect of such waiver shall
be such that all of the Holders will be treated equally and that such waiver
will be binding upon all Holders. All remedies, either under this Agreement or
by law or otherwise afforded to any party, shall be cumulative and not
alternative.
Rights: Separability. Unless otherwise expressly provided in this
Agreement, each Holder's rights are several rights, not rights jointly held with
any of the other Holders. In case any provision of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Titles. The titles of the Sections of this Agreement are for convenience
of reference only and are not to be considered in construing this Agreement.
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one Agreement.
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.
-10-
EXECUTION COPY
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
under seal as of the date first above written.
COMPANY:
ALTUS BIOLOGICS INC.
By:______________________________
Name: Xxxxx Xxxxxxxx
Title: President
HOLDER:
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By:______________________________
Name:
Title:
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.
-11-
EXECUTION COPY
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement under seal as of the date first above written.
COMPANY:
ALTUS BIOLOGICS INC.
By: ______________________________
Name: Xxxxx Xxxxxxxx
Title: President
HOLDER:
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By: ______________________________
Name: Xx. Xxxxxx Xxxxx
Title: President
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.
-12-
EXECUTION COPY
EXHIBIT 9.1
Investor's Representation Letter
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.
-13-
EXECUTION COPY
ACCREDITED INVESTOR REPRESENTATION
In connection with the issuance of a warrant for the purchase of up to
400,000 shares of Common Stock of Altus Biologics Inc. (the "Company) pursuant
to that Strategic Alliance Agreement dated February 22, 2001 by and between the
Company and Cystic Fibrosis Foundation Therapeutics Inc. hereby represents to
the Company as follows:
1. Accredited Investor. CFFTI is an "accredited investor" as such term is
defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act") as CFFTI falls within one or more of the categories as
indicated below:
[CHECK APPROPRIATE BOX(ES)]
[ ] (1) a bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"); an insurance company as
defined in Section 2(13) of the Securities Act; an investment company registered
under the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; a Small Business Investment Company
licensed by the United States Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivision, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of that Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
the investment decisions made solely by persons that are accredited investors;
[ ] (2) a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] (3) an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
securities represented by the Warrant, with total assets in excess of
$5,000,000;
[ ] (4) a director or executive officer of the Company;
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.
-14-
EXECUTION COPY
[ ] (5) a natural person whose individual net worth,** or joint net
worth with that person's spouse, at the time of such person's purchase of
the Shares exceeds $1,000,000;
[ ] (6) a natural person who had an individual income*** in excess
of $200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year;
[ ] (7) a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D; and
[ ] (8) an entity in which all of the equity owners are accredited
investors (as defined above).
2. Investment. CFFTI is acquiring this Warrant and the Warrant
Shares issuable upon the exercise of this Warrant for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof within the meaning of Section 2(11) of the 1933 Act, nor
with any present intention of distributing or selling the same, except as
otherwise may be permitted under applicable securities laws.
3. Authority. CFFTI has full power and authority to enter into and
to perform this Warrant in accordance with its terms. The Registered Holder has
not been organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4. Experience. CFFTI has made detailed inquiry concerning the
Company, its business and its personnel; and has had the opportunity to ask
questions and receive answers concerning the terms and conditions of this
Warrant, the Warrant Shares and any shares of Common Stock issued or issuable
upon conversion of the Warrant Shares and to obtain any additional information
that the Company possesses or can acquire that CFFTI or its advisors believes is
necessary to verify the accuracy of information provided by the Company to
CFFTI; and CFFTI has adequate net worth and means of providing for his or its
current needs and personal contingencies to sustain a complete loss of its
investment in the Company; CFFTI's
----------
** For purposes of this letter, "net worth" is equal to the excess of total
assets at fair market value over total liabilities.
*** For purposes of this letter, "income" means adjusted gross income, as
reported for federal income tax purposes, increased by the following
amounts: (i) the amount of any interest income received which is
tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of Form 1040);
(iii) any deduction claimed for depletion under Section 611 et seq. of the
Code; and (iv) any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income pursuant to the
provisions of Section 1202 of the Code.
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.
-15-
EXECUTION COPY
overall commitment to investments which are not readily marketable is not
disproportionate to its net worth, and CFFTI's investment in this Warrant, and
the Warrant Shares issuable upon exercise of this Warrant will not cause such
overall commitment to become excessive.
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
____________________________________
(Signature)
____________________________________
(Title)
Dated:_________________ ____________________________________
(Name Typed or Printed
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.
-16-
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.
-17-
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.
-18-
EXECUTION COPY
This First Amendment to Strategic Alliance Agreement, is made as of
September 26, 2001 (this "First Amendment Agreement"), by and between Altus
Biologics Inc., a Delaware corporation (the "Company"), and Cystic Fibrosis
Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI" and collectively,
with the Company, the "Parties," and each a "Party"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to them
in the Strategic Alliance Agreement dated as of February 22, 2001 (the
"Agreement").
WHEREAS, CFFTI and the Company's predecessor, Altus Biologics Inc., a
Massachusetts corporation ("Altus Massachusetts"), were parties to the
Agreement;
WHEREAS, Altus Massachusetts was merged with and into the Company for the
purpose of reincorporating Altus Massachusetts as a Delaware corporation, and as
a result of such migratory merger, to which CFFTI had previously consented
pursuant to Section 11.8 of the Agreement, the Company succeeded to all of the
rights and obligations of Altus Massachusetts under the Agreement and the
related Warrants (Nos. W-5A and W-5B) and Registration Rights Agreement, each
dated February 22, 2001, between CFFTI and Altus Massachusetts, to the same
extent as if the Company were the original party thereto;
WHEREAS, the Company is pursuing a financing transaction whereby it
intends to raise working capital through the issuance of Series B Convertible
Preferred Stock (the "Series B Stock"), and the prospective purchasers of the
Series B Stock (the "Series B Investors") require certain amendments to the
Agreement as a condition to their investment in the Company; and
WHEREAS, the Parties desire to amend the Agreement hereby and provide for
the cancellation of the Registration Rights Agreement and inclusion of CFFTI as
a party to the new registration rights agreement to be entered into by the
Company and the purchasers of the Series B Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. AMENDMENTS.
1.1 New Definitions. In Article I of the Agreement, the following
new definitions are added to the definitions list in the appropriate
alphabetical order:
"Base Exercise Price" shall have the meaning assigned to such
term in Section 2.8 below.
"Call Option" shall have the meaning assigned to such term in
Section 2.8 below.
"Combined Net Sales" shall mean the gross invoiced sales price
of any Products and Other Products sold by the Company, its Affiliates or its
sublicensees [**********************************************], less the
following amounts incurred
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.
-19-
EXECUTION COPY
in the ordinary course of business with respect to such sales to the extent
separately included in the invoice for the Products and Other Products as part
of the gross invoiced sales price:
(a) trade, cash and quantity discounts or rebates
[**********************];
(b) credits or allowances given or made for rejection of or return
of, and for uncollectible amounts on, previously sold Products or Other Products
or for retroactive price
reductions[***********************************************************];
(c) charges for insurance, freight, and other transportation costs
[******** ******************] of Products and Other Products; and
(d) sales, transfer and other excise taxes levied on the sale or
delivery of Products or Other Products (including any tax such as a value added
or similar tax or government charge) borne by the seller thereof,
[***********************************************].
"First Amendment Agreement" shall mean the First Amendment to the
Agreement dated as of September 26 , 2001 by and between the Company and CFFTI.
"Other Products" shall mean 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 which are, in either case,
designed to treat any other indication other than
[***********************************].
"Other Product Development Activities" shall mean activities related to
the development and marketing of the Other Products, 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 the necessary approvals for the
marketing and distribution of Other Products or to otherwise market and sell the
Other Products in compliance with any applicable Law.
"Success Fee" shall mean, as of the date of determination, the sum of (i)
the amount of the Grant actually funded by CFFTI during the period from the
effective date of the Agreement through such date of determination, up to
twenty-five million dollars ($25,000,000) and (ii) the cumulative interest
accrued on such amount through the date of determination, such interest to be
calculated at an annual rate of [*********] and to accrue with respect to each
incremental CFFTI Funding Amount comprising the cumulative CFFTI Funding Amount
from and after the date CFFTI actually funds each such incremental CFFTI Funding
Amount; provided, however, that the Success Fee shall not exceed forty million
dollars ($40,000,000).
"Warrant C" shall mean the Company's warrant to acquire an aggregate of
two hundred thousand (200,000) shares of Common Stock in the form of Warrant 5-C
issued and delivered to CFFTI pursuant to the First Amendment Agreement.
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.
-20-
EXECUTION COPY
1.2 Amendment of Certain Definitions. In Article I of the Agreement,
the following definitions are amended as indicated:
(a) The definition of "Approval Date" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Approval Date" shall mean (i) in the case of Products that are regulated
as drugs by the FDA, the earlier of the date on which the Company receives from
the FDA an approvable letter under 21 CFR Section 314.110 or an approval letter
under 21 CFR Section 314.105, or (ii) in the case of Products that are regulated
as biologics by the FDA, the earlier of the date on which the Company receives
from the FDA an approval letter or biologics license under 21 CFR Section 601.4.
(e) The definition of "Common Stock" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Company, as authorized pursuant to Article FOURTH of the Amended
and Restated Certificate of Incorporation of the Company to be filed with the
Secretary of State of the State of Delaware and made effective as of the date of
the initial closing of the issuance of Series B Stock.
(f) The term "Company" shall have the meaning set forth in the
preamble of the First Amendment Agreement.
(g) The definition of "Warrants" is deleted in its entirety
and the following new definition is inserted in lieu thereof:
"Warrants" shall mean, collectively, Warrant A, Warrant B and Warrant C.
1.3 Section 2.3(b) of the Agreement is amended by deleting the text
"(together the "Warrants")" appearing at the end of such Section.
1.4 Section 2.3 of the Agreement is amended to add clause (n) at the end
thereof which shall read in its entirety as follows:
(n) following the Approval Date until exercise by the Company
of the Call Option and payment in full of all amounts due in respect thereof,
control and be primarily responsible for the conduct of the Other Product
Development Activities, and use good faith, commercially reasonable efforts,
consistent with the Company's business plan, to develop the Other Products and
bring the Other Products to market in [**********************] as soon as
reasonably practicable, including obtaining all necessary approvals of
applicable governmental bodies for the marketing and distribution of the Other
Products in [**********************]. Other Product Development Activities will
be conducted by the Company, or the Company will cause its subcontractor(s) to
conduct Other Product 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 Other Product
Development Activities.
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.
-21-
EXECUTION COPY
1.5 Section 2.6 of the Agreement is deleted in its entirety and
the following new Section 2.6 is inserted in lieu thereof:
"2.6 License Fee
(a) On 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 the Succecs Fee exceeds the Fair Market Value of the Shares as of the
Approval Date (such excess is referred to herein as the "License Fee").
(h) 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) [*****************] of such 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
[*****************************************************************] 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 compounded annually and
accrue on the outstanding balance of the License Fee at the Regular Rate. 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 the Regular Rate plus [***************]."
(i) The license granted to CFFTI under Section 5.1 and all
sublicenses thereunder shall terminate upon either the exercise by the Company
of the Call Option and payment in full of all amounts due in respect thereof or,
if later, upon payment in full of the License Fee. Upon such termination, CFFTI
shall promptly transmit to the Company all products and information and
promotional or marketing materials and data relating to the Products or Other
Products that are in the possession of CFFTI or any sublicensees of CFFTI other
than the Company.
1.6 The following new Section 2.7 is added to the Agreement:
"2.7 Royalties on Combined Net Sales. After the Approval Date (or,
if the Approval Date has not occurred but the Company is selling Other Products)
and until exercise of the Call Option, and provided (a) CFFTI has not exercised
its right to terminate under Section 10.1 and (b) CFFTI has funded the full
amount of the Grant in accordance with the terms of this Agreement, the Company
will pay royalties to CFFTI in the amount of [******************************] of
Combined Net Sales until the later of either (x)
[******************************************] of any United States patent
covering the Products or Other Products, including patents granted after the
date of the First Amendment
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.
-22-
EXECUTION COPY
Agreement, or (y) [******************************************] of the United
States patents that [*********************************************************]
(which are Patent No. [*******]; Patent No. [*******]; Patent No. [*******];
Patent No. [*******]; Patent No. [*******]; and Patent No. [********]. Royalties
under this Section 2.7 shall be payable on a [*******] basis within
[**************] following the end of each [**************] for which royalties
are due. Each payment made by the Company to CFFTI under this Section 2.7 shall
be accompanied by a written report summarizing the data used to calculate the
amounts paid, including the amount of Combined Net Sales worldwide on a country
by country basis and supporting information reasonably necessary to determine
the amount of royalties due under this Section 2.7. Upon the written request of
CFFTI, and no more frequently than [***] in any calendar year, the Company shall
permit an independent certified public accountant selected by CFFTI to have
access during normal business hours to such records of the Company as may be
reasonably necessary to verify the accuracy of royalties payable and reports
made hereunder. If such audit reveals that any additional royalty was required
during the audited period, such royalty shall be paid promptly to CFFTI. The
fees charged by such accountant shall be paid by CFFTI, unless the audit
discloses that the royalties for the audited period are deficient by more than
[***************], in which case the Company shall pay the
[**************************] charged by the independent certified public
accountant."
1.7 The following new Section 2.8 is added to the Agreement:
"2.8 Call Option. On and after the Approval Date, the Company shall
have the right and option to purchase (the "Call Option") the royalty stream
described in Section 2.7 above from CFFTI at an exercise price determined as
follows:
(a) On or prior to the [****************] after the Approval Date,
the exercise price shall be [************]: the sum of: (1) the [*********], and
(2) the amount, if any,
[********************************************************************], and (3)
[******************************************************], discounted back to the
Approval Date at an annual discount rate equal to [***************] (such amount
the "Base Exercise Price");
(j) From and after the [*****************] day after the Approval
Date through the third anniversary of the Approval Date, the exercise price
shall be the sum of: (X) the [**************] and (Y) a premium amount equal to
[**************** ******************]; and
(k) From and after the third anniversary of the Approval Date, the
exercise price shall be the sum of: (X) the [*****************] and (Y) a
premium amount equal to the [**********************************], where the
[************************** **************************] for each year (or
partial year) that has elapsed since the third anniversary of the Approval
Date.
By way of example, if the Approval Date is April 12, 2004 and the exercise
of the Call Option occurs on July 20, 2009, a date five years and three months
after the Approval Date, the Applicable Percentage would 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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
-23-
EXECUTION COPY
2. MISCELLANEOUS. Except as amended hereby, the Agreement remains in full
force and effect and all references contained in the Agreement to "this
Agreement" shall be deemed to include this First Amendment Agreement. This First
Amendment Agreement may be executed in one or more counterparts, including via
facsimile, each of which shall be deemed an original. This First Amendment
Agreement may not be amended except by a written agreement executed by each of
the Parties.
3. WARRANT C. Upon execution of this Agreement, the Company shall issue
and deliver to CFFTI a warrant to acquire an aggregate of two hundred thousand
(200,000) shares of Common Stock substantially in the form of Exhibit A attached
hereto.
4. REGISTRATION RIGHTS AGREEMENT. The Company and CFFTI agree that the
Registration Rights Agreement is terminated. The Company shall cause CFFTI to be
included as a party to that certain Investor Rights Agreement of even date
herewith by and between the Company, Vertex Pharmaceuticals Incorporated and the
Series B Investors, such Agreement to be substantially in the form previously
provided to CFFTI as modified in the manner requested by CFFTI and otherwise in
form and substance satisfactory to CFFTI. All of the 600,000 shares of common
stock issuable in respect of the three warrants issued to CFFTI (Warrant 5A
dated February 22, 2001, Warrant 513 dated February 22, 2001 and Warrant 5C of
even date herewith) shall be included as Registrable Shares (as defined in such
Agreement) under such Agreement.
5. EXPENSES. The Company shall pay and indemnify CFFTI against the
reasonable fees and expenses (including legal fees and expenses) incurred by
CFFTI in connection with the negotiation and execution of this First Amendment
Agreement and the documents and agreements referred to herein. Such amount shall
be paid within five (5) days after CFFTI provides the Company with the full
amount of such fees and expenses.
6. ENTIRE AGREEMENT. This First Amendment Agreement, together with the
Agreement, contain the entire agreement between the Parties hereto with respect
to the matters contemplated herein and therein and supersedes all prior
agreements or understandings among the Parties related to such matters.
IN WITNESS WHEREOF, the Parties have caused this First Amendment to
Strategic Alliance Agreement to be executed by their respective duly authorized
representatives.
ALTUS BIOLOGICS L,NC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx
President and CEO
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.
-24-
EXECUTION COPY
By:____________________________________
Name: Xxxxxx X. Xxxxx, Ph.D.
Title: President & CEO
IN WITNESS WHEREOF. the Parties have caused this First Amendment to Strategic
Alliance Agreement to be executed by their respective duly authorized
representatives.
ALTUS BIOLOGICS L,NC.
By:____________________________________
Xxxxx Xxxxxxxx
President and CEO
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By: /s/ Xxxxxx X. Xxxxx, Ph.D.
-----------------------------------
Name: Xxxxxx X. Xxxxx, Ph.D.
Title: President & CEO
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.
-25-
EXECUTION COPY
EXHIBIT A
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-5C 200,000
Shares
WARRANT
To Purchase Shares of Common Stock
of
ALTUS BIOLOGICS INC.
Dated September 26, 2001
WHEREAS, pursuant to and in connection with that certain First Amendment
to Strategic Alliance Agreement, is made as of September 26, 2001 by and between
Altus Biologics Inc., a Delaware corporation (the "Company"), and Cystic
Fibrosis Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI"), the
Company desires to provide CFFTI an opportunity to obtain an additional equity
interest in the Company through the acquisition of shares of its Common Stock,
$.01 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 September 26, 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
Thousand (200,000) (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 immediately at any time on or after September 26, 2001
and before September 26, 2011 (the "Expiration Date") and shall be void
thereafter.
1. EXERCISE OF WARRANT.
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.
-26-
EXECUTION COPY
1.1. 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.
1.2. 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 Warrant
Shares computed using the following formula:
X = Y(A-B)
-----
A
Where: X = the number of Warrant Shares to be issued to the Warrantholder.
Y = the number of Warrant Shares under this Warrant (or such lesser number
of Shares as the Warrantholder elects to purchase, in the case of a partial
exercise).
A = the fair market value of one share of Common Stock on the date
of exercise.
B = the Exercise Price.
As used herein, the fair market value of the Common Stock shall be deemed
to be the mean between the highest and lowest quoted selling prices as reported
in The Wall Street Journal on the last trading day preceding the date of
determination on the primary securities exchange where the Common Stock of the
Company is traded or if not traded on a securities exchange, then on The Nasdaq
Stock Market, or if there were no sales on the applicable date, on the next
preceding date within a reasonable period (as determined in the sole discretion
of the Board of Directors of the Company (the "Board of Directors")) on which
there were sales. In the event that there were no sales in such a market within
a reasonable period, the fair market value shall be as determined in good faith
by the Board of Directors. In the event the Warrantholder disagrees with the
fair market value determined by the Board of Directors, the Company and 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.
-27-
EXECUTION COPY
Warrantholder shall negotiate in good faith and use their best efforts to agree
upon the selection of an independent appraiser, who will have 30 days in which
to determine the fair market value of the Common Stock, and whose determination
will be final and binding on all parties concerned. If no individual appraiser
can be agreed upon, each party shall select an appraiser and the two selected
appraisers shall select a third to serve as the independent appraiser for
purposes of determining fair market value. All costs of the independent
appraiser shall be borne equally by the Company and the Warrantholder.
2. RECORD HOLDER. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided in Section 1.2 above and the person entitled to receive the
Warrant Shares of Common Stock issuable upon such exercise or conversion shall
be treated for all purposes as the holder of such Warrant Shares of record as of
the close of business on such date.
3. PAYMENT OF TAXES. The Company shall pay all taxes and other
governmental charges (other than income taxes) that may be imposed in respect of
the issue of the Warrant Shares or any portion thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for the Warrant Shares or any
portion thereof in any name other than that of the registered holder of the
Warrant surrendered in connection with the purchase of such shares, and in such
case the Company shall not be required to issue or deliver any certificate until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.
4. TRANSFER AND EXCHANGE.
4.1. TRANSFER. Subject to the terms hereof, including, without
limitation, Sections 5.1 and 5.3, the Warrant and all rights thereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its office designated in Section 8.4 hereof by the registered
holder hereof in person or by duly authorized attorney, upon surrender of the
Warrant properly endorsed; provided, however, that this Warrant may not be
transferred in part unless such transfer is to a transferee who pursuant to such
transfer receives the right to purchase at least 75,000 shares of Common Stock.
Upon any partial transfer, the Company will issue and deliver to such holder a
new warrant or warrants with respect to the Warrant Shares not so transferred.
Each taker and holder of the Warrant, by taking or holding the same, consents
and agrees that the Warrant when endorsed in blank shall be deemed negotiable,
and that when the Warrant shall have been so endorsed, the holder may be treated
by the Company and all other persons dealing with the Warrant as the absolute
owner of such Warrant for any purpose and as the person entitled to exercise the
rights represented thereby, or to the transfer on the books of the Company, any
notice to the contrary notwithstanding; but until such transfer on such books,
the Company may treat the registered holder of the Warrant as the owner for all
purposes. The term "Warrant" as used herein shall include the Warrant and, any
warrants delivered in substitution or exchange therefor as provided herein.
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.
-28-
EXECUTION COPY
4.2. EXCHANGE. The Warrant is exchangeable for a warrant or warrants
for the same aggregate number of Warrant Shares, each new Warrant to represent
the right to purchase such number of Warrant Shares as the holder shall
designate at the time of such exchange. The Warrant may be subdivided, at the
Warrantholder's option, into several warrants to purchase the Warrant Shares
(collectively, also referred to as the "Warrant"). Such subdivision may be
accomplished in accordance with the provisions of this Section 4.
5. TRANSFER OF SECURITIES.
5.1. RESTRICTIONS ON TRANSFER. Neither the Warrant nor any of the
Warrant Shares shall be transferable except upon the conditions specified in
this Section 5.1, which conditions are intended to insure compliance with
applicable provisions of the 1933 Act.
5.1.1. Unless and until otherwise permitted by this Section 5.1, the
Warrant and each certificate or other document evidencing any of the Warrant
Shares shall be endorsed with the legend substantially in the following form:
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 TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER.
5.1.2. Neither the Warrant nor any of the Warrant Shares shall be
transferred and the Company shall not be required to register any such transfer,
unless and until one of the following events shall have occurred:
(a) the Company shall have received an opinion of counsel
reasonably acceptable to the Company and its counsel, stating that the
contemplated transfer is exempt from registration under the 1933 Act as then in
effect, and the Rules and Regulations of the Commission thereunder. Within ten
days after delivery to the Company and its counsel of such an opinion, the
Company either shall deliver to the proposed transferor a statement to the
effect that such opinion is not satisfactory in the reasonable opinion of its
counsel (and shall specify the legal analysis supporting any such conclusion) or
shall authorize the Company's transfer agent to make the requested transfer;
(b) the Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or
(c) (i) the Warrant or the Warrant Shares, as the case may be,
have been registered pursuant to a registration statement filed by or on behalf
of the Company, (ii) such registration statement has been declared effective by
the Commission under the 1933
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.
-29-
EXECUTION COPY
Act and is not subject to any stop order, and (iii) the Company has not sent a
notice to the Warrantholder requesting that sales under such registration
statement and the related prospectus should be halted until such time as the
Company has corrected or updated such registration statement and the related
prospectus.
The restrictions on transfer imposed by Section 5.1 shall cease and terminate as
to the Warrant or the Warrant Shares, as the case may be, when (i) such
securities shall have been effectively registered under the 1933 Act and sold by
the holder thereof in accordance with such registration, or (ii) an acceptable
opinion as described in Section 5.1.2(a) or a "no action" letter described in
Section 5.1.2(b) states that future transfers of such securities by the
transferor or the contemplated transferee would be exempt from registration
under the 1933 Act. When the restrictions on transfer contained in this Section
5.1 have terminated as provided above, the holder of the securities as to which
such restrictions shall have terminated or the transferee of such holder shall
be entitled to receive from the Company, at the expense of the Company, a new
Warrant or a new share certificate, as the case may be, not bearing the legend
set forth in Section 5.1.1 hereof.
5.2. COOPERATION. The Company shall cooperate in supplying such
information as may be reasonably requested by the Warrantholder to complete and
file any information reporting forms presently or subsequently required by the
Commission as a condition to the availability of an exemption, presently
existing or subsequently adopted, from the 1933 Act for the sale of the Warrant
or Warrant Shares, which is expressly understood not to include the completion
or filing of any registration statements or other forms used to register such
securities for sale under the 1933 Act or any state's securities laws.
5.3. PERMITTED TRANSFERS. Subject to Section 5.1 above and subject to
all applicable laws and rules, the Warrantholder may transfer this Warrant and
any Warrant Shares purchased hereunder.
6. ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price in
effect from time to time and the number of Warrant Shares shall be subject to
adjustment in certain cases as set forth in this Section 6.
6.1. SUBDIVISION OR COMBINATION. In the event the outstanding Common
Stock shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding Common Stock shall be combined into a smaller number of shares of
Common Stock, the Exercise Price shall simultaneously with the effectiveness of
such combination, be proportionately increased and the number of Warrant Shares
proportionately reduced. For the purpose of this Section 6, a distribution or
series of distributions of Common Stock to holders of Common Stock in which the
number of shares distributed is ten percent (10%) or more of the number of
shares of Common Stock upon which the distribution is to be made shall be deemed
to be a subdivision of Common Stock.
6.2. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
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.
-30-
EXECUTION COPY
6.2.1. In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time receivable on
the exercise of the Warrant) after the Issuance Date, or in case, after such
date, the Company (or any such other corporation) shall consolidate with or
merge into another corporation or convey all or substantially all of its assets
to another corporation, then and in each such case the Warrantholder, upon
exercise of the Warrant as provided in Section 1 hereof at any time after the
consummation of such reorganization, consolidation, merger or conveyance, shall
be entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise of the Warrant prior to such consummation, the
stock or other securities or property to which the Warrantholder would have been
entitled upon such consummation if the Warrantholder had exercised or converted
the Warrant immediately prior thereto (and such stock or securities shall be
deemed to be "Warrant Shares" for the purpose of this Warrant); in each such
case, the terms of this Warrant, including the exercise provisions of Section 1,
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of the Warrant after such consummation.
6.2.2. The Company shall not effect any consolidation, merger or
conveyance of all or substantially all of its assets unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation into or for the
securities of which the previously outstanding stock of the Company shall be
changed in connection with such consolidation or merger, or the corporation
purchasing such assets, as the case may be, shall assume by written instrument,
in form and substance reasonably satisfactory to the Warrantholder, executed and
delivered in accordance with Section 8.2 hereof, the obligation to deliver to
the Warrantholder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, the Warrantholder is entitled to purchase.
6.2.3. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock of the Company, the Company shall not effect any consolidation, merger or
sale with the Person having made such offer or with any Affiliate of such
Person, unless prior to the consummation of such consolidation, merger or sale
the Warrantholder shall have been given a reasonable opportunity to then elect
to receive either the stock, securities or assets then issuable upon the
exercise of the Warrant or, if different, the stock, securities or assets, or
the equivalent, issued to previous holders of the Common Stock in accordance
with such offer, computed as though the Warrantholder hereof had been at the
time of such offer, a holder of the stock, securities or assets then purchasable
upon the exercise or conversion of the Warrant. As used in this paragraph 6.2.3.
the term "Person" shall mean and include an individual, a partnership, a
corporation, a trust, a joint venture, a limited liability company, an
unincorporated organization and a government or any department or agency thereof
and an "Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with, such
other Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
6.3 ADJUSTMENT TO WARRANT SHARES FOR CERTAIN DILUTIVE ISSUANCES.
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.
-31-
EXECUTION COPY
6.3.1 SPECIAL DEFINITIONS. For purposes of this Subsection 6.3, the
following definitions shall apply:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Subsection 6.3.2 below, deemed to be
issued) by the Company after the Threshold Financing Closing Date other than:
(A) Common Stock issued or issuable upon conversion of shares of
the Company's preferred stock, par value $.01 per share (the "Preferred Stock"),
outstanding as of the close of business on the Threshold Financing Closing Date;
(B) Common Stock issued or issuable (i) upon exercise of the
Vertex Warrants outstanding as of the close of business on the Threshold
Financing Closing Date or (ii) in exchange for any shares of Preferred Stock
held by Vertex;
(C) Common Stock granted, or issued or issuable upon the exercise
of Options granted, to employees, consultants, creditors or other persons
performing or providing services or products to the Company or any affiliate of
the Company, in connection with their employment, advisory or other relationship
with the Company, pursuant to stock grants, options or other arrangements
approved by the Board of Directors of the Company. Shares of Common Stock or
Options previously issued pursuant to any such stock grants or option plans as
of the date that the exclusion hereunder is being determined shall be included
in calculating the number of shares of Common Stock subject to such exclusion;
(D) Common Stock issued as a dividend or distribution on the
Preferred Stock;
(E) Common Stock issued in any public offering of Common Stock or
Convertible Securities;
(F) Common Stock issued in connection with any strategic
alliance, license, distribution, marketing or collaboration agreements, up to an
aggregate of 500,000 shares of Common Stock (as such number may be adjusted in
connection with any of the events described in Section 6.1);
(G) issuances with respect to which an adjustment is made
pursuant to Section 6.1 above; and
(H) Common Stock issued upon conversion of the shares of Series B
Stock issued upon exercise of the Series B Warrants.
"Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities including Options, directly or
indirectly convertible into or exchangeable for 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.
-32-
EXECUTION COPY
"Factor" shall initially be one (1) and shall be subject to
adjustment pursuant to this Section 6.3.
"Option" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities.
"Series B Warrants" shall mean the several warrants issued to the
investors at the closing of the Threshold Financing for the purchase of shares
of the Company's Series B Preferred Stock, $.01 par value per share.
"Threshold Financing" shall mean the Company's Series B Preferred
Financing pursuant to which the Company sold approximately $35,600,000 of its
Series B Convertible Preferred Stock to a group of investors including Nomura
International plc, XX Xxxxx Securities Corporation, and US Ventures Partners.
"Threshold Financing Closing Date" shall mean September 26, 2001.
"Threshold Price" shall mean $4.3147358 per share.
"Vertex Warrants" shall mean the Company's warrants for the
purchase of Common Stock issued to Vertex Pharmaceuticals Incorporated.
6.3.2 DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
6.3.2.1 If the Company at any time or from time to time after
the Threshold Financing Closing Date shall issue any Options (other than Options
excluded pursuant to Section 6.3.1(C) hereof) or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subsection 6.3.5
hereof) of such Additional Shares of Common Stock would be less than the
Threshold Price then in effect, and provided further that in any case in which
Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Factor shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration
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.
-33-
EXECUTION COPY
payable to the Company, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Factor computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(C) no readjustment pursuant to clause (B) above shall have
the effect of increasing the Factor to an amount which exceeds the lower of (i)
the Factor on the original adjustment date, or (ii) the Factor that would have
resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;
(D) upon the expiration or termination of any unexercised
Option, the Factor shall be readjusted, and the Additional Shares of Common
Stock deemed issued as the result of the original issue of such Option shall no
longer be deemed issued for the purposes of any subsequent adjustment of the
Factor; and
(E) in the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Factor then in effect shall forthwith be
readjusted to such Factor as would have obtained had the adjustment that was
made upon the issuance of such Option or Convertible Security (prior to such
change) been made upon the basis of such change, but no further adjustment shall
be made for the actual issuance of Common Stock upon the exercise or conversion
of any such Option or Convertible Security.
6.3.3 NO ADJUSTMENT OF NUMBER OF SHARES. No adjustment to the
Factor shall be made unless the consideration per share (determined pursuant to
Subsection 6.3.5) for an Additional Share of Common Stock issued or deemed to be
issued by the Company hereunder is less than the Threshold Price then in effect.
6.3.4 ADJUSTMENT OF FACTOR AND THRESHOLD PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event the Company shall issue or sell
(or pursuant to Section 6.3.2 be deemed to have issued) Additional Shares of
Common Stock without consideration or for a consideration per share less than
the Threshold Price then in effect (each such event a "Dilutive Event"), then
and in such Dilutive Event, the number of Warrant Shares subject to purchase
under this Warrant shall be increased to a number that is determined by dividing
the number of Warrant Shares prior to the Dilutive Event by the factor
determined by reference to the formula below (the "Factor") and the Exercise
Price in effect prior to the Dilutive Event shall be decreased to a price that
is determined by multiplying such price by the Factor. The Factor shall be
determined as follows:
Factor = CSB + X
-------
CSA
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.
-34-
EXECUTION COPY
where
CSB = the total outstanding shares of Common Stock outstanding and deemed
to outstanding immediately prior to the dilutive transaction (calculated to
include the number of shares of Common Stock issuable upon conversion of the
outstanding Options and Convertible Securities).
X = the number of shares determined by dividing the aggregate
consideration received in the dilutive transaction (as determined by reference
to Section 6.3.5) divided by the Threshold Price.
CSA = the total outstanding shares of Common Stock immediately after the
dilutive transaction (calculated to include the number of shares of Common Stock
issuable upon conversion of the outstanding Options and Convertible Securities).
In addition, the Threshold Price for future determination under this Section 6.3
shall be adjusted by multiplying the Threshold Price in effect immediately prior
to the dilutive issuance by the Factor.
6.3.5 DETERMINATION OF CONSIDERATION. For purposes of this
Section 6.3, the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
6.3.5.1 Cash, Services and Property: Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate of cash received by the Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(B) insofar as it consists of services or property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other assets of the Company for consideration which
includes cash, property or services, be the proportion of such consideration so
received for the Additional Shares of Common Stock as determined in good faith
by the Board of Directors.
6.3.5.2 Options and Convertible Securities. The consideration
per share received by the Company for Options and Convertible Securities shall
be determined by dividing
(A) the total amount of cash, services or property, if
any, received or receivable by the Company as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set
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.
-35-
EXECUTION COPY
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such-consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
6.4. NOTICE OF ADJUSTMENT. When any adjustment is required to be made
in the Exercise Price or the Factor, the Company shall promptly notify the
Warrantholder of such event, of the calculation by which such adjustment is to
be made and of the resulting Exercise Price and Factor.
6.5. DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event
occurs as to which in the opinion of the Board of Directors the other provisions
of this Section 6 are not strictly applicable or if strictly applicable would
not fairly protect the purchase and exercise rights of the Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid.
7. RESERVATION OF WARRANT SHARES. The Company shall at all times reserve
and keep available out of its authorized but unissued Common Stock the full
number of Warrant Shares deliverable upon exercise of the Warrant, as such
number may change from time to time pursuant to the terms hereof. Also, the
Company shall, at its own expense, take all such actions and obtain all such
permits and orders as may be necessary to enable the Company lawfully to issue
fully paid and nonassessable Warrant Shares upon the exercise or conversion of
the Warrant, provided, however, this Section 7 shall not be construed to require
the Company to register the Warrant or the Warrant Shares under the 1933 Act or
any state's securities laws.
8. MISCELLANEOUS.
8.1. ENTIRE AGREEMENT. This Warrant, the Registration Rights Agreement
of even date herewith between the Company and the Holder and the Alliance
Agreement constitute the full and entire understanding and agreements between
the parties hereto with respect to the subjects hereof and thereof.
8.2. SUCCESSORS AND ASSIGNS. The terms and conditions of this Warrant
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, except as expressly provided otherwise herein.
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-
EXECUTION COPY
8.3. GOVERNING LAW. This Warrant shall be governed by and construed
under the internal laws of the Commonwealth of Massachusetts (without reference
or regard to conflict or choice of law provisions).
8.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or the day following deposit with a nationally recognized
overnight courier service, or upon the fifth day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Holder, Cystic Fibrosis
Foundation Therapeutics, Inc., at 0000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX 00000, (301)
000-0000 (fax), Attention: Xx. Xxxxxx Xxxxx, or at such other address as shall
have furnished to the Company in writing, with a copy to Xxxxxxx Berlin Xxxxxxx
Xxxxxxxx, LLP, 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, (202)
000-0000 (fax), Attention: Xxxxxxx X. Xxxxxxx, Esquire, (b) if to the Company, a
copy should be sent to 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, (000) 000-0000
(fax), Attention: Treasurer, or at such other address as the Company shall have
furnished in writing to the Warrantholder, with a copy to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, (000) 000-0000 (fax), Attention: Xxxxxxxx X. Xxxxxxx, Esquire, or (c) if
to any other Warrantholder, at such address as such holder shall have furnished
to the Company in writing, or, until such Warrantholder so furnishes an address
to the Company, then to and at the address of the last holder of such Warrant
who so furnished an address to the Company.
8.5. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any securities issued or sold or to be
issued or sold hereunder, upon any breach or default of the Company under this
Warrant, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Warrant, or any waiver on the part of any holder of any
provisions or conditions of this Warrant must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Warrant or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
8.6. SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Warrant, except as
expressly provided otherwise herein.
8.7. WAIVERS AND AMENDMENTS. With the written consent of the record or
beneficial holders of more than 50% in interest of the Warrant Shares, the
obligations of the Company and the rights of the Warrantholders may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its board of
directors, may enter into a supplemental agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Warrant; provided, however, that no such waiver or supplemental agreement
shall reduce the aforesaid percentage of the Warrant Shares,
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-
EXECUTION COPY
the holders of which are required to consent to any waiver or supplemental
agreement, without the consent of the record or beneficial holders of all the
Warrant Shares (treated as if exercised). Upon the effectuation of each such
waiver, consent, agreement of amendment or modification the Company promptly
shall give written notice thereof to the record holders of the Warrant and the
Warrant Shares. This Warrant or any provision hereof may not be changed, waived,
discharged or terminated orally, but only by a statement in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, except to the extent provided in this Section 8.7.
8.8. SEVERABILITY. If one or more provisions of this Warrant are held to
be invalid, illegal or unenforceable under applicable law, such provision shall
be modified in such manner as to be valid, legal and enforceable, but so as to
most nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant as if such provision
were not included in either case, and the balance of this Warrant shall not in
any way be affected or impaired thereby and shall be enforceable in accordance
with its terms.
8.9. REGISTERED HOLDER. The Company may deem and treat the registered
Warrantholder(s) hereof as the absolute owner(s) of this Warrant
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise or conversion hereof, of any
distribution to the Warrantholder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Other than as set
forth herein, this Warrant does not entitle any Warrantholder hereof to any
rights of a stockholder of the Company.
8.10. TITLES AND SUBTITLES. The titles of the sections and subsections of
this Warrant are for convenience and are not to be considered in construing this
Warrant.
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the Issuance Date.
ALTUS BIOLOGICS INC.
By: ___________________________________
Xxxxx Xxxxxxxx
President
ACKNOWLEDGED AND AGREED
AS OF THE ISSUANCE DATE, INCLUDING,
WITHOUT LIMITATION, THE TRANSFER
RESTRICTIONS CONTAINED IN SECTION 5.1:
CYSTIC FIBROSIS FOUNDATION
THERAPETICS, INC.
By: _______________________________
Xx. Xxxxxx Xxxxx
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-
EXECUTION COPY
President
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-
EXECUTION COPY
NOTICE OF EXERCISE
(To be Executed by the Registered Warrantholder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to purchase
____________________ (_________________) shares of the Common Stock, $.01 par
value, of Altus Biologics Inc., a Delaware corporation, covered by Warrant No.
W-__________, according to the conditions thereof and herewith makes payment of
the Exercise Price of such Warrant Shares in full.
I. Such payment is hereby tendered in the form of $____________ by wire
transfer or certified or bank check.
II. The undersigned elects to receive the net value of the Warrant Shares
pursuant to Section 1.2 of the Warrant.
III. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Warrant and the shares of Common Stock to be issued upon
exercise thereof are being acquired solely for the account of the undersigned
and not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of all or any portion of
the Warrant or such Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.
Printed Name of Warrantholder:
_______________________________________
Signature:
_______________________________________
Title (if signing on behalf of a
Warrantholder):
_______________________________________
Date:
_______________________________________
Address:
_______________________________________
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-
EXECUTION COPY
FORM OF ASSIGNMENT
For Value Received, the undersigned registered owner of this Warrant
issued by Altus Biologics Inc. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant No. W-_________, with respect to the number of Warrant Shares of Common
Stock set forth below:
Name of Assignee Address Number of Warrant Shares
and does hereby irrevocably constitute and appoint _______________________
attorney to make such transfer on the books of Altus Biologics Inc., maintained
for such purpose, with full power of substitution in the premises.
Dated:_____________
_____________________________
Signature of registered owner
Witness:_____________________
The Assignee acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws. Further, the Assignee has acknowledged that upon
exercise of this Warrant, the Assignee shall, if requested by the Company,
confirm in writing, in a form reasonably satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or sale in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
_________________________________
Signature of Assignee
Print Name: _____________________
Print Title:_____________________
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-
EXECUTION COPY
EXECUTION COPY
This Second Amendment to Strategic Alliance Agreement is made as of
December 22, 2003 (this "Second Amendment Agreement"), by and between Altus
Biologics Inc, a Delaware corporation (the "Company"), and Cystic Fibrosis
Foundation Therapeutics, Inc., a Maryland corporation ("CFFTI" and collectively,
with the Company, the "Parties," and each a "Party"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to them
in the Strategic Alliance Agreement dated as of February 22, 2001, as amended by
the First Amendment to Strategic Alliance Agreement dated as of September 26,
2001 (the "Agreement").
WHEREAS, the Company has requested that CFFTI advance [**********] of
payments that would not otherwise be due from CFFTI in respect of the Grant
until completion of the Pediatric Phase II milestone and CFFTI has agreed to
make such advance on the terms set forth herein;
WHEREAS, the Milestone Grant Funding Plan has been modified by the Parties
to account for the development plan of the Products and requires further
modification to provide for the advance described herein; and
WHEREAS, certain amendments to the Agreement are necessary or desirable in
connection with the foregoing.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. AMENDMENTS.
1.1 New Definitions. In Article I of the Agreement, the following new
definitions are added to the definitions list in the appropriate alphabetical
order:
"Pediatric Payment" shall have the meaning set forth in Section 2(b)(i) of
the Second Amendment Agreement.
"Phase II Milestone Date" shall mean the last day of the quarter specified
in the Milestone Grant Funding Plan within which Phase II is to be completed and
[**************] associated with the Phase II transmitted by the Company to
CFFTI in accordance with the Milestone Grant Funding Plan.
"Second Amendment Agreement" means the Second Amendment to Strategic
Alliance Agreement dated as of December 22, 2003 between the Company and CFFTI.
1.2 Amendment of Certain Definitions. In Article I of the Agreement, the
following definitions are amended as indicated:
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-
EXECUTION COPY
(a)The definition of "Milestone Grant Funding Plan" is deleted in its
entirety and the following new definition is inserted in lieu thereof:
"Milestone Grant Funding Plan" shall mean the revised Milestone Grant
Funding Plan attached to the Second Amendment Agreement as Exhibit 1, as the
same shall be amended and modified from time to time pursuant to the approval of
the ASC in accordance with Section 2.2 of the Agreement.
(b)The definition of "Phase IIb Milestone Date" is deleted in its
entirety.
1.3 Sections 2.6(a) and (b) of the Agreement are deleted in their entirety
and the following new Sections 2.6(a) and (b) are inserted in lieu thereof
"2.6 License Fee.
(a)On the first Approval Date to occur, the Company shall be obligated
to pay to CFFTI an amount in cash in United States dollars [**********
*******************************************************************************
**********************] (such excess is referred to herein as the "License
Fee").
(b)The License Fee shall be paid as follows: (i) [*********] after the
first Approval Date to occur, 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)
[******************************************], whichever is higher, and (ii)
[*****************] of such 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)
[******************************************], whichever is higher
([**************************************************************]) 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 compounded annually and
accrue on the outstanding balance of the License Fee at the Regular Rate. If a
Company Default occurs following the first Approval Date to occur, 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 the Regular Rate plus
[***************]."
1.4 Section 2.7 of the Agreement is deleted in its entirety and the
following new Section 2.7 is inserted in lieu thereof:
"2.7 Royalties on Combined Net Sales. After the first Approval Date to
occur (or, if an Approval Date has not occurred but the Company is selling Other
Products) and until exercise of the Call Option, and provided (a) CFFTI has not
exercised its right to terminate under Section 10.1 and (b) CFFTI has funded all
of the Grant that has become due prior to such Approval Date (or the date such
Other Products are first sold, as applicable) in accordance with the terms and
subject to the conditions set forth in this Agreement, the Company will pay
royalties to CFFTI in the amount of [********************] of Combined Net Sales
until 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.
-43-
EXECUTION COPY
later of either (x)
[*************************************************************] covering the
Products or Other Products, including patents granted after the date of the
First Amendment Agreement or (y) [******************************************] of
the United States patents that have issued
[**********************************************] (Patent No. [*******]; Patent
No. [*******]; Patent No. [*******]; Patent No. [*******]; Patent No. [*******];
and Patent No. [*******]). Royalties under this Section 2.7 shall be payable on
a quarterly basis within [*********] days following the end of each
[**************] for which royalties are due. Each payment made by the Company
to CFFTI under this Section 2.7 shall be accompanied by a written report
summarizing the data used to calculate the amounts paid, including the amount of
Combined Net Sales worldwide on a country by country basis and supporting
information reasonably necessary to determine the amount of royalties due under
this Section 2.7. Upon the written request of CFFTI, and no more frequently than
[***] in any calendar year, the Company shall permit an independent certified
public accountant selected by CFFTI to have access during normal business hours
to such records of the Company as may be reasonably necessary to verify the
accuracy of royalties payable and reports made hereunder. If such audit reveals
that any royalty was required during the audited period, such royalty shall be
paid promptly to CFFTL The fees charged by such accountant shall be paid by
CFFTI, unless the audit discloses that the royalties for the audited period are
deficient by more than [***************], in which case the Company shall pay
the [**************************] charged by the independent certified public
accountant."
1.5 Section 2.8 of the Agreement is deleted in its entirety and the
following new Section 2.8 is inserted in lieu thereof:
"2.8 Call Option. On and after the first Approval Date to occur, the
Company shall have the right and option to purchase (the "Call Option") the
royalty stream described in Section 2.7 above from CFFTI at an exercise price
(which shall be paid upon exercise of the Call Option) determined as follows:
(a) On or prior to the [******************] after such Approval
Date, the exercise price shall be [***************]: the sum of: (1) the
[*********], and (2) the amount, if any, by which
[****************************************************], and (3)
[*******************] CFFTI through the date of exercise under Section 2.7 of
the Agreement (and [**********************************************************]
of the Second Amendment Agreement), discounted back to such Approval. Date at an
annual discount rate equal to [***************] (such amount the "Base Exercise
Price");
(b) From and after the [*****************] day after such Approval
Date through the third anniversary of such Approval Date, the exercise price
shall be the sum of: (X) the [*****************] and (Y) a premium amount equal
to [******************************************]; and
(c) From and after the [***************] of such Approval Date, the
exercise price shall be the sum of: (X) the [*****************] and (Y) a
premium amount equal to the [*******************************], where the
"Applicable Percentage" shall 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
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
-44-
EXECUTION COPY
equal to [**************************************************************] of
such Approval Date.
By way of example, if the first Approval Date occurs on April 12, 2004 and the
exercise of the Call Option occurs on July 20, 2009, a date five years and three
months after such Approval Date, the Applicable Percentage would be
[******************]."
1.6 Section 10.1(c) of the Agreement is deleted in its entirety and the
following new Section 10.1(c) is inserted in lieu thereof:
"(c) within thirty (30) days after the Phase II 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
[**************] of the date of such notice, an amount that is the lesser of
[************************************************* *****] 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 first Approval Date
to occur, in the event of sales of Products, the Company will pay royalties not
to exceed the cumulative total of
[***********************************************************] to CFFTI, by
paying to CFFTI [****************] of Net Sales, provided, however, if the
Company sells or distributes the Products through a sublicensee and does not
sell directly, 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."
2. ADVANCE. Notwithstanding any provision in the Agreement to the
contrary, the Company and CFFTI agree as follows:
(a)CFFTI shall fund [********] of the Grant prior to December 31, 2003,
which amount, the parties acknowledge, would not otherwise have become due until
completion of the Pediatric Phase II milestone under the Milestone Grant Funding
Plan in effect prior to the date of this Second Amendment Agreement. The date on
which the Advance is actually paid to the Company is referred to herein as the
Advance Date.
(b)In consideration of CFFTI's agreement to make the advance described
in Section 2(a) of this Second Amendment Agreement:
(i) The amount of the Grant payable upon completion of the Pediatric
Phase II milestone shall be equal to the excess of (A) [*************] (B) the
sum of (1) [*************] (2) the product of
[***************************************
***************************************] that have elapsed from and after
December 31, 2003 through (and including) the date payment in respect of the
Pediatric Phase II milestone is
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-
EXECUTION COPY
due under the Agreement (such excess amount is referred to as the "Pediatric
Payment"). For purposes of the calculation required by clause (2) of this
Section 2(b)(i)(B), the quarter in which the payment in respect of the Pediatric
Phase II milestone is due under the Agreement shall be included, thus by way of
example if such milestone were achieved on May 1, 2005, the amount calculated
under such clause (2) would be equal to [******]; and
(ii) Upon payment of the Pediatric Payment in accordance with the
applicable provisions of Section 2.5 of the Agreement, the entire Grant shall be
deemed funded and CFFTI shall have no further obligation to make payments in
respect of the Grant under the Agreement or otherwise; and
(iii) Within 30 days following the first Approval Date to occur, the
Company shall pay to CFFTI, as an additional royalty and in addition to any
amounts due under Section 2.7 of the Agreement, an amount equal to $1,500,000 by
wire transfer of immediately available funds.
3. MISCELLANEOUS. Except as amended by the First Amendment Agreement and
this Second Amendment Agreement, the Agreement remains in full force and effect,
and all references contained in the Agreement to "this Agreement" shall be
deemed to include this Second Amendment Agreement. This Second Amendment
Agreement may be executed in one or more counterparts, including via facsimile,
each of which shall be deemed an original. This Second Amendment Agreement may
not be amended except by a written agreement executed by each of the Parties.
4. EXPENSES. The Company shall pay and indemnify CFFTI against the
reasonable fees and expenses (including legal fees and expenses) incurred by
CFFTI in connection with the execution of this Second Amendment Agreement. Such
amount shall be paid within five (5) days after CFFTI provides the Company with
the full amount of such fees and expenses.
5. ENTIRE AGREEMENT. This Second Amendment Agreement, together with the
Agreement and the First Amendment Agreement, contain the entire agreement
between the Parties hereto with respect to the matters contemplated herein and
therein and supersede all prior agreements or understandings among the Parties
related to such matters.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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-
EXECUTION COPY
IN WITNESS WHEREOF, the Parties have caused this Second Amendment to
Strategic Alliance Agreement to be executed by their respective duly authorized
representatives.
ALTUS BIOLOGICS L,NC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx
President and CEO
CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS, INC.
By: /s/ Xxxxxx X. Xxxxx, Ph.D.
-----------------------------------
Name: Xxxxxx X. Xxxxx, Ph.D.
Title: President & CEO
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-
EXECUTION COPY
EXHIBIT 1
Milestone Grant Funding Plan ($ in millions)
As of December 22, 2003
MILESTONE/ACTIVITY MILESTONE ACHIEVEMENT DATE CFFTI FUNDING AMOUNT COMPANY FUNDING AMOUNT
------------------ -------------------------- -------------------- ----------------------
[***] [***]
[***] [***]
[***] [***]
M1 [***] [***] [***] [***]
M2 [***] [***] [***] [***]
[***] [***] [***]
M3 [***] [***] [***] [***]
[***] [***] [***]
M4 [***] [***] [***] [***]
M5 [***] [***] [***] [***]
M6 [***] [***]
[***]
M7 [***] [***] [***]
TOTAL [***] [***]
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-
